I got my 20 year badge today 
Some of Steam’s oldest user accounts are turning 20-years old this week, and Valve is celebrating the anniversary by handing out special digital badges featuring the original Steam colour scheme to the gaming veterans. Steam first opened its figurative doors all the way back in September 2003, and has since grown into the largest digital PC gaming storefront in the world, which is actively used by tens of millions of players each day. “In case anyone's curious about the odd colours, that's the colour scheme for the original Steam UI when it first launched,” commented Redditor Penndrachen, referring to the badge's army green colour scheme, which prompted a mixed reaction from players who remembered the platform's earliest days. “I joined in the first six months,” lamented Affectionate-Memory4. “I feel ancient rn.”
Some of Steam’s oldest user accounts are turning 20-years old this week, and Valve is celebrating the anniversary by handing out special digital badges featuring the original Steam colour scheme to the gaming veterans. Steam first opened its figurative doors all the way back in September 2003, and has since grown into the largest digital PC gaming storefront in the world, which is actively used by tens of millions of players each day. “In case anyone's curious about the odd colours, that's the colour scheme for the original Steam UI when it first launched,” commented Redditor Penndrachen, referring to the badge's army green colour scheme, which prompted a mixed reaction from players who remembered the platform's earliest days. “I joined in the first six months,” lamented Affectionate-Memory4. “I feel ancient rn.”
I got my 20 year badge today
Some of Steam’s oldest user accounts are turning 20-years old this week, and Valve is celebrating the anniversary by handing out special digital badges featuring the original Steam colour scheme to the gaming veterans. Steam first opened its figurative doors all the way back in September 2003, and has since grown into the largest digital PC gaming storefront in the world, which is actively used by tens of millions of players each day. “In case anyone's curious about the odd colours, that's the colour scheme for the original Steam UI when it first launched,” commented Redditor Penndrachen, referring to the badge's army green colour scheme, which prompted a mixed reaction from players who remembered the platform's earliest days. “I joined in the first six months,” lamented Affectionate-Memory4. “I feel ancient rn.”
Damn...I'm still at 19. I gotta wait a few months.
The Rise of Steam: A Case Study on the Most Dominant Force in Gaming
Gabe Newell Gabe Newell spent his formative years at the Davis Senior High School with a love for physics, calculus, and English. As a diligent worker, he enjoyed the time spent with his teachers more than he did with his classes.
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The Rise of Steam: A Case Study on the Most Dominant Force in Gaming
Gabe Newell spent his formative years at the Davis Senior High School with a love for physics, calculus, and English. As a diligent worker, he enjoyed the time spent with his teachers more than he did with his classes. In 1980, he graduated and made his way to Harvard where he would continue his studies for the next three years. In his final year, Newell would later drop out of Harvard after being convinced by then CEO Steve Ballmer to join Microsoft. With his newfound job at Microsoft, he would follow in the same footsteps as its founder who too had dropped out of Harvard, becoming the 271st employee of the company (Barett).
Newell would end up dedicating 13 years of his life to Microsoft acting as a producer for three major releases for the Windows platform (Barett). At the time, Windows dominated 85.6% of the global desktop computer software market share with 5% going to Apple’s Mac OS and the rest going to an assortment of smaller developers (CNET). Windows was the ubiquitous platform for all things related to the personal desktop computer.
Newell noticed a problem. He was an avid video game enthusiast and loved the iconic game DOOM - one of the earliest shooters about a space marine slaying demons flooding out of Hell and invading Mars. High-quality games like this were noticeable absent from the Windows operating system.
DOOM
DOOM laid the foundation for the future of first-person shooters with its fast-paced gameplay and snazzy 3D graphics. It was a game designed initially for the MS-DOS (an early version of the Microsoft Operating system for IBM computers). It fully utilized the processing power of the early IBM PCs in order to create a fun and immersive first-person shooter experience. This wasn’t commonplace back in the early ’90s.
Jay Wilber, the CEO of the tiny 12-man team of Id software that developed DOOM, concocted a unique marketing and distribution strategy for DOOM. Believing that traditional media, large publishing studios, and retailers would be uninterested in producing and promoting DOOM, Jay Wilber focused Id software into self-publishing and self-distribution of the game (Kushner).
Wilber devised a plan. Since the game was separated into different “episodes”, Id software would release the first episode as shareware. Anyone could share the first episode amongst their friends as they pleased as a guerilla marketing ploy to generate buzz for the game. Players interested in pursuing more episodes, would then directly access Id software’s website to purchase the rest of the episodes (Kushner).
