Good service makes money for Steam

If it's good enough for software pirates, it's good enough for Valve, according to Gabe Newell.

Gaming portal Steam is making a mess of money by giving gamers exactly what they want, when they want it, and copying content delivery models from the pirates and beating them at their own game, according to head steamer Gabe Newell.

In his keynote speach at the Dice Summit, the Valve boss said that direct download services closed the distance between game creators and their audience and, in an ebullient presentation, he pointed out how Steam had created a very succesful and highly lucrative business by realising that people who had resorted to piracy did so in most cases because they weren't being properly served by traditional retailers.

He said that the old way of reaching your punters was dead and that Steam was trying to touch its customers every three weeks rather than every three months when a new game is released.

The service, which now has 20 milion registered users, has partnerships with every major PC game publisher and offers full game downloads as well additional content and services for more than 350 of the top PC games currently available.

And with 100 per cent growth every year since the company started in 2004, it must be doing something right. What it seems to be doing right is adding value to the gaming experience. Gone are the days when you would by a game, complete it in a few days, then stuff it in a drawer or take it back to the shop to trade in.

Today's games grow and evolve with added content, new levels, new weapons, new characters, new features... and Steam has driven this sea change. And it's not just the game publishers which are involved in updating content and improving gameplay. User forums have become an invaluable source of new ideas.

The real success story for Steam, however, is that each successive major update or special offer creates sales spikes for the original titles as new players are tempted on board. Every time a new update is announced for Team Fortress 2, sales of the original game spike by at least 100 per cent and Steam registrations have been known to go up by 71 per cent during these periods. A recent half price offer on Left 4 Dead led to an eye-watering 3,000 per cent uptake in sales.

Any game exec out there pondering whether entertainment software is too expensive would be well placed take a close look at Steam's pricing policy. Newel reckons that the company has seen sales increase by 35 per cent with price cuts as small as ten per cent, whilst a 25 per cent cut can see the number of units shifted increase by 245 per cent.