[This blog entry has been mirrored and featured over at Gamasutra expert blogs and with more comments from industry folks]
A few days ago, it was widely reported that several Electronic Software Distribution (a.k.a. online distribution) vendors such a IGN’s Direct2Drive (owned by Fox – a News Corp entity), Gamers Gate (owned by Paradox Interactive, a software publisher) and Impulse (owned by Stardock, a software publisher) announced that they were not going to carry Infinity Ward’s latest blockbluster game, Call Of Duty – Modern Warfare 2 (a.k.a. MW2) – a title that is being published by the studio owner, Activision.
If you are reading this and don’t know why these events are very important to the industry, let me bring you up to speed. This is a very long read and is not recommended for those of you with a limited attention span.
A CRASH COURSE INTRO
MW2 is one of the most anticipated holiday titles since Halo 3 and is on track to break all kinds of records. In fact, according to an article in USA Today, it has already broken pre-order records at retailer GameStop.
For all intent and purposes, this game – unlike Halo 3 which was an XBox 360 exclusive – is going to be a sales juggernaut this Thanksgiving and Christmas season for anyone selling it. That includes traditional retailers (e.g. Best Buy) as well as ESD sites (e.g. Direct2Drive).
The game releases on Nov 10th and some retailers actually have midnight opening shindigs.
So what is this furor over Valve’s Steam service? Well, to fully understand the implications, you need a primer on how ESD actually works, who the top players are and what the frak is really going on behind the scenes.
THE TOP ESD PLAYERS
According to CB Estimates from mid-2009, the top ESD sites are rated as follows:
- Valve’s Steam (40%)
- Metaboli / GameTap (+15%) *
- Digital River (12%) *
- Real Networks Trymedia (+9%) *
- IGN’s Direct2Drive (9%)
- GamesGate (3.5%)
- Everyone else (Stardock’s Impulse, Boonty/Nexway, GameStreamers, Ztorm, Gamesload etc): 11.5% *
* These have White Label partners (e.g. GameStop, Yahoo! Games etc) who they provide games for. The way this works is that aggregator (e.g. Real Networks, Game Streamer etc) acquires the games, then makes them available to a site’s storefront – usually powered by the aggregator’s backend services. So if Real Networks signs a game, that game will automatically appear on GameStop’s website for purchase. The “per unit” sale of each game is split between the publisher/developer, aggregator and the site selling it. The downside is that the developer/publisher makes less royalties per unit, but that in some cases can be offset due to the vast number of sites carrying the game. This is similar to how Digital River and other large sites handle affliliate sites that sell digital goods licensed by Digital River. Real Networks is currently the largest “game specific” network – with over 700+ affiliate sites selling games they source.
Steam, the current #1 ESD site has in excess of twenty MEEELION!! subscribers. Others – most of which were in business long before Steam was even an idea at Valve – are trailing Steam. By a rather large margin. A margin that is just getting wider as Steam continues to be the #1 ESD sales target.
How did that happen? Well thats the rather astonishing part. Most of it can be found on the Wikipedia Steam page. The short version goes like this.
Apparently the brain trust at Valve, sometime before 2002 “Valve Time”, decided to hatch this hare brain scheme that would revolutionize (!) online game content delivery. Of course everyone thought that they were, well, quite mad. Then again, if you’ve actually followed Valve’s games, history or industry shenanigans, you’d be hard pressed to think that anyone over there was actually sane. To wit: Chet Faliszek of Old Man Murray fame, got a job working there. The phrase hilarity ensues should probably spring to mind right about now. Anyway, you get the picture.
Valve decided to use its own highly popular games to push Steam – which at the time was, again, just a content delivery system.
Over the years Steam evolved from a mere content delivery system to, well, a full fledged store front that not only sells Valve’s own games, but also handpicked (by the Valve brain trust) games from other publishers and developers alike.
For the most part, Valve – through Steam – empowered developers, great and small to reach a larger audience and in most cases, help them completely sever the ties to “leech like” publishers. Many a success story has come out of Steam and apart from the much loved Valve itself, you’d be hard pressed to not like working with them, let alone not play their games.