This marketing idea worked incredibly well for DOOM. DOOM became a highly popular game cementing itself as one of the most iconic titles of its age. It sold over 6 million copies within its first two years of release, an almost unprecedented amount for a small games developer like Id software (McCandless). It was also pirated so intensely that it was estimated that the true number of copies in circulation was upwards of 10-20 million (Dunnigan). By 1995, it was estimated that there were more copies of DOOM in circulation than copies of the Windows 95’ software (Anthony).
The Birth of Windows Games
Around the time when the DOOM shareware was circulating around the PC world, Gabe Newell came across the game and was incredibly impressed with its capabilities. It was a different game that utilized the PC's full functionality to generate large three-dimensional worlds with fast-paced combat and incredible graphics. He was initially incredibly disappointed that DOOM only ran on MS-DOS rather than on the Windows software (Anthony).
“It was common wisdom that it wasn’t possible to write a good game in Windows because of, well, unnamed technical reasons.” – Gabe Newell
He believed that upon its release in 1993, DOOM was the most used piece of software in the US with Windows trailing behind. The disappointing industry notion that PCs were just not a platform for playing games would soon be shattered (CVG). Newell would install a copy on an MS-DOS laptop and peddle it around the Microsoft offices in an excited fashion:
'Look, look what PC games can do! This is a lot better than your NES system or your Sega system.'
His excitement led him to form a team of Microsoft engineers to port the game onto Windows operating systems. He offered to help DOOM developer John Cormack port the worldwide phenomenon to Windows for free. This version would later be known as DOOM 95 (aptly named after the Windows 95 operating system). This propelled the Windows operating system forward as a platform proven to be a viable location for high-quality PC game development. The technology used to port DOOM was a direct precursor to the Microsoft DirectX application programming interface that would later allow for the creation of billion-dollar franchises like World of Warcraft and the Battlefield series (Klepek).
After the success of DOOM, Id software developers began work on their next game Quake. During this process, one of Gabe Newell’s friends left Microsoft to work with John Carmack on Quake. He encouraged Newell and his other friend Mike Harrington, another Microsoft employee, to build their own game company after seeing their success porting DOOM (CVG). In 1996, Newell and Harrington would go down to the Id Software offices to discuss the business venture and their ideas for a games company. John Carmack gifted them the source code for Quake.
“Go build a game,” he said.
Valve Corporation
In 1998, Gabe Newell’s newly formed gaming company Valve Corporation debuted with their first-ever game. Half-Life was a science fiction first-person shooter developed specifically for the Microsoft Windows platform. The game is centered around a single character who has to fight their way out of a science facility after accidentally opening a portal to an alien world.
The game was lauded for its blend of a smooth narrative structure, unique alien-fighting gameplay, and puzzles. It won more than fifty game of the year awards and was listed on numerous publications for being one of the most influential video games of our time, selling more than 2.5 million retail copies in its first year (IGN). Valve would later produce other critically acclaimed titles and franchises such as the Portal series and expansions upon the Half-Life series.
Modders
Modder is a moniker given to someone that makes modifications to computer software. Modders in the ’90s were usually programming hobbyists that made modifications to games and software for fun. Mods (short for modifications) were always offered to the internet community as free extensions to games. Valve embraced the modding community. Mods gave longevity to a game, as constant changes to the way a game would keep an audience engaged and excited. A single modder for example named Minh Le, who would later be part of the creation of the multi-billion dollar franchise of Counter-Strike, was cited as a critical reason as to why Half-Life was still popular five years after its initial release (GameSpy).
A popular mod for the game Quake (the next game from Id software developers after DOOM) had been making the rounds. Team Fortress was a multiplayer team class-based online first-person shooter developed by two Australian modders. Gabe Newell hired the two to work for Valve and paid for the intellectual property rights of Team Fortress after their success to re-release the mod in 1999 as a fully-fledged game known as Team Fortress Classic (Planet). Team Fortress Classic would later build into being another one of Valve’s flagship franchises with an in-game item trading economy worth $50 million in 2013 (Good). Team Fortress Classic’s release was also simultaneously timed to promote the Half-Life Software Development Kit (SDK)(Planet).
The Half-Life SDK was a collection of tools and applications used to help developers and modders create mods for games on Valve’s GoldSrc game engine that was the foundation of games like Half-Life. Customers that purchased a copy of Half-Life would get access to the Half-Life SDK. Newell hoped that customers of the game would make mods for the community and keep the game alive since they were gifted the ability to do so by Valve (Barett).
