Why the PC is the future (from VALVE) [FEATURE]

When Valve summoned a handful of US and UK journalists to itsSeattle headquarters at the end of last month, it promised to talkabout the future of Steam, its digital distribution system. That itdid, revealing the ambitious Steam Cloud service for remote storage of game data, and boasting that it would soon be making more money selling games digitally, all the while remaining untroubled by piracy.
Valvemastermind Gabe Newell and his cohorts had an ulterior motive forbringing reporters together, however, and unusually for an ulteriormotive, it wasn't a wholly self-interested one. It was this: toevangelise the PC as the games platform of the future.
"Thisreally should be done by a company like Intel or Microsoft, somebodywho's a lot more central to the PC," says Newell, pointing out thatcompanies like Blizzard, PopCap and GameTap would have just as much tosay as Valve about how PC gaming is leading innovation in technology,business models, and community-building. But, notwithstandingMicrosoft's occasional promotionof Games For Windows - an initiative Newell refrains from attackingdirectly, but exudes disdain for - that support has not beenforthcoming.
Where console platforms have merciless andwell-funded PR armies poised to combat any criticism, negative storiesabout the PC - mostly publishers, or developers like Crtyek,complaining of rampant piracy and flat sales - run unimpeded. Salesdata that focuses solely on boxed copies sold at retail appear to backthem up. Valve has had enough. "There's a perception problem," saysNewell. "The stories that are getting written are not reflecting whatis really going on."

You want figures? There are 260 million online PC gamers, a marketthat dwarfs the install base of any console platform, online oroffline. Each year, 255 million new PCs are made; not all of them forgaming, it's true, but Newell argues that the enormous capitalinvestment and economies of scale involved in this huge market ensurethat PCs remain at the cutting edge of hardware development, andconsoles their "stepchildren", in connectivity and graphics technologyespecially. Meanwhile, Valve's business development guru, JasonHoltman, notes that without the pressure of cyclical hardware cycles,PC gaming projects - he points to Steam as an example - can groworganically, over long periods of time, and with no ceiling whatsoeverto their potential audiences.

More pertinent, perhaps, are thefigures directly relating to games revenue that the retail charts -admittedly a stale procession of Sims expansions and under-performingconsole ports - don't pick up. "If you look into the future, there's animportant transition that's about to happen, and it's going to happenon the PC first," says Newell.

At its heart, he explains, is a shift from viewing games as aphysical product, to viewing them as a service - something that is alsohappening in other entertainment media. Digital distribution is part ofthat; more fluid and varied forms of game development, with games thatchange and engage their communities of players over time, are another;as is, naturally, the persistence and subscription (or otherwise)revenues of MMO games. None of this is reflected in the sales chartsanalysts, executives - and gamers - obsess over.
Valve sees 200per cent growth in these alternative channels - not just Steam, butincluding the likes of cyber-cafes as well - versus less than 10 percent in bricks-and-mortar shop sales. Steam has a 15 million-strongplayer-base with 1.25 million peak concurrent users, and 191 per centannual growth; none too far off a console platform in itself. The PCcasual games market, driven by the likes of PopCap, has gone from nextto nothing to USD 1.5 billion dollar industry in under ten years, andhas doubled in size in just three. Perhaps most surprisingly, Valve hasfound that digital distribution doesn't cannibalise retail sales - infact, a free Day of Defeat weekend on Steam created more new retailsales than online ones.

And then there is the game that many claim has been the death of PCgaming, but that Valve sees as its greatest success story, and itsfuture. "Until recently, the fact that World of Warcraft was generating120 million dollars in gross revenue on a monthly basis was completelyoff the books," Newell says. "Essentially, [Blizzard is] creating a newIron Man every month, in terms of the gross revenue they're generatingas a studio. Any movie studio would be shouting about that from therooftops. But it was essentially invisible."
Newell thinks thatWOW is "arguably the most valuable entertainment franchise in any mediaright now", and also believes, rightly, that it could only ever havehappened on the PC. He also tips his hat to South Korea's Nexxon forits enormous success with free-to-play, microtransaction-driven gameslike Kart Rider and Maple Story, soon to be aped by EA's BattlefieldHeroes.

There is another reason for the gulf between theperception and the reality of the games market, Valve thinks, and it'sa geographical and linguistic one. The dominance of the Englishlanguage gives the US and UK games markets, where the PC is weakest,undue prominence. In several major Western markets - notably Germanyand the Nordic countries - the PC performs much better. What's more, inthe emerging markets of China, Korea and Russia, where gaming is seeingunprecedented, explosive growth, console install bases are negligible,and the PC is king. Valve thinks that there's a silent majority ofglobal gamers who are skipping the console era entirely, the way thesedeveloping nations already skipped dial-up internet.

