Q&A: Valve Explains Why PC Gaming's Gaining Steam

"We've mostly passed the days of being a scary thing to being a staple in people's launch plans," Valve marketing VP Doug Lombardi tells Gamasutra. Given the ever-broadening digital distribution space, we spoke to him to discuss the state of downloadable gaming on the PC and how Steam's doing -- and the role it aims to play in the months ahead. According to Lombardi, Steam has seen year-over-year growth of 150 percent, with an install base now in excess of 15 million accounts. "We continue to announce more titles coming day and date now, which is one of the last pieces of metrics we're using for judging the success and strength of the platform," he says. And a large part of that, he continues, is the growing body of independent titles available on Steam. Valve recently announced that the IGF-winning music game Audiosurf was the number one seller for the month of February. "I think his whole life has changed in the past 3 weeks," Lombardi laughs. "That's all to his credit -- all the reviews and raves are about the game, but it's awesome that Steam has become one of these places where folks can take an indie game and take it from having a cult following to having their life change." A Way In For Indies Indeed, it seems as if digital distribution is developing as a channel to strengthen independent games, from Xbox Live Arcade and PlayStation Network to PC-based platforms like Steam. "I think it's providing an alternative avenue for all kinds of games," Lombardi agrees, citing Introversion's Darwinia and Tripwire's Red Orchestra. "It's good in both directions," Lombardi says. "Our gamers can find cool games they wouldn't find elsewhere at prices retail can't sustain. There are a bunch of titles now at a place in their lifecycle where retail doesn't make sense, but they're good." And it's not just indies, Lombardi says, noting that the back catalog collections from companies like Id and Rockstar perform quite well. "At this point, you're looking at the PC market being tougher and tougher on shelf space... when you look at a place that has endless shelf space and 15 million targeted accounts to go after, it's really interesting for indies as well as older and AAA debut launches." The 'PC Is Dead' Static Alongside this rose-colored imagery, though, is a growing tide of opinion that aims to ring a death knell for the PC as a gaming platform -- at least in its current shape. Just recently THQ's Michael Fitch railed against the challenges of the PC gaming audience on the heels of Titan Quest developer Iron Lore's closing, while the NPD's grim picture of 2007's PC retail biz is still reverberating. Lombardi blames the retail-heavy NPD report for the anxiety wave. "That totally ignores the money changing hands, and properties like World of Warcraft with their monthly subscriptions. That totally ignores Steam sales, and any other MMOs and online distribution systems and a host of others... it also ignores things like PopCap games. Peggle's not in that number." He continues, "If you took Steam, Peggle, PopCap, WoW and mixed it with NPD numbers, the world looks a lot different. All of a sudden, it looks like PC's probably the biggest one, and year over year, the fastest-growing." We were joined by Valve's business development director, Jason Holtman, who also notes that the infamous NPD story focuses only on North America. And, he notes, Steam distributes worldwide. "Our view of where PC gaming is across the world is very different than someone looking at North America's numbers," says Holtman. Supporting PC Development With Steamworks Holtman explains that in addition to continuing to get more titles out on Steam, another area of focus is Valve's recently announced Steamworks tools -- a suite of publishing and development tools available for free. Steamworks gives developers access to real-time stats, auto-updating and matchmaking utilities, in addition to a range of recently implemented social networking services, and other Steam tools -- and Lombardi and Holtman feel that making Steamworks available will be a key solution to addressing some of the PC market's current woes -- eliminating the dreaded patch-hunt for consumers, and giving developers access to snapshots of participating users' configurations. Explains Holtman, "Things we work hard on for our own games, other people should be able to use. It will strengthen the PC platform in general; it is something that's going to make PC gaming and Steam better. We've just gotta reinforce that PC gaming is the place to be." Up Against The Odds? But in the current climate, some audiences might be tough to convince. We asked if Valve has any plans in place to try and stem the tide of "anti-PC gaming PR," so to speak. But Lombardi admits it'll take more hands than Valve has on deck to