If Newell saw potential in a mod, he would help sell the mod and split all profits in half with the modder. If the modder wanted to self-publish their mod, they would have to pay a $200k licensing fee and additional royalties to Valve in order to have access to the Valve Half-Life SDK. By 2004, mods would account for 20% of all of Valve’s revenue (Barett).
The Counter-Strike Problem
In 2000, the first and most iconic of the mods to come out as a result of the release of the Half-Life SDK was Counter-Strike. Counter-Strike was a total-conversion mod (a mod that completely remade all the art assets and gameplay elements of the original game that was being modded). It was an online multiplayer first-person shooter that pitted a team of counter-terrorists against terrorists to complete various objectives. The game was developed by a college student from Vancouver and a teenager in New Jersey. The two of them had never met in person prior to the breakout success of Counter-Strike.
The mod was wildly successful with gamers and the rights for the game were later purchased by the Valve Corporation in 2000 (Barett). The two young developers were hired onto the Valve team to work on developing and maintaining the game. The game would then be re-released by Valve with the new developers on board, going on to sell over 25 million copies and spawn an entire franchise. In 2002, Counter-Strike became the most popular online game in the world (Makuch).
Stressed by the pressure of its immense success, Valve began to struggle to roll out regular updates to Counter-Strike. Updates were incredibly important especially for a game that had been developed with the culture of modding behind it. The game was constantly evolving and Valve needed a way to consistently deliver updates to the game. Updates would take several days long and would require Valve to shut their online services down for a couple of days in order to patch Counter-Strike. Users were also required to scour the internet in search of these updates after receiving the dreaded “Client and Server Version Mismatch” that would prevent them from playing online (Case).
There was also rampant cheating in Counter-Strike, with dozens of user-created cheats that would ruin the experiences for others during online matches. Valve had to come up with a solution, and a quick one too in order to prevent themselves from alienating their honest (and paying) player base.
Valve began preparing to create an online content delivery system that would streamline its update system by delivering updates to customers faster and dealing with cheaters for its online games. In 2002, Valve polled its user base and found that approximately 75% of its users had access to high-speed internet (Case). Dated technology was now no longer an infrastructural obstruction to the rollout of a new online content delivery system.
The Valve Corporation started work on its new creation, Steam.
In 1998, Gabe Newell’s newly formed gaming company Valve Corporation debuted with their first-ever game. Half-Life was a science fiction first-person shooter developed specifically for the Microsoft Windows platform. The game is centered around a single character who has to fight their way out of a science facility after accidentally opening a portal to an alien world.
The game was lauded for its blend of a smooth narrative structure, unique alien-fighting gameplay, and puzzles. It won more than fifty game of the year awards and was listed on numerous publications for being one of the most influential video games of our time, selling more than 2.5 million retail copies in its first year (IGN). Valve would later produce other critically acclaimed titles and franchises such as the Portal series and expansions upon the Half-Life series.
Modders
Modder is a moniker given to someone that makes modifications to computer software. Modders in the ’90s were usually programming hobbyists that made modifications to games and software for fun. Mods (short for modifications) were always offered to the internet community as free extensions to games. Valve embraced the modding community. Mods gave longevity to a game, as constant changes to the way a game would keep an audience engaged and excited. A single modder for example named Minh Le, who would later be part of the creation of the multi-billion dollar franchise of Counter-Strike, was cited as a critical reason as to why Half-Life was still popular five years after its initial release (GameSpy).
A popular mod for the game Quake (the next game from Id software developers after DOOM) had been making the rounds. Team Fortress was a multiplayer team class-based online first-person shooter developed by two Australian modders. Gabe Newell hired the two to work for Valve and paid for the intellectual property rights of Team Fortress after their success to re-release the mod in 1999 as a fully-fledged game known as Team Fortress Classic (Planet). Team Fortress Classic would later build into being another one of Valve’s flagship franchises with an in-game item trading economy worth $50 million in 2013 (Good). Team Fortress Classic’s release was also simultaneously timed to promote the Half-Life Software Development Kit (SDK)(Planet).
The Half-Life SDK was a collection of tools and applications used to help developers and modders create mods for games on Valve’s GoldSrc game engine that was the foundation of games like Half-Life. Customers that purchased a copy of Half-Life would get access to the Half-Life SDK. Newell hoped that customers of the game would make mods for the community and keep the game alive since they were gifted the ability to do so by Valve (Barett).
