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Steam: The Friendly Monopoly?

When discussing the current gaming climate for the online PC market, the word monopoly is tossed around a lot, and in most cases you’ll hear Steam follow suit.  Discussions surrounding the topic usually focus on the presence of the monopoly rather than how the monopoly came to be, especially when it comes to examining Steam’s place in the gaming market.  A monopoly by definition is the exclusive possession or control of the supply or trade in a commodity or service.  Valve by no means holds exclusive possession of the online PC market, but it certainly holds a hefty presence in terms of sales.  On average, the number of concurrent Steam users per day is 3-4 million; by these statistics we can determine Valve is the market leader, but for the sake of brevity I’m going use the term monopoly.  As I progress through the article I hope your initial impression of the word will change, especially when it comes to understanding Steam’s place in the gaming world.

In the words of Lawrence Lessig:

Before the monopoly should be permitted, there must be reason to believe it will do some good – for society, and not just for monopoly holders.

So is Steam good for the gaming world?  I’m somewhat iffy on the answer to the question.  After all, how did Steam reach its position as market leader?  It found its place through customer loyalty, distribution coverage, image, pricing, profit, and promotional spending. Yet it also grounded itself through the consumers loyalty to the very platform the store is based.  To put it simply, as Steam remains loyal to the customer, the customer is more inclined to stay loyal to Steam.  With time, a growing library and reassurance of good service, the customer holds a fervent loyalty to the platform which houses all their entertainment in an easily accessible manner.  Eventually we reach a stage where some customers will deny other services and products unless it commits to the central hub of entertainment which the customer has become so accustomed to.

This phenomenon fascinates me in that the supplier/hub now holds an inherent value which adds weight to a customer’s decision of purchase.  When a PC community sees a product, we sometimes hear the powerful and equally terrifying term “No Steam, no buy”.  Powerful in that it demands a quality of service the customer needs in order to buy the product, terrifying in that it shuns smaller competitors who offer the same product with equal if not better service.  Take for example the PC release of Dark Souls.  When hinting a possible PC version there was a resounding “yes” from the community.  When revealed it would require GFWL, there was an uproar of tremendous proportions over the platform rather than the actual product itself.  While I agree with the community in this instance, it shows that a quality of service has been set and made mandatory, one which Valve continually improved on and Microsoft ignored (an ignorance they certainly regret today).  This set bar benefits all customers and will always benefit the same company who implemented it.  We the customer gain from it, but could the bar be higher?

To my earlier point pertaining to competitors offering equal if not better service, let’s take GOG for example.  GOG’s products are arguably better, as without DRM you hold full ownership of the downloaded product without the need to stay online compared to Steam’s quasi offline mode (or rather online-then-offline mode).  While offering the same product DRM free, a customer used to Steam (not all, I should add) will disregard GOG’s product based on its lack of Steamworks, even though they could still add it to their library.  The seasonal sales back the Steam user in this decision, offering the same title at the same if not a lower cost, promising the same title will eventually be added to the hub of entertainment.  It’s an effect which in due course traps the customer in a stasis of acceptable service when better service is available; we’re likely to see this change with time, however.  Last week, when CD Projekt RED announced they’d be expanding their GOG catalogue, I saw the start of a real competitor to Steam; their one major flaw being their loyalty to old titles.  Should they incorporate newer games, I believe they could be a force to be reckoned with, but against the monolith which is Steam I don’t see that happening too soon.  Valve is the ultimate first come-first served, and now everyone wants a piece of the pie. It’s the customer who put Valve in this position for their virtue as a private-company bent on pleasing, rather than a money hungry board of directors bent on using the consumer.

So we’ve had a look at the consumer, but what about the developer?  I’ve talked to many a developer, and many agree that Steam is one of the better places to publish your game.  Though details vary, Steam charges developers around 30%-40% of the profit made on a game, but this rate is unique for each game published on the platform.  It also aids new IPs in the gaming world by providing an easy route for indie developers to release their product.  With an understandably low-budget, Steam offers an escape from the terrible percentage takes of other publishers such as XBLA.  An astounding example of this can be seen with the indie title “Cthulhu Saves The World”.  Shortly after releasing their title on Steam, Zeboyd Games announced “Cthulhu Saves The World” made more money in six days on Steam compared to what the Xbox version made in a year.  This easy route, while giving us great titles, has subjected the PC community to some god awful games made by developers looking for an easy buck.  Take “Revelations 2012” for example, a game with no redeemable features.  How Revelations met the criteria and quality to get into the Steam store is a mystery, and a sad one at that when far better indie games are refused publishing for the same position.

