Experienced Points

Experienced Points
One Platform to Rule Them All

Shamus Young | 1 Apr 2014 19:00
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Back at the turn of the century, a lot of companies - including the one I worked for - concluded you just couldn't do business in Russia. The Russian market was plagued with fraud, stolen credit card numbers, hackers, and piracy. Our merchant account (our ability to perform credit card transactions online) was in danger of being revoked. So many of our Russian transactions were bogus that the credit card companies didn't want to do business with us. We eventually had to block all Russian traffic just to get back in good standing with the credit card gatekeepers. Like a lot of companies, we walked away from the Russian market and never looked back.

Fourteen years later, Valve is making it work. Russia isn't just a healthy market, it's the fastest-growing one and account for 5% of all game sales. I don't know if the credit for this goes to Valve or to the Russian economy, but it's worth noting when a company finally plants its flag on a hill that nobody else has been able to hold. It's also worth noting that it's having similar success in Brazil - another country thought to be hopelessly lost to piracy. They've devised a system of pricing games in a way that makes sense in the local economy and makes it more likely that people will be both willing and able to pay for the convenience of Steam.

I don't want to imply that Steam has achieved global penetration. There are still worlds left to conquer. In Hong Kong, there aren't game shops or big-box retail outlets where people buy games. Outside of MOBAs, there isn't a lot to the digital market. Bringing Steam to those people will be a challenge, and bringing it to the rest of China is an even greater challenge. South Korea is wary of games that deal with North Korea. Japan is a bit more sensitive regarding gore than the west, but often way more permissive regarding sex. There are huge problems to solve to get significant portions of the population to adopt Steam when they each have their own currencies, payment preferences, and censorship concerns. Steam hasn't taken over the world, but it's going farther and doing business with people that the consoles and major publishers have been unwilling or unable to to reach.

I'm not at all impressed with what I've seen of the Steam Machine so far (a column for another time, perhaps) but if I was one of the Big Three I'd be terrified of having a new competitor in the living room that has a userbase of 75 million gamers to leverage. Sure, the Steam Machine could be the next Ouya, but it could also be the next iPhone: A dark horse challenger that quickly becomes a dominant player.

Steam is now massive even by standards of consoles. It's more resistant to piracy than any other platform. There is no used game market. The hardware is maintained by the users, creating a base of perpetually upgrading customers without needing to create risky money sinks like gaming consoles. It has better penetration in global markets than anyone outside of Blizzard. We're getting very late in a game of Monopoly where Nintendo, Sony, and Microsoft are fighting over Boardwalk and Park Place. And while they're doing that, Valve has gobbled up almost everything else on the board. Its pragmatic, steady, implacable approach to building its platform is making incredible progress.

The PC market isn't just a sideshow market anymore. There are billions on the line, and the major publishers would be wise to make sure their games are available to those 75 million people.

You can read more from Shamus Young on his website. Special thanks to Steam Dev Days and to the talented Robert Rath for a lot of the information in this write-up.

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