All this came to a head at a time when PC gaming was going through its largest decline in the history of the industry, publishers and developers folding left and right, retailers pulling every trick in the [strong arming] book to make the barrier of entry for smaller players not even worth it etc. In other words, retail was becoming a bust for all but the top players with more money to burn on marketing a game than on the game’s own development. So the harder it got for developers and publishers to get their game out at retail, the faster the adoption of ESD (on both consoles and the PC) took off.
The story of Valve’s entry into the fray would be quite boring if it ended there. Oh no, it didn’t just end with digital distribution content delivery and a fancy store front – that would be too easy.
Enter the finishing touch, SteamWorks – a full blown suite of technologies that helps developers (most of whom found themselves being publishers with the dawn of ESD) and publishers to not only bring games to Steam but also tailor them specifically for the platform and its community using a variety of FREE technologies.
If you’ve been in the industry for as long as I have, you’d be right in thinking that GameSpy (owned by IGN) does the same thing. As does Microsoft’s Games For Windows Live initiative. The thing to remember here is that GameSpy comprises of mostly bloated legacy technology – hated by almost any gamer you happen to mention it too. Games For Windows Live (not to be confused with Games For Windows branding!) on the other hand, apart from being the most reviled (seriously, it took the crown from Vista OS) piece of tech ever to be unleashed on gamers, is well, for the most part – just pure rubbish in comparison to either of those two.
What happens when you bundle a mature content delivery app such as Steam with a highly anticipated game sequel such as Half-Life 2? What drives the usage and adoption of that app? If you said the game’s install numbers, you’d be correct. The idea here is that if Valve has sold (which it probably has) thirty million copies of its games – which you cannot install or play without their Steam client app – you’d have thirty million gamers now using Steam.
And that is how Valve seeded Steam. Using their own highly popular games. And totally blindsided every other ESD site on the planet. Seemingly overnight. See how GameStop is now frantically rushing to get on the ESD bandwagon due to the days of retail games sales being numbered, due to ESD? Its like that now in the ESD world.
And if you’re thinking Microsoft and that Internet Explorer bundled with the OS furor, well, so is every other ESD vendor. Which brings me to how this whole ESD thing works.
HOW ESD WORKS
The basic principle is quite simple. You have goods – in this case a game that you want to sell online via ESD. You can either sell it direct from your own website or through other websites, thus tapping into their install base, popularity etc. Simple straightforward stuff.
Oh, and forget about getting it into retail. For reasons that would take up a whole other blog post, I’d rather not get into that discussion.
Anyway, as with all things digital, you have to think of protection for your game using various forms of DRM. Most of the leading sites only support a few DRM schemes. These range from Sony’s much maligned SecuROM, to simple fares like Software Passport/Armadillo.
On the big sites such as Direct2Drive, Gamers Gate, Real Networks (with its 700+ White Label partner sites), Metaboli/GameTap, GameStreamer etc – you have a choice of which DRM scheme to use – if any. The most popular being SecuROM. These ESD vendors all have licensed (from Sony DADC, Starforce etc) backend which allows them to authenticate and generate serial numbers. They pay a per unit royalty to Sony, Starforce etc. Those fees are reconciled into each copy of the game that they sell. So if you have a $19.99 game on an ESD site and you get for example a 50% royalty cut per unit, you get $9.99 for each copy they sell. The cost of DRM – if any – is factored into their cut and you don’t pay anything extra.
This works the same way on Steam and Impulse, but with some variations.
On Impulse – which is like Steam without all the kewl SteamWorks stuff – extra work has to be done in order to have your game sold through them. The reason being that the work goes beyond just doing a DRM implementation. You have to “wrap” the game around API that makes it possible for the game to be bought, sold, patched, tracked and played on those networks. This API is provided by these two vendors – free of charge.