If Newell saw potential in a mod, he would help sell the mod and split all profits in half with the modder. If the modder wanted to self-publish their mod, they would have to pay a $200k licensing fee and additional royalties to Valve in order to have access to the Valve Half-Life SDK. By 2004, mods would account for 20% of all of Valve’s revenue (Barett).
The Counter-Strike Problem
In 2000, the first and most iconic of the mods to come out as a result of the release of the Half-Life SDK was Counter-Strike. Counter-Strike was a total-conversion mod (a mod that completely remade all the art assets and gameplay elements of the original game that was being modded). It was an online multiplayer first-person shooter that pitted a team of counter-terrorists against terrorists to complete various objectives. The game was developed by a college student from Vancouver and a teenager in New Jersey. The two of them had never met in person prior to the breakout success of Counter-Strike.
The mod was wildly successful with gamers and the rights for the game were later purchased by the Valve Corporation in 2000 (Barett). The two young developers were hired onto the Valve team to work on developing and maintaining the game. The game would then be re-released by Valve with the new developers on board, going on to sell over 25 million copies and spawn an entire franchise. In 2002, Counter-Strike became the most popular online game in the world (Makuch).
Stressed by the pressure of its immense success, Valve began to struggle to roll out regular updates to Counter-Strike. Updates were incredibly important especially for a game that had been developed with the culture of modding behind it. The game was constantly evolving and Valve needed a way to consistently deliver updates to the game. Updates would take several days long and would require Valve to shut their online services down for a couple of days in order to patch Counter-Strike. Users were also required to scour the internet in search of these updates after receiving the dreaded “Client and Server Version Mismatch” that would prevent them from playing online (Case).
There was also rampant cheating in Counter-Strike, with dozens of user-created cheats that would ruin the experiences for others during online matches. Valve had to come up with a solution, and a quick one too in order to prevent themselves from alienating their honest (and paying) player base.
Valve began preparing to create an online content delivery system that would streamline its update system by delivering updates to customers faster and dealing with cheaters for its online games. In 2002, Valve polled its user base and found that approximately 75% of its users had access to high-speed internet (Case). Dated technology was now no longer an infrastructural obstruction to the rollout of a new online content delivery system.
The Valve Corporation started work on its new creation, Steam.
The Early Years
In late 2003, Steam was released. It was the name given to a PC platform where Valve could deliver updates to its roster of games like Half-Life and Counter-Strike to its customers. To install and play games published by Valve, one would have to make the purchase for their game on the Valve website. That person who had made a purchase of the game would then be required to install Steam on their personal computer, whereby they would be able to access the game from the Steam client after logging in to their Steam account.
The Steam client solved a number of issues for Valve. By creating a singular platform for rolling out all updates, with a new auto-update feature that would keep all Valve games up to date constantly for their player base. This would improve upon the customer experience.
There was also a new Valve Anti-Cheat (VAC) system that rolled out as part of the Steam platform aimed at tackling the rampant cheating problem in Counter-Strike. It would detect a cheater by scanning the host computer system and looking for changes in the lines of code in the game. The information would then be sent to Valve servers where it would be cross-referenced with known cheats. If there was a new form of altered code that appeared, a Valve engineer would analyze the change to determine if it was a cheat, whereby they would then add it to the roster of known cheats. The VAC system would then place a ban on an associated Steam account and IP address of the computer that would range from a temporary amount of time to a permanent ban depending on the severity of the offense (Valve).
Steam was also unique because whilst most PC games and software had a required installation process, Steam’s automatic installations eliminated that need.
At this moment in time, Steam was essentially just a game updater and online server browser for Counter-Strike. It had no way to generate revenue and was a platform that existed solely to benefit the user experience of those that bought Valve games.
Half-Life 2
The highly anticipated Half-Life 2 was due for release in late 2004. Half-Life 2 had premiered at the E3 games and entertainment expo earlier in 2003 to much fan-fair and critical appraise. Valve servers were hacked, however delaying the release of the game, generating more controversy and buzz around the game.
One thing incredibly unique about Half-Life 2 was its method for distribution. Valve had two methods of distribution: firstly, they were going to release CD copies of the game in retail stores. The second method of distribution was through Steam itself. Half-Life 2 was especially important because even if a customer bought the game in retail stores, they would still have to register an account with Steam in order to play it. Upon release, the game dominated the main page of Steam. In its first two years of release, Half-Life 2 would go on to sell more than 4 million copies and become the catalyst for Steam's jumpstart into an online digital distribution platform (Kelly).