Do not click this image, for your own sake
Back to the main question I’ve put forward, is Steam good for the gaming world?  Yes.  Could it be better? Yes.  It’s good for the gaming world as it’s found a position (monopoly or not) which doesn’t require bullying your competitors.  Instead, its foundation is built on pleasing the customer who in turn won’t abandon them for a better alternative.  Though my earlier point still stands, should Valve decide to significantly lower the quality of their service, their large user base will shift to a better service.  For this very reason we’re seeing a lot of “friendly monopoly” companies like Google.  Either they adhere to the expected standard or we leave. It’s not that “Steam is a monopoly and monopolies are always bad for customers”; it’s “Steam is the market leader by keeping customer satisfaction high via ease-of-use and low prices”.  We put Steam on this pedestal of power for a reason, and should it start to neglect us we can just as easily usurp their place with another platform who will arise to the occasion.

 23 thoughts on “Steam: The Friendly Monopoly?
  1. it’s not a mystery how Revelations 2012 got onto steam, it used the Source Engine. doesn’t Valve get licensing fees from the game? of course they’d be encouraged to sell it.

    • Dimitri on said:

      the source engine is totally free to use, and they made the source code open to the public long ago. there are no fees, wavers, or contracts involved, you literally just download the engine and dev tools they use to make their games off the website. they even have a support service for devs using it.

  2. Marcus Puckett on said:

    God I hope GoG can get up to a level where they are competing with Steam. It’s unlikely that they will ever get newer games, however, because of their anti-DRM policies.

  3. MonkeyShines on said:

    There is no friendly monopoly, and if you knew anything about the free market you’d know this. Why is this site full of valvedrones?

  4. Lawrence Davis on said:

    Steam isn’t even a monopoly. A monopoly needs to control production. They don’t have a say in every game that gets put on Steam.

    • This. Developers choose to come to Steam. Competition could easily exist if another company with the resources to create a service as good or better than Valve’s decided to. Good Old Games is actually better than Steam in a lot of ways, but they don’t have the catalog to go after the same market. Give that a few years and that could definitely change though.

      • Alexandru Crudu on said:

        It could be argued that Steam holds the distribution monopoly. Just ask any comic book shop owner how they feel about Diamond Comic Distribution and the.
        I’m not saying that Valve will ever turn into EA, mostly because they’re not under the pressures of being a publicly traded company, but I think, even in the digital market, competition is key. And in a few years, 5 maybe 6(I’m hoping for less), GoG might be Steam’s number one competitor. Mainly because EA isn’t trying with Origin and, really, who cares about GFWL?

        • Lawrence Davis on said:

          Again, there is no actual “monopoly” by any correct definition of the term. Valve does not control production of any games other than their own. The reason why so many people continue to purchase games on Steam is because Valve actually got people to like Steam. These are all the games where you actually need a Steam account to play them.

          http://en.wikipedia.org/wiki/List_of_games_using_Steam_authentication

        • Frankly, Origin is in many ways better than Steam. For all of EAs evils, they at least employ a handful of customer service techs. I’ve never had an Origin problem extend beyond 24-48 hours, a very reasonable time frame in this context. Steams ultimate offense is that it plays the numbers on hacks. It figures the number of people it will screw are significantly lower than the number it will please. This is their only calculus. But if you are in that minority, you have the potential to enter an unpleasant hell.

    • As I said in the article, “Valve by no means holds exclusive possession of the online PC market, but it certainly holds a hefty presence in terms of sales.”
      Steam isn’t a monopoly, more of a de facto behemoth by which many competitors and games revolve around the service.

      • Orson on said:

        Well, it’s a little confusing or misleading to refer to them as a monopoly a couple of times and then clarify that it’s not a monopoly and then call them a monopoly again, especially when you’re using lines like “…should Valve decide to significantly lower the quality of their service, their large user base will shift to a better service.” which is exactly the direct result of competition, while the lack of competition is what defines a monopoly. So a company that acts like a “friendly monopoly” because of competition cannot be referred to as a “monopoly” in any sense of the word. It just seems like bad writing to say “Valve holds a monopoly! Well, I know it’s not a monopoly, but I’m gonna call it one anyway. So, back to that monopoly…”

        Incidentally, to the commentors saying that Valve does not hold a monopoly because it doesn’t control production: you are also wrong. Valve does not hold a monopoly, but it has nothing to do with controlling production.

        tl;dr everyone take Econ 101 and stop saying stupid things

        • Spokker on said:

          At most, it’s monopolistic competition. It’s competition among firms with differentiated products.

        • taking econ 101 is almost an ironclad guarantee that you *will* say stupid things. Economics is a discipline more in common with Dungeons and Dragons than it is with the material extraction, use, and distribution of natural resources and products.

    • This is a false understanding of monopoly. Production is only one component. Distribution is another. And this is where Steam is almost inarguably a monopoly. It is also where the true “dark side” of Steam can be found. I’ll post my own comment on that subject in a moment.

  5. David Mc Manus on said:

    Hmmm…..Monopoly or not steam has lead alot of distributors to step it up so yeah steam has been a friendly “Monopoly”.

  6. Rayshawshaw on said:

    I think Valve is going in the right direction with how they are running Steam and if it eventually becomes a monopoly, as long as they stick with keeping the consumer happy I really don’t see an issue. I don’t understand why people commenting on this are making such a big deal about whether Steam is or isn’t a monopoly. If they are or want to be, as long as they are keeping me satisfied and keeping the games coming and the sales good, fine. If they aren’t, so what? I’m not going to lose sleep over it. I really enjoyed this article overall though.