ALL developers and publishers who want their games on ESD vendor sites, HAVE to adhere to the standards set by those vendors or they can’t (or won’t) carry your game. For example, you can’t insist on using SecuRom on a publisher site that does not support it. You have to use what they support or your game won’t be sold there. This is no different from Walmart telling you that it won’t take your game if it has a non-standard box, is rated AO etc. So you have to be in compliance or they won’t sell your game. Of course nothing is stopping you from selling it yourself and from your own site – but thats not the point here.
Basically if your game uses SecuROM, you can sell it on any ESD site that supports SecuROM. If the site does not support SecuROM – but you have your own Sony DADC activation server – you can still sell your game, and to any vendor willing to carry it. Having a DRM activation server (in the case of online activation DRM) is the key here.
STEAM – THE ESD VENDOR’S QUAGMIRE
With Steam, the API wrapper is tightly integrated into their Steam delivery client in order to provide the ability to buy and sell the game from within Steam, as well as to deliver, auto-patch it, track sales etc. As with all other sites, you do not have to use Valve’s own DRM, called SteamWorks CEG. So you can still have a SecuROM (or any DRM scheme) wrapped game sold on Steam.
Steam wrapped games (with or without third party DRM) can be sold at any ESD site and even on retail discs. What makes this possible is that Valve generates the serial numbers for the product, then gives it to the developer/publisher who then hands it over to the ESD site operator who adds it to their server backend so that each purchase is given a unique key. This is how come you see some Steam wrapped games (e.g. Dawn Of War 2, Fear 2 etc) on Direct2Drive. When the game is installed, the Steam client downloads it and asks for the key. In this case, the authentication is done by Steam servers.
Unlike Steam wrapped games, you cannot sell any other DRM enabled game to other sites in this manner because they would have to setup their own authentication servers (e.g. SecuROM) or rely on a third-party (in this case the DRM developers) for authentication. Steam just makes it easy and seamless. Valve handles the authentication and auto-patching automatically. All you have to do is wrap and deliver the game. Done.
So for baseline Steam wrapped games, you only have delivery, authentication and auto-patching.
But it goes even further than that. Since Steam has a full image of the game on their servers, if you wanted to sell the game direct (e.g. on yours or a partner’s website), all you have to do is give out the Steam keys. The end user then fires up the Steam client, enters the key and downloads the game. Directly from Valve. In fact, thats how we sell Steam versions of our games through BMT Micro (our store frontend) and Digital River. If you have Steam installed, it is a no-brainer. If you don’t, you have a link (in the sale confirmation email) showing you where to download the Steam client from. You install, enter key, download game. Play it.
But here is the kicker. With Steam, in the form of their SteamWorks tech suite, you the developer gets so much more stuff – FOR FREE. Plus not only is it all trivial to implement, the royalties that Valve doles out to Steam publishers is on par with what these other ESD sites give out. And those other sites have no added value service whatsover – unlike Valve which gives you all this stuff and everything you need to be successful on the platform.
Steam is huge and continues to grow in leaps and bounds.
If the publishers want to have their games on most ESD sites, they can do builds specific to those sites. For example if you wanted to sell a SecuROM game, your ESD sites choices are numerous. But what if you were to sell on sites that have various DRM requirements? Here is an example of how that picture would look like using the most common DRM schemes at each site:
Direct2Drive – SecuROM
Gamers Gate – SecuROM
Real Networks – SafeDisc
GameStreamer – SecuROM
MetaBoli – GameShield
GameTap – Exent
Yummy – GameShield
Digital River – Armadillo
Impulse – Impulse (or whatever they’re calling it)
Steam – SteamWorks CEG
As you can see, at any give moment in time, you would be looking at a different DRM scheme or API “wrapper” at all the ESD sites. And thats not even taking into account other ESD sites such as PlayFirst, Boonty / Nexway, AWOMO, WildTangent Orb etc – all of which have their own DRM (if any) scheme or API required for games to be “wrapped” for their individual networks.
Then you have to take into account the various (SecuROM, Starforce, Tages, GameShield, ByteShield, Armadillo, Software Passport etc) DRM schemes which most sites support. Even if you don’t want your game to use DRM, you still have to deal with the API wrappers in most cases. e.g. Steam, Yummy, Metaboli, GameTap etc.
