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The war between Steam, Impulse, Direct2Drive and other digital distribution networks is heating up. The release of Modern Warfare 2 and its inclusion of Steamworks stirred a pot which is already close to boiling over. The owners of Impulse and Direct2Drive both decided not to sell the game over concerns about the game’s required installation of Steam. Why, the companies asked, should they have to install a competitor’s platform in order to sell a game?

Similar complaints formed the basis of Steam: A Monopoly in a Making?, an article I wrote for Issue 245 of The Escapist. There was no shortage of opinions on the article from both sides of the issue. But one person approached me whom I didn’t expect: Brad Wardell, CEO of Stardock, the company that operates Impulse. Wardell is also a game developer, best known for the Galactic Civilizations series.

Over the course of our conversation, Wardell told me his opinions on Steam and spoke about Impulse Reactor, a free application programing interface (API) announced at this year’s Games Developers Conference which competes directly with Valve’s Steamworks.

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M.S. Smith: What was your initial reaction to the comments by readers of Steam: A Monopoly In the Making?

Brad Wardell: It’s been a very interesting experience watching it. It’s so déjà vu, because I was an OS/2 user. Back then, and this may seem incredibly quaint today, but a lot of younger people don’t remember that Microsoft was absolutely beloved by its fans, because OS/2 was made by IBM and Windows was made by Microsoft, and everyone hated IBM. Everyone wanted Windows to win because they loved Microsoft. But, of course, now Microsoft isn’t loved to the extent they were. There aren’t a lot of Microsoft fanboys.

Now you see the same thing with Steam. There are a lot of people who don’t like what we’re doing and who literally don’t want there to be other options on the PC because it just complicates things. And it’s just an amazing thing because, you know, I watch movies online. And sometimes I buy them on my Xbox 360, and sometimes I do it through Comcast, and sometimes I do it through iTunes, and sometimes I do it through Netflix on demand. I couldn’t imagine having only one option. Can you imagine if I could on get movies through Comcast?

MS: I have Comcast as well, and no, that’s not something I want to imagine.

BW: And yet on the PC, because there is so much love for Valve – and I count myself amongst Valve’s fans because I’ve been playing Valve’s games since the original Half-Life – people are allowing their love of Valve to blind them. Not wanting to have competition is just amazing. Like I said, I saw it before, back when it was Microsoft against IBM. If you compare Windows during that short time it had competitive pressure, and then compare where it has gone since, it is amazing how little change there has been. There isn’t any pressure on Microsoft anymore, except for the Mac, but that is minor compared to what OS/2 was …

We see the same thing on digital distribution. Steam just celebrated its seventh birthday, but they didn’t start doing weekend sales until Impulse started doing them. And from what I can tell, they didn’t do holiday sales until after Impulse was doing them. And that’s what competition is. It isn’t that we’re better or Steam’s better; it’s just natural growth when people are fighting for a consumer’s dollar.

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MS: What are your concerns when it comes to one platform taking over the PC digital distribution market?

BW: What I worry about is if anyone were to dominate the PC to that level, it makes the PC less competitive versus consoles. One thing I’ve noticed developers talking about is pricing on the PC versus the console market. Consumers see that they can get games on digital services for very cheap. But if it stops being profitable for game developers to make games for the PC, they will move to other platforms.

Consumers see the benefit to them when there is competition, but they don’t see the benefits to developers. People have very little idea just how ugly the retail space can get now that there are only a few players in it. It is one of the reasons why digital distribution is growing so fast. Developers want alternatives to retail because … well, I don’t want to get into it, because I’m afraid of retail, too. I don’t want to get myself into trouble here, because you wouldn’t believe how much leverage retail has. The point is, though, that I don’t want to be at the mercy of the distributor.

MS: Do you get any sense that, besides Steamworks, you have trouble negotiating with publishers because of Steam’s size?

BW: No, not really. Most publishers don’t want to just sell through one store. Publishers have already experienced problems with that on the retail side. For example, the size of PC boxes in retail stores is decided by Wal-Mart. So regardless of where you buy your PC game, the dimensions of the box are decided by the buyer at Wal-Mart because they have so much clout. So no one is looking for one digital distributor to have such overwhelming clout.

MS: Some readers of “Steam: A Monopoly in a Making?” speculated that publishers would overthrow today’s digital distributors by opening their own stores. Is this something you’re worried about, or do you feel that services like Impulse and Steam offer value that the publisher’s won’t be able to replicate?

BW: Well, the answer to that is complicated because the answer is “yes” to both. EA already has the EA Store. Activision, now that they have acquired Blizzard, could certainly have the Battle.net store fill that role. The experience of downloading and installing StarCraft II over the internet is just wonderful, so I could see Activision doing something like that. But the typical publisher just doesn’t have the resources. It takes a lot.

A lot of people think Impulse sort of came out of nowhere, but Stardock has been doing digital distribution since the ’90s on our own titles. We had to slowly, over a matter of years, build up the infrastructure. It isn’t just a matter of setting up a website and some links if you’re going to do it well. So I think most publishers will end up using Steam, Impulse and whomever else in the long term. The big guys, mainly Activision and Electronic Arts, will probably have their own stores. But I don’t know for sure.

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MS: There is also a lot of speculation about how digital distribution will end up. Some think it has already taken over, and others think it will take 20 years before it is as important as retail …

BW: I don’t think it will ever completely take over. I think on the PC side it will go the way of music. Although only 30 percent of music is sold digitally, apparently 70 percent of music is still purchased the old fashioned way, even though I don’t know anyone who still purchases music that way anymore.

MS: There is definitely a perception gap there. I don’t know anyone who buys PC games in stores anymore. But when you look at the numbers, retail still seems to be doing very well.

BW: Even on our own stuff. We’ve had Impulse for years, and still two-thirds of our sales are retail.

MS: You announced Impulse Reactor, which is a competitor to Steamworks, at GDC last month. Can you tell me a bit about that?

BW: The first version of it, the only feature we made available was GOO [Game Object Obfuscation], which provided a less obnoxious DRM solution for developers. We did the Gamer’s Bill of Rights, but then publishers came to us and said, “well, it is easy for you to say that.” But the game publishers don’t make DRM solutions, they license them, and the only options out there have been various types of draconian copy protection. So we said we need something that is effective but isn’t obnoxious, and that’s where GOO came from.

This year, with Impulse Reactor 2, we’re hearing the same about Steamworks. If you’re a developer and you want to add matchmaking and ladders and the like, your options are Steamworks, Gamespy or Games for Windows Live. Steamworks is free, Gamespy is not and Games for Windows Live comes with a lot of strings attached, because if you want to patch your game you have to go through their approval process, so that turns off a lot of developers. This practically means that if you’re a developer, Steamworks is the only choice. The downside of that is that you’re contributing to Valve’s dominance. A lot of consumers like that, but a lot of people forget that competition is good.

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