Steam isavailable in 21 languages for this reason, and Valve reckons that itsspeedy localisation and lack of physical distribution is an effectivecounter to the piracy common in these markets. It's also allowing Valveto get games to players in regions traditional channels don't support."PC's are everywhere in the world," says Holtman simply. "PC's are thesame all over the world. All of sudden, if you can open up emergingmarkets and go somewhere like Russia or South East Asia, you've goneway further than you can go with a closed console. There are 17 millionPC gaming customers in Russia alone."

A key shift in this brave new world of games as services rather thanproducts - and one that runs contrary to the traditional image of PCgaming - is a move away from graphical fidelity being the yardstick ofprogress. "As a company that's really proud of the job we do withgraphics it's funny to say this," Newell says, "but we get a betterreturn right now by focusing on those features and technologies thatare about community, about connecting people together."
He citeseasy uploading of gameplay videos to YouTube as a bigger source ofentertainment value than marginal improvements in graphics. "I thinkthat people thinking about how to generate web hits on their serversare a lot closer to the right mentality for what's going to besuccessful in entertainment going forward, than somebody that's used tohaving conversations about how to get end caps at Best Buy."
Therevolution in distribution and business models also offers a major newopportunity for smaller games - and smaller games developers - tothrive. The demands of retail - the logistical problems of gettingboxes to shops, and the budgetary drain of huge marketing campaigns -mean that bigger is necessarily better in the traditional games market.
Notso on Steam and its equivalents, says Valve, pointing to the hugesuccess of indie darling Audiosurf, as well as its own Portal. "As youmove away from that huge first weekend, big blockbuster mentality,"says Newell, "you're getting back to an area where smaller and smallergroups can connect with customers. I think you're going to find thatthe enjoyment of being in the game industry as a developer on the PC isa lot greater than outside of it."

He's backed up by an actual indie, Audiosurf creator Dylan Fitterer.This one-man development, created without financial backing -impossible on consoles, due to the cost of development kits - was thebest-selling game on Steam full-stop at its release, outclassing manybig-budget titles. "I didn't have to ask anybody if I could release it,except for my wife," Fitterer says. "It took a few years, and I waspretty darn tired by the time it was ready. Something likecertifications? No thanks." He also points out the tight limitations ofconsole servers versus PC servers for online gaming; Audiosurf'sscoreboard for every song ever recorded would be out of the question ona closed platform.
Holtman argues that Steam and Steamworks - thesuite of free tools it offers - revolutionise the environment fordevelopers and publishers. The auto-updating system means that a gamecan be developed right up to release and beyond. It eases painfulcrunch times, and allows game makers to respond to their audiences,publishers to develop their titles as continuously evolving franchisesrather than finite products.
"All of a sudden, PC games becomethis thing that's reliable and up-to-date," says Holtman. Team Fortress2 designer Robin Walker weighs in, noting that the PC version of theshooter has had no less than 53 updates since its release last year -something that certification cost and time have prohibited for onconsole - and that this "ship continuously" ethos is a key component tothe success of the best multiplayer titles. Steam, he says, makes thatprocess fast and transparent.
"I don't want anyone between me andmy customers," says Walker. "I want to write code today and I want allmy customers running it tomorrow." Possible on the PC - Steam inparticular, naturally. Not possible on consoles. For his part, Fittereradded achievements to Audiosurf in a total of two days. This constantiteration creates a feedback loop between developer and customer that,reckons Walker, can only improve the quality of the game. "The more Italk to my customers, the better my decisions will be. Without a systemof talking to my customers, I will make bad decisions."

The implication is a striking one: sporadic, excessively controlledupdating means that console multiplayer games will never reach theheights of their PC counterparts. There is a counter-argument - that PCgames descend into a poorly-defined, indistinct mess of constantpatching - but it is effectively squashed by the fact that, if you lookfor a multiplayer game with the longevity and massive popularity of aWOW or a Counter-Strike on console, you won't find one (with the veryarguable exception of Halo).
Auto-updating is the reason Valvecreated Steam in the first place. It's the reason it now finds itselfin an odd position for a developer: semi-publisher, leadingdistributor, market analyst, agony uncle and technocrat - not tomention defender of a platform that's still being proclaimed dead, whenall signs point to the very opposite.
At the end of the day, PCgaming's health - and its trickiest challenge - comes down to a bottomline that even the format's detractors can't refute: there are just somany of the damn things. "We think the number of connected PC gamers weare selling our products to dwarf the current generation of consolesput together," states Newell. "There are tremendous opportunities infiguring out how to reach out to those customers.