Plus, even when SecuROM is the common denominator (most of the sites in the list above now support SecuROM), you still have to do a separate installer package for ALL the SecuROM enabled sites. Why? Because there is a unique SecuROM DLL that the game is required to load in order to provide sales and tracking for the game. So you have a game on five (Direct2Drive, Real Networks, Digital River, GameStreamer, Steam) SecuROM enabled sites, you’re looking at a total of five different installation packages. All of which have to be individually tested.
Yes, for the most part not only is it a mess but it is also a tech support nightmare. Have a patch to release? Great. Now you have to do multiple versions of that patch for all the different networks that have your game. Found a DRM breach (e.g. SecuROM games are notoriously easy to crack if the protection is not done at source level) and want to release a new build? Well thats a new build and thus version number. Which means – yes – you once again have to release multiple versions or things like multiplayer (which usually require version checks so that all clients are using the same version) will cease to work.
Obviously there is more value in a single solution (e.g. Steam) than in multiple solutions – but you still have to be in compliance with the ESD site. This is no different from for example, Best Buy having the exclusive on a game like Crime Craft. That can be either because Best Buy gave out concessions to have the game exclusively or because other retailers didn’t want to carry it.
So if you go solo and pick one single solution (e.g. Steam, SecuROM or whatever), there is a chance that you have pretty much limited the places where your game can be sold. So why are more and more developers (publishers – by their very nature are greedy bastards, so they’re not likely to go this route) choosing Steam as a solo platform? Well, if you read and understood everything I posted above, the reason is crystal clear.
If Steam were not such an ESD juggernaut and with all these tools made available to developers, who in their right minds would bother going Steam solo? Have you seen how much of a mess XBLA or *shudder* XBCG is? Remember when everyone and their dog was claiming how its going to be easy to get games on there, how it would open doors for everyone and such? Well that – in usual Microsoft fashion – turned out to be pure crap. So most sensible developers ended up staying on the PC, with the exception of a few brave souls who actually bet on XBLA/XBLG – and probably lost. And staying on the PC meant finding the path of least resistance for getting your game out. The same path that iPhone developers opted to choose and have now seen that getting on a popular platform doesn’t guarantee you anything.
For most developers the path of least resistance – and with more perks than you can shake a stick at – is Steam. If you can get in. In time, publishers started joining in even though they were all wary of Valve’s Steam initiative.
THE ESD PUBLISHING FUROR OVER STEAM
Which brings us to this furor over MW2 – a game that as of this writing – exclusively uses Valve’s Steam client for distribution. They decided to go solo with Steam.
When you consider that a publisher (e.g. Activision) is looking to distribute such a highly anticipated game using a single ESD method, it is bound to raise some flags. Why is why these three – all Valve competitors – are up in arms.
In my less-than-humble opinion, the concern is patently unfounded. Here’s why.
Regardless of what the delivery method is, when an ESD site sells a Steam wrapped game, that sale goes to the ESD site – not to Valve. So even if Direct2Drive were to sell MW2, they would get the sale, but Valve gets to pick up the resources and costs of activation, auto-patching – all the pre/post-release hassles etc. This of course is the Status Quo and didn’t cause a furor until now. But why now?
Well because apparently these ESD sites – seeing how major MW2 is looking to be this season – are thinking that the sheer volume of sales that it is going to generate will no doubt create additional Steam client users for Valve, thereby increasing Valve’s already massive Steam client install base.
Steam has in excess of twenty MEEELION!!! Steam client users. By those numbers (even if it were half that), my guess is that almost every living core gamer already has at least one Steam game installed – and so already has the Steam client on their machine. A game like MW2 is not going to turn a casual gamer – who owns no Steam enabled games – into a gun totting lunatic running around with weapons of mass destruction. It is a hard core game. Most hard core gamers already have a Steam game – and most likely a Valve game. So it is highly unlikely that MW2 is going to increase the Steam client install numbers by much, let alone cause a dent worth worrying about.