Steam Storefront Features
Steam’s rise as the ubiquitous location for all PC games was nothing short of meteoric. In 2005, Valve started selling games from third-party sellers on its Steam platform after seeing the potential for a lucrative business following the success of Half-Life 2’s rollout on Steam. The first two games, Ragdoll Kungfu and Darwinia signaled Steam’s shift from being just a game downloader and updater to an online store (Sayer, Tyler).
Enhanced User & Developer Experience
Over the next couple of years, Steam would develop numerous features to enhance the user experience as its roster of games expanded. Free demos for games, HD trailers, and videos on game pages became commonplace. By 2006, there were over 100 games on the Steam platform making discovering games more difficult. Additional features like critics scores, user scores, and filters to determine the top-selling games or trending games were developed for the Steam platform to help players make purchase decisions (Sayer, Tyler).
The Steam platform also became home to the Steam Community, which encompassed a community forum section and an online chat system all on the Steam platform. Friends lists and community groups for games were important aspects of the Steam Community that made it unique by building upon the communal and social aspects of the Steam store.
During this time, Steam also released Steam Cloud which allowed users to sync progress on their games across multiple devices. The flagship Steamworks system was also created for developers, which allowed them to view their game analytics (consumer interaction with their games, number of purchases, storefront impressions on their games) and utilize tools such as the VAC system to police their own gaming communities (Sayer, Tyler).
In late 2003, Steam was released. It was the name given to a PC platform where Valve could deliver updates to its roster of games like Half-Life and Counter-Strike to its customers. To install and play games published by Valve, one would have to make the purchase for their game on the Valve website. That person who had made a purchase of the game would then be required to install Steam on their personal computer, whereby they would be able to access the game from the Steam client after logging in to their Steam account.
The Steam client solved a number of issues for Valve. By creating a singular platform for rolling out all updates, with a new auto-update feature that would keep all Valve games up to date constantly for their player base. This would improve upon the customer experience.
There was also a new Valve Anti-Cheat (VAC) system that rolled out as part of the Steam platform aimed at tackling the rampant cheating problem in Counter-Strike. It would detect a cheater by scanning the host computer system and looking for changes in the lines of code in the game. The information would then be sent to Valve servers where it would be cross-referenced with known cheats. If there was a new form of altered code that appeared, a Valve engineer would analyze the change to determine if it was a cheat, whereby they would then add it to the roster of known cheats. The VAC system would then place a ban on an associated Steam account and IP address of the computer that would range from a temporary amount of time to a permanent ban depending on the severity of the offense (Valve).
Steam was also unique because whilst most PC games and software had a required installation process, Steam’s automatic installations eliminated that need.
At this moment in time, Steam was essentially just a game updater and online server browser for Counter-Strike. It had no way to generate revenue and was a platform that existed solely to benefit the user experience of those that bought Valve games.
Half-Life 2
The highly anticipated Half-Life 2 was due for release in late 2004. Half-Life 2 had premiered at the E3 games and entertainment expo earlier in 2003 to much fan-fair and critical appraise. Valve servers were hacked, however delaying the release of the game, generating more controversy and buzz around the game.
One thing incredibly unique about Half-Life 2 was its method for distribution. Valve had two methods of distribution: firstly, they were going to release CD copies of the game in retail stores. The second method of distribution was through Steam itself. Half-Life 2 was especially important because even if a customer bought the game in retail stores, they would still have to register an account with Steam in order to play it. Upon release, the game dominated the main page of Steam. In its first two years of release, Half-Life 2 would go on to sell more than 4 million copies and become the catalyst for Steam's jumpstart into an online digital distribution platform (Kelly).
Steam Storefront Features
Steam’s rise as the ubiquitous location for all PC games was nothing short of meteoric. In 2005, Valve started selling games from third-party sellers on its Steam platform after seeing the potential for a lucrative business following the success of Half-Life 2’s rollout on Steam. The first two games, Ragdoll Kungfu and Darwinia signaled Steam’s shift from being just a game downloader and updater to an online store (Sayer, Tyler).
Enhanced User & Developer Experience
Over the next couple of years, Steam would develop numerous features to enhance the user experience as its roster of games expanded. Free demos for games, HD trailers, and videos on game pages became commonplace. By 2006, there were over 100 games on the Steam platform making discovering games more difficult. Additional features like critics scores, user scores, and filters to determine the top-selling games or trending games were developed for the Steam platform to help players make purchase decisions (Sayer, Tyler).