counter the multimillion-dollar, multiple agency initiatives of the console giants. "Valve is barely over 150 people -- we've got about 8 people who aren't developers or artists," he said, contrasting his staff with the number of people Microsoft, Sony and Nintendo have working public relations alone. "It'd be nice if someone wanted to play that role of being a platform holder that was championing the cause... but I think even in the absence of that, this story isn't new." Recalls Lombardi, "I can remember this story coming around in the mid '90s... and then 3D accelerator came out, and Carmack released that patch for GL Quake, and everybody shut up, because all of a sudden PlayStation looked like crap. There's a big shift about to come in the post-GPU space... all of a sudden PC will leapfrog what's going on on the consoles, in many other ways besides graphics." Moreover, Lombardi says, it's not difficult to make the case that the PC is far ahead of the consoles in the connectivity arena. "The console guys are still trying to figure out how to release DLC, and are still not selling full new games [digitally]," he notes. "I think at the end of the day there's going to be a continued group of people -- us, Blizzard, Epic -- committed to making great apps for PC." He adds, "People keep innovating on the hardware to make it a more heavyweight platform; it's maturing more quickly than consoles. It's pretty hard to say they're going to go away completely." In fact, continues Lombardi, the question mark might be floating squarely in the console's future, as their prices continue climbing and more post-purchase purchases are becoming necessary. "How much longer will that story still have credibility?" He posits. "Somebody go back and look at next-gen console install base numbers since launch time, and compare it to PSone and PS2. I wouldn't be surprised at all if we saw these guys stuttering out at 25,000 -- nobody's going to get to 100 million, which we saw from Sony on the last 2 [console generations]. I don't think anybody's even thinking of this." New Biz Models We also asked Lombardi and Holtman about promising alternative business models and the role they may play in PC gaming's growth. After all, EA is doing so with Battlefield Heroes, which some have suggested bears a striking stylistic resemblance to Valve's Team Fortress 2. The pair shrugged off the resemblance, commenting only, "How many games look like Quake? How many bands wanted to be like the Beatles after the Beatles hit?" So does Valve ever expect to capitalize on emerging trends like microtransactions, tiered subscriptions and free-to-play?" I think you will definitely see that come online," said Holtman. "We know that's an emerging trend, already very well established in Asia now. We've looked at that, we know we have a base there, and we also know there's a model that people are exploring... where you can play an instance for free with microtransactions [as] another way of lowering the barrier to entry and getting people into that game and into that franchise." Added Holtman, "You will see partners come on and do it, and you may see functions inside Steam come online. it's something we've always approached... you're going to see it slowly roll out, and we'll see how people react." Currently, he says, Valve is working with Nexon to experiment with CS Online under those revenue models in Taiwan, Korea, Japan and China, incorporating a microtransactions model. "Folks will need to make microtransactions to get different items, skins, things like that," Lombardi explains. "We're working with those guys, and using different versions of our backend to administer it, and obviously our IP to headline it." He continues, "We feel that's a great place for us to learn, and Nexon is a company that has done it before, and so they're a good partner... it's in beta now, and over the years we'll take the learning from that and also work with other partners who want to bring games like that to North America via Steam." "The world's moving in that direction," adds Lombardi. "It's tempting to say that's the future." But, he says, that would be an incomplete statement. "Folks still like just paying for their game, and not being bothered with ads or prompts to buy other stuff. But there's obviously a whole other crowd willing to be somewhere in between." All in all, Holtman says, all of these current issues require a moderate stance -- no one gaming plaform will abruptly die off to be supplanted by another, and no one business model will drive off all the others. "Some people always think, 'is that going to be the next thing, and is everything else going to die'?" Holtman notes. "Almost every move we've ever made on Steam has been to add something... new stuff doesn't cannibalize anything else we're doing. It's always a big add."