So what exactly do Direct2Drive, Gamers Gate and Impulse gain with this MW2 boycott? As much as these lads did with their boycott of Valve’s upcoming game. In a word: nothing. They gain absolutely nothing – except maybe some good, bad or ugly PR.
Oh as for those lads boycotting LD42? Well, considering that the pre-orders for the new Valve game are said to be double that of the original game (which was HUGE), I’d say they helped the game.
So anyway, even with L4D2 coming out, the issue of additional Steam client installs is also moot because that game – maybe not as big as MW2 – will also play a part in gaining some additional Steam clients. Both MW2 (Nov 10th) and L4D2 (Nov 17th) are coming out around the same time.
STEAM – MUCH ADO ABOUT SOMETHING
What these three ESD sites are saying is basically that either Steam is well on its way to being a monopoly or they’ve finally come to realize that they simply cannot compete with what Valve has to offer.
Both of the above are silly and ludicrous of course.
To play the “M” card – if successful – would mean that Valve would have to detach the store front from the Steam client. Or worse, spin off Steam as a separate company from Valve. History suggests that neither would achieve anything other than lining the pockets of the attorneys involved.
IGN already owns GameSpy – a competing framework of technologies that are in direct competition to most of the SteamWorks subset. Why can’t they wrap their Direct2Drive store around it?
Stardock’s Impulse (which pales in comparison to Steam) pretty much has a store wrapped around its own delivery client.
Gamers Gate – the other protester – has no such tech and only runs a store front, much like all the other players.
Here’s the funny thing, ALL of the sites above – including others such as Digital River, already have a content delivery app (a.k.a. downloader) that serves the game. Gamers Gate used to have their own, but recently stopped using it – for whatever reason. All Valve did was make their content delivery more robust, seamless and easy for the end-user by linking the store backend to it.
So instead of innovating and/or coming up with their answer to Steam, they’d rather cry foul and lose even MORE money by no longer carrying Steam wrapped games?
Innovate, don’t aggravate. See what I did there?
From my perspective, the only concern that I have about Steam is that Valve gets to choose which games go on there. When you have situations like this MW2 thing happen, small devs like us can’t even pull a stunt like that because if we do – thus alienating our other ESD partners – there is a chance that they won’t carry our games. And if Valve passes on publishing our games, we’re farked on that platform. Thats the real concern that I see here regarding Steam.
For example, to have a game on most ESD sites – all I have to do is contact my a/c manager, give them the details, we discuss the royalty splits, sign a contract [amendment] etc. The game goes up when ready.
With Valve, they are more of a traditional publisher in that they get to pick and choose which games they want on Steam and which they think would do well with their subscribers.
Is this wrong? To be honest, I’m not so sure.
I personally ran into this issue a few months back because apparently Valve doesn’t feel that space games do well on Steam. Its their service and I trust that they know it better than I do. So I left it at that. After all, my space games are sold everywhere else – so if someone wants those games bad enough, they know where to go. They don’t have to be on Steam to be sold nor to be successful. I should know because my space games (all twelve of them) were being sold long before we even got on Steam with our two recent non-space games this past August.
On Steam – despite their massive install base – you’re only as successful as your game. Just because the game is on Steam doesn’t guarantee sucess. Its not like we’re comparing Walmart to Best Buy which, in those two instances, takes volume into account. With ESD, you don’t have that luxury due to the type of goods being sold.
After all you either want 1000 games on Steam, with 50% crap or you want 500 games on there with 10% crap. Valve still has to foot the bill of those crap games and they don’t ask you the publisher for anything in return.
Unlike retail publishers who can pull non-performing products from the shelf, throw them in the bargin bin, return them to the publisher etc – while issuing chargebacks to the publisher – you can’t do any of that with ESD games. So once your game is on there, thats it. The distributors (e.g. Valve) has to hope that good, bad or ugly, the game sells enough for it to a) pay for the resources it is using up b) pay Valve for hosting it
And with Steam, you get world class tools, real-time reporting, an amazing publisher support staff etc. Apart from competent support staff (I can only speak for the services that sell my games) at these other ESD sites, you get more – in terms of publishing tools and such – by going with Steam. It is a one stop shop. And thats why it is powerful and popular all at once.