The Steam platform also became home to the Steam Community, which encompassed a community forum section and an online chat system all on the Steam platform. Friends lists and community groups for games were important aspects of the Steam Community that made it unique by building upon the communal and social aspects of the Steam store.
During this time, Steam also released Steam Cloud which allowed users to sync progress on their games across multiple devices. The flagship Steamworks system was also created for developers, which allowed them to view their game analytics (consumer interaction with their games, number of purchases, storefront impressions on their games) and utilize tools such as the VAC system to police their own gaming communities (Sayer, Tyler).
Video Game Anti-Piracy
Steamworks rendered traditional Digital Rights Management (DRM) copyright protection systems obsolete for video games. The original, most common anti-piracy system used by developers was the SecuROM DRM. SecuROM was notorious for not being user-friendly and made it extremely difficult for people to play games as they would be required to connect to DRM servers every time they wanted to play any of the games they bought. One of the biggest culprits of the SecuROM problem was with the game Spore released by Electronic Arts (EA). The Spore SecuROM required the game to be re-authenticated every 10 days making it a nightmarish experience to own and play (Alexander).
Steamworks uses a system called Custom Executable Generation (CEG) in order to copyright protect its games. The CEG system creates a unique encrypted version of each user’s game that is decrypted every time a player logs in to their Steam account. This prevents the game file from being shared, copied, manipulated, or reverse engineered protecting the game from any malicious intent or misuse. Another key feature of CEG is that users don’t need to constantly re-authenticate their games. Once they sign into their Steam account, the games installed on their computer are automatically decrypted and remain so even if the user plays the game offline without the internet (Valve). This makes CEG far more user-friendly than the SecuROM system that required constant and often inconvenient internet connectivity.
Too Many Games!
By 2008, Steam implemented more features like the ‘New Releases’ tab in order to help consumers sift through the flood of games appearing onto the platform. Steam’s developer-friendly services made it an attractive place for third-party sellers to list their games on Steam and started a golden age for PC game development.
“The worst days [for game development] were the cartridge days for the NES. It was a huge risk – you had all this money tied up in silicon in a warehouse somewhere, and so you’d be conservative in the decisions you felt you could make, very conservative in the IPs you signed, your art direction would not change, and so on. Now it’s the opposite extreme: we can put something up on Steam, deliver it to people all around the world, make changes [through updates]. We can take more interesting risks[...] Retail doesn’t know how to deal with those games. On Steam [a digital distributor] there’s no shelf-space restriction” - Gabe Newell
The steam storefront had democratized video game development, giving developers a direct line to consumers that they never had before in retail. It made it possible for indie developers and modders to make and sell games when the concept of it was not feasible before because they simply didn’t have the physical infrastructure or connection with retail stores to sell their games (Strategy First). Selling games were too expensive and traditionally developers had only 36% retail margins (Barett). On the other hand, with Steam, developers would make 70% of what was sold on Steam, a staggeringly higher amount than that of traditional retail sales models (Orland). Furthermore, Steam had the added benefit of reaching a much larger global consumer base through the internet.
To help developers sell their games, and curate games for consumers, Steam pioneered the ‘Spotlight’ feature on its main page, a banner that developers could pay to advertise their specific games on. This banner system would reach Steam’s active user base of over 25 million in 2009 (Graft). By 2009, for “the fifth straight year the platform had realized over 100% year-over-year growth in unit sales" (Graft).
The year 2009 also saw the placement of the ‘Under $5 and Under $10’ sections that led many users to have entire lists of cheap games they would never play as a result of an impulse buy (Sayer, Tyler). Steam also started to list discounts for games in large highly visible green labels that denoted percentages in them, so it was easier for users to identify discounts within the storefront.
In 2014, Steam released the ‘Discovery Update’ that would allow consumers to find games based on the recommendations of friends and community curators. They could provide recommendations, rate games, and write more detailed reviews than before. Steam saw an 18% increase in all sales revenue as compared to prior to the update (Pearson). 3 million Steam users had found new games through the community curators. This boosted sales for individual developers too, where they saw a 5% boost in overall sales for their games in 2014 (Pearson).
Steam Today
As of 2019, Steam has over 1 billion registered accounts with 90 million active users and upwards of 14 million daily concurrent users – double the amount since 2015 (Shilov). As of 2017, Steam has had $4.3 billion in sales revenue that accounted for 14% of all gaming revenue (including consoles, mobile games, and VR games) (Shilov).