    • It is this selfishness that has doomed all of us in general. What if you were one of their victims? It’s not like it’s under your control. You can be hacked at any time. And then see how much you admire their system. You could talk in a forum and run afoul of a mod. And then see what happens? No appeal. No recourse. Property gone.

      But I guess it’s okay with you since you haven’t had a problem. Yet. Remember this attitude when it’s your turn to cry.

  7. Bill Hoffman on said:

    Given the choice between purchasing a game off of Steam and from GOG, I’d choose GOG every time. Steam just has too many restrictions on when and how you can play the games you bought. Even if a game is first released on Steam, I would be willing to wait a long time, years even, for it to be released without DRM on another service. So yeah, if GOG can step up their releases even a little bit I could have no reason to use Steam at all barring Valve exclusive games.

  8. Thiago on said:

    Wow, this website is full of valve drones, valva bots… geez, do they have to resort to this?

    Yes, its a monopoly. I cant play many of my favorite games unless I have steam… wich is an awful and disgracefull and abusive software I would NEVER, EVER have installed on my computer.

    They force me to download stuff all the time, spam with their damned advertise, and crash my game sessions and make me reboot my computer a lot, and when i close it, its hiden in my task bar…

    Its not right to force me to install something I dont want. Someting that will take over my computer, my games, my internet connection, for the sake of their profit.

    Its worse then microsoft!

    I hate steam and for every game that betrays me and use this crap i go pirate and get all the cracks to run it steam free!

  9. I can see from yet another tech board that our people have been trained well by corporate power.
    Steams offenses against both markets and customers can be seen most clearly when one is a victim of a hack. This is when you can see Steam as the adversary it really is, rather than the convenient uber-mall of software.

    If you ever lose your account to a hack, the first thing you notice is that any and all titles tied to the Steam malware automatically lock. This constitutes a denial of service attack on YOU, a victim of a third party event. If account restitution were timely, then this might not be so big a problem. But Steam is notoriously substandard for customer service. Ticket submissions can take at best several days, often weeks, and the conclusion of the harried minions isn’t always standard. In short, buying a game from a publisher using Steam is a bonding agreement with Steam itself in perpetuity. Older folks would know instantly that this is wrong.

    Additionally, the DRM justification for using Steam as an exclusive distributor doesn’t justify the perpetual enslavement of ones system to the Steam software. Steam only needs to verify your purchase once in order to conclude that you are, indeed, a legal purchaser. There is no need to force you to “prove” yourself every time you start up a game.

    This is where Steam become malware. It insists on this arrangement in order to conduct surveillance on users for marketing purposes (at a minimum; god knows what else the government might be pimping from them these days). In doing so, my purchase has now extended beyond distribution to being an unwilling target of advertising spies. No game purchase should carry this as a penalty.

    I recently had my account hacked, and now it lies in limbo. After getting angry, I got banned. I got angry because I was essentially told that the hack was my fault. Never mind that security is the service that Steam sells publishers, apparently they really believe that security is the users sole responsibility. An appalling irony.

    I have 400 hundred plus dollars of licensed software in a state of indefinite confiscation. An electronic Gitmo. That, friends, is theft. Access to that software should have absolutely nothing to do with the state of my “account”. I bought it, they know I bought it, but in suspending Stream activities that are peripheral to the act of gaming, they have also managed to strip me of my access rights.

    This is mobster-like cartelism. I have no options here–one standard of monopolism, by the way. If Barnes and Noble bans me, I can always order a book from elsewhere. If Steam freezes me, 70% of all games in production have been denied my access. This is more than just monopolism; this is commercial tyranny.

    This…..must….end. We should not agree to be slaves to a corporate state. Gaming is just one manifestation of this form of hostility, and admittedly, in the scheme of things, not all that serious. But it is still abusive. And we should have more dignity than to tolerate this contempt.

  10. Reverb on said:

    So… Tom is a disgruntled customer. That explains an awful lot. A disgruntled customer with ultra-melodramatic tendencies. ‘Ohhh Nooooo, Steam so bad, me so mad.’ Look, Steam is NOT a monopoly. Could it be heading in that direction? Yea, sure, but it’s not there yet. Too much CHOICE involved. Not to mention, you talking about how Origin is better than Steam is probably the funniest, most hypocritical thing I’ve read on here. OMFG that was a stupid thing to say. EA is trying to do the SAME THING as Valve. Hell, EA even tried to buy valve – more than once! Can you imagine how fucked up things would be if EA owned Steam!?!? Jocking for EA, while insulting Valve is terribly sad and pathetic – kinda like your ‘me account hacked and me get banned’ tearjerker of a story.

  11. Guy Gamer on said:

    I’d like to point out Revelations 2012 got two updates that were larger than the game itself.

    Your screenshot is outdated.

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