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26 July 2012

Valve panics as Windows 8 prepares to drink Steam’s milkshake

Platform owners gear up to leverage their power.

By Alex Hern

Gabe Newell, the auteur head of Valve, has threatened to move his company’s digital distribution platform, Steam, to Linux in response to the locked-down nature of Windows 8. Newell called the new release “a catastrophe for everyone in the PC space”, which would lead to several hardware manufacturers leaving the market.

Ars Technica’s Peter Bright reports:

He attributed Valve’s success to the PC’s open nature, saying that the company “wouldn’t exist” without either the PC or “the openness of the platform.” That openness is under threat, though. Newell argues that there is a “strong temptation” to close the platform, because the platform’s developers “look at what they can accomplish when they limit the competitors’ access to the platform, and they say ‘That’s really exciting.'”

But it’s not just the “locked down” nature of the platform that scares Newell. His real concern is what Microsoft is doing with Xbox Live integration. If you download a game from the Windows 8 app store – and only from the Windows 8 app store – you get achievements, access to your friend list, and other perks that come with Microsoft’s online gaming service. Steam, Valve’s own app store and a tidy little earner, may find it difficult to compete. A similar squeeze is happening on the Mac, where Apple’s App Store has, from yesterday, integration with their Game Centre service.

The threat to move to Linux also has a side-benefit for Valve. Their Linux client, like much on the platform, is community-developed. Dangling the carrot of more games being made available is likely to motivate that community to put extra effort into the project, and that effort will both improve the Linux client and, far more importantly, improve the Mac OS X client, which runs on the same architecture.

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The problem facing Valve is similar to that facing Netflix: they are a middleman in a world which is fast doing away with them. Matt Yglesias details the problems faced by the movie streaming service:

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My wife are streaming-only Netflix customers and we love it and use it all the time. But the reason we use it is that it has a lot of content that we like. But it’s really not clear why this should be the case. Apple makes the box we use to facilitate streaming video, Comcast owns the pipes along which the video streams, and various production companies own the copyrights to the content we stream. Netflix has basically no leverage point in this battle. Right now it has the rights to a fair amount of content that I want to watch, but I see no reason for confidence that they’ll be able to continue securing those rights in the long term.

Valve isn’t in quite such a pickle. They are still an extremely popular developer, and while Steam is required for Team Fortress 2 and CounterStrike: Source, it will remain installed on a large number of gaming PCs. But the idea that, in the long term, it will carry on selling games from competing publishers seems unlikely. The two end games seem to be publisher-level fragmentation, or platform-level monopolisation.