Steam is also poised to target global audiences. PC games are expected to dominate 25% of the international games market by the end of 2019 (WePC), and Steam is gearing up to match that. Its efforts to localize its international storefronts, by bolstering its language options and acceptance of more international payment methods, have seen a 15% increase in sales from the Asia region since 2015 (Soper).
Currently, Steam sits comfortably on top of the throne of the PC gaming world as the ubiquitous store for all PC games. But its domination of the industry is being challenged by a new contender. Following the roaring success of Fortnite after its release in 2017, developer Epic Games is countering Steam with its own store, the Epic Games store, and it is providing a more lucrative option for developers. Epic Games is working to curate a collection of games for its massive user base that already uses the Epic Games client (Frank). Fortnite has 250 million players as of 2019, and CEO Tim Sweeney hopes that the players will pivot from using the Epic Games platform to opening games on the Epic Game store, similar to Steam’s history with Counter-Strike and the Steam Storefront (Frank). The aim of the Epic Games store isn’t to compete as the ubiquitous store for all games, but rather to strike exclusive deals with AAA developers to make Epic Games the home of high-quality entertainment (Frank).
As mentioned previously, Epic Games is also working to be developer-friendly by offering to take only 12% of all revenue of game sales in contrast to Valve’s 30% cut from sales on its platform (Frank). Epic Games’ developer-friendly model is also challenging Apple and Google who traditionally take a 30% cut from all sales on their respective platforms (Shilov). In late 2018, Steam responded to this move by changing its revenue share model with developers. Steam would still take a 30% cut of all sales and transactions made for any game, but if the revenue for a game exceeded $10 million, Steam would only take 25% of the revenue share. If a game surpassed $50 million in sales, it would take a lower amount of only 20% of the revenue share (Orland). Steam still takes a larger cut of the revenue share as compared to Epic Games but one must note that the Epic Games Store is fairly new to the online gaming market industry; Steam still has a deeply entrenched audience and consumer community that uses its platform making it very difficult to be challenged.
Epic Games is also trying other methods to compete with Steam by offering discounts for developers who use its Software Development Kit known as the Unreal Engine (Soper). It is also offering two free games every week for new users who sign up for an Epic Games account to build their games libraries. One can only speculate this is done by Epic Games to match consumer Epic Games Store libraries to that of their Steam libraries.
The war for dominance over the online PC game market will wage on into the future. Will Steam continue to maintain its foothold in the gaming market? Or will other contenders like Epic Games get a larger byte? Only time will tell.
Steamworks rendered traditional Digital Rights Management (DRM) copyright protection systems obsolete for video games. The original, most common anti-piracy system used by developers was the SecuROM DRM. SecuROM was notorious for not being user-friendly and made it extremely difficult for people to play games as they would be required to connect to DRM servers every time they wanted to play any of the games they bought. One of the biggest culprits of the SecuROM problem was with the game Spore released by Electronic Arts (EA). The Spore SecuROM required the game to be re-authenticated every 10 days making it a nightmarish experience to own and play (Alexander).
Steamworks uses a system called Custom Executable Generation (CEG) in order to copyright protect its games. The CEG system creates a unique encrypted version of each user’s game that is decrypted every time a player logs in to their Steam account. This prevents the game file from being shared, copied, manipulated, or reverse engineered protecting the game from any malicious intent or misuse. Another key feature of CEG is that users don’t need to constantly re-authenticate their games. Once they sign into their Steam account, the games installed on their computer are automatically decrypted and remain so even if the user plays the game offline without the internet (Valve). This makes CEG far more user-friendly than the SecuROM system that required constant and often inconvenient internet connectivity.
Too Many Games!
By 2008, Steam implemented more features like the ‘New Releases’ tab in order to help consumers sift through the flood of games appearing onto the platform. Steam’s developer-friendly services made it an attractive place for third-party sellers to list their games on Steam and started a golden age for PC game development.
“The worst days [for game development] were the cartridge days for the NES. It was a huge risk – you had all this money tied up in silicon in a warehouse somewhere, and so you’d be conservative in the decisions you felt you could make, very conservative in the IPs you signed, your art direction would not change, and so on. Now it’s the opposite extreme: we can put something up on Steam, deliver it to people all around the world, make changes [through updates]. We can take more interesting risks[...] Retail doesn’t know how to deal with those games. On Steam [a digital distributor] there’s no shelf-space restriction” - Gabe Newell
The steam storefront had democratized video game development, giving developers a direct line to consumers that they never had before in retail. It made it possible for indie developers and modders to make and sell games when the concept of it was not feasible before because they simply didn’t have the physical infrastructure or connection with retail stores to sell their games (Strategy First). Selling games were too expensive and traditionally developers had only 36% retail margins (Barett). On the other hand, with Steam, developers would make 70% of what was sold on Steam, a staggeringly higher amount than that of traditional retail sales models (Orland). Furthermore, Steam had the added benefit of reaching a much larger global consumer base through the internet.