Think about this for a minute. Paradox Interactive. a publisher that also owns Gamers Gate, has its own games at all the competing sites – including Steam. Same with the likes of EA, Atari, Activision etc – all of which even have their own ESD delivery store fronts. Guess why that is.
THE DEVIL’S ADVOCATE
This move on the part of these three ESD sites makes no sense whatsover and it is a rather foolish move I think. All they’ve done is give Valve an exclusive to a highly anticipated game. So instead of hurting Valve in the pocket by selling the game and taking some revenue away from Valve, they decide to throw the baby out with the bath water and just give Valve most of the ESD sales revenue for MW2. Brilliant plan guys – I for one can’t wait to see what happens when the dust settles.
My guess is that between now and Nov 10th, someone is going to blink. I’m guessing it won’t be Activision. Plus I don’t think Bobby even has eyelids that move.
But never mind all that, ponder this if you will….
What if Valve were to suddenly stop selling all games that use IGN’s GameSpy technology – which competes with some components of Valve’s own SteamWorks suite – and also pulls those [GameSpy enabled] games from its store?
What if Valve made it mandatory for all games sold on Steam to use its own proprietary suite of SteamWorks technologies – including its own DRM scheme, then what?
The end result would be that you couldn’t sell any game on Steam that didn’t use Valve’s own tech. For example no SecuROM games, you have to use SteamWorks CEG or no DRM. No GameSpy networking, server browser, transport layer etc – has to be SteamWorks own versions. And so on.
And what if Valve decides that it won’t sell any game that is offered for sale on Direct2Drive, Gamers Gate or Impulse? Yes, its possible – as thats what exclusives are about. Ever wondered what is going on behind the scenes between XBox 360 and PS3 console publishers when it comes to exclusivity on those platforms? It could end up like that. Which is why you won’t be playing the excellent Uncharted 2 on XBox 360, let alone Halo 3 on the PS3.
Yes, all of the above would be a very nasty picture. Being the [current] ESD leader, they can come up with any rules as they see fit. But as history has shown, Valve is not that kind (they’re all mad over there, remember?) of company. This is not any of those “big boys” (no, I’m not naming names) voted most likely to abuse the system if given half the chance.
Let me throw the last one in there. Have you seen ANY of Stardock’s own published games for sale anywhere other than at retail or on their own Impulse ESD site? Nope. Why? The same reason that you won’t see any of Valve’s own games anywhere but at retail or on their own Steam ESD site. See where this is going?
And as they say, becareful what you wish for. What if Valve decides to spawn off Steam and they go in one or many of the aforementioned direction thereafter, then what?
As much as I love working with all my ESD partners and have no problems with them or any bad (except that some of them – apart from Valve – tend to either pay royalties late or when they bloody well feel like it) experiences thus far, this whole thing is foolish, misguided and without merit. It is the sort of thing that gets people Pink slips and sleepless nights. If any of these three “protesters” were publicly held companies (incidentally IGN is owned by Fox which is part of News Corp) they’d have to think long and hard to have to pull a stunt like this. It is the sort of thing – now more than ever – that has all the makings of a flatlined stock price.
We developers LOVE cool toys. Especially when they’re free! You want to compete with Steam? Build better toys, give them to us. And oh, while you’re at it, pay us on time. Please?
At the end of the day, stuff like this [boycott] is bad for the biz and bad for gamers; and can only lead to other problems down the road.
Disclaimer: My games on all ESD sites, use different DRM schemes – and so, no Steam. Only our games sold on Steam and through our own web store (powered by BMT Micro and Digital River – who don’t care either way – as well as the upcoming retail releases) use the Steam version. I’m not stupid. 🙂
Rev 1: It must be mentioned that Gamers Gate apparently does not carry Steam enabled or Activision games (thats up to the publisher as to who they want to carry their games) and no official word of this “MW2 exclusively Steam enabled” specific boycott currently exists. I have sent an email to the Paradox/Gamers Gate CEO (a good industry friend of mine) for clarification and will update when I hear back.