To help developers sell their games, and curate games for consumers, Steam pioneered the ‘Spotlight’ feature on its main page, a banner that developers could pay to advertise their specific games on. This banner system would reach Steam’s active user base of over 25 million in 2009 (Graft). By 2009, for “the fifth straight year the platform had realized over 100% year-over-year growth in unit sales" (Graft).
The year 2009 also saw the placement of the ‘Under $5 and Under $10’ sections that led many users to have entire lists of cheap games they would never play as a result of an impulse buy (Sayer, Tyler). Steam also started to list discounts for games in large highly visible green labels that denoted percentages in them, so it was easier for users to identify discounts within the storefront.
In 2014, Steam released the ‘Discovery Update’ that would allow consumers to find games based on the recommendations of friends and community curators. They could provide recommendations, rate games, and write more detailed reviews than before. Steam saw an 18% increase in all sales revenue as compared to prior to the update (Pearson). 3 million Steam users had found new games through the community curators. This boosted sales for individual developers too, where they saw a 5% boost in overall sales for their games in 2014 (Pearson).
Steam Today
As of 2019, Steam has over 1 billion registered accounts with 90 million active users and upwards of 14 million daily concurrent users – double the amount since 2015 (Shilov). As of 2017, Steam has had $4.3 billion in sales revenue that accounted for 14% of all gaming revenue (including consoles, mobile games, and VR games) (Shilov).
Steam is also poised to target global audiences. PC games are expected to dominate 25% of the international games market by the end of 2019 (WePC), and Steam is gearing up to match that. Its efforts to localize its international storefronts, by bolstering its language options and acceptance of more international payment methods, have seen a 15% increase in sales from the Asia region since 2015 (Soper).
Currently, Steam sits comfortably on top of the throne of the PC gaming world as the ubiquitous store for all PC games. But its domination of the industry is being challenged by a new contender. Following the roaring success of Fortnite after its release in 2017, developer Epic Games is countering Steam with its own store, the Epic Games store, and it is providing a more lucrative option for developers. Epic Games is working to curate a collection of games for its massive user base that already uses the Epic Games client (Frank). Fortnite has 250 million players as of 2019, and CEO Tim Sweeney hopes that the players will pivot from using the Epic Games platform to opening games on the Epic Game store, similar to Steam’s history with Counter-Strike and the Steam Storefront (Frank). The aim of the Epic Games store isn’t to compete as the ubiquitous store for all games, but rather to strike exclusive deals with AAA developers to make Epic Games the home of high-quality entertainment (Frank).
As mentioned previously, Epic Games is also working to be developer-friendly by offering to take only 12% of all revenue of game sales in contrast to Valve’s 30% cut from sales on its platform (Frank). Epic Games’ developer-friendly model is also challenging Apple and Google who traditionally take a 30% cut from all sales on their respective platforms (Shilov). In late 2018, Steam responded to this move by changing its revenue share model with developers. Steam would still take a 30% cut of all sales and transactions made for any game, but if the revenue for a game exceeded $10 million, Steam would only take 25% of the revenue share. If a game surpassed $50 million in sales, it would take a lower amount of only 20% of the revenue share (Orland). Steam still takes a larger cut of the revenue share as compared to Epic Games but one must note that the Epic Games Store is fairly new to the online gaming market industry; Steam still has a deeply entrenched audience and consumer community that uses its platform making it very difficult to be challenged.
Epic Games is also trying other methods to compete with Steam by offering discounts for developers who use its Software Development Kit known as the Unreal Engine (Soper). It is also offering two free games every week for new users who sign up for an Epic Games account to build their games libraries. One can only speculate this is done by Epic Games to match consumer Epic Games Store libraries to that of their Steam libraries.
The war for dominance over the online PC game market will wage on into the future. Will Steam continue to maintain its foothold in the gaming market? Or will other contenders like Epic Games get a larger byte? Only time will tell.
What's hilarious is that when I was an undergrad trying to play Half-life 2, I was pissed off I needed a Steam account. 20 years later, we are here, and I'm pissed off if a game isn't on Steam. 