Re-Envisioning Steam As An All-in-One Digital Marketplace

The digital store landscape is changing quickly and I’m worried for Steam. For now things are going great, but as video games reach mainstream appeal, more digital distributors like Apple and Amazon will want to sell games. Competition between digital distribution services fighting over the “All-in-One Media Marketplace” title will increase significantly. Already, Apple’s iPhone has surpassed Sony’s PSP in handheld gaming market share. Competitors like Games for Windows Live, GamersGate, GOG, GameTap, and games for the iphone & ipod have poped up over the years. Most importantly, Valve’s bigger competitors, Apple, Amazon, Microsoft, have invested in enormously diverse digital stores that sell everything from music, movies, tv shows, books, and apps. And games are next. For Valve’s competition to create an all-in-one marketplace all they have to do is add one component to their store, video games, which they’ve already started doing. On the other hand if Valve wants to create the same all-in-one digital marketplace to compete and hold its ground it’s going to have to add numerous components that the competition already has and is experienced with. Hold its ground or branch out? I’d hate to have to make that decision, but lets pretend like Steam should and will branch out.

 

█ The all-in-one Steam Marketplace: Games + Music + Video + Software

Personally, I feel it’s a little too late to enter the video and music markets. Amazon and Netflix already have the selection and technology to handle video rentals and purchases, iTunes (70% market share) and Amazon already have music covered and Microsoft will undoubtedly be following in Apple’s footsteps and launching a Windows App Store. Valve should have been more aggressive at branching out. Steam could have been the first serious “app store” for PCs and the first complete all-in-one digital media marketplace. But it’s nearly  2011, and no matter how or what Steam sells there’s already a well established competitor with years of experience, dozens of patents, and and millions of users already acquired. Then again you have to start somewhere, the other guys did and that’s how they grew to where they are now. Execution, and emotion (simplicity & ease) is everything.

To become the go-to store for everything digital Valve has to add multiple components to Steam but its competitors only need to add one component, video games, to their stores.

“But Chris!”, you say, “Steam is more than that, it has a social layer with friends lists and instant messenger and stuff!”. Yes, that’s true and the small percentage of gamers who use those features will care. But the casual gamers (who make up the majority of total gamers) in the market might not care for Steam’s features. Hell, casual gamers don’t even care about their games having HD, online play, achievement points, good graphics, or social layers (example: Nintendo Wii). All Apple has to generally do is add a [Video Games] tab in iTunes and Steam’s chances at dominating the field they deserve to become slimmer.

But if video games really are the future of visual entertainment you can bet MS, Apple, Google, and Amazon will be starting their own game distribution service. Remember, these companies invested heavily in digital video and music distribution because it was a huge market. They’ll go where there’s money, and there’s lots of money in gaming.

Valve can win this fight thought. It’s a lot more creative, willing to try new things, and capable of quick change. They revolutionized game distribution and they can do the same with movies and music. They just need to create an easy to use and integrated, all-in-one digital media marketplace.

The competition’s flaws:

  • Microsoft foolishly fragmented their own media platforms beyond recognition. Zune Marketplace, Windows Media Player, and Windows Live for Games, Xbox marketplace. They should be combined into one brand and if possible one client but Microsoft doesn’t understand that and probably never will. It’s one reason why their Zune mp3 player never caught on. Microsoft is very experienced with selling games, music, and movies on thier Xbox 360 console, but aren’t doing as well when it comes to selling that content on PCs.
  • Apple has no experience with selling installables for Windows PCs but they do have experience selling downloadables for everyone and selling installables for their own products (iPod, iPad, iPhone). However, they’re not very experience with selling multimedia streamables like Amazon (purchases through a standard browser) and definitely not experienced enough with gaming or windows development to replace the Steam client.
  • Amazon is the other way around, they’re experienced with downloadables and streamables but nothing else, their “unbox” desktop client (for purchasing and renting video) is so glitchy and buggy that it renders purchases un-watchable most of the time. Believe me I got suckered into trying it, 3 times.
  • Sony, poor sony. They killed off their failed “Connect” music store a while back and I doubt will try to revisit it. They’re very experienced with selling games for their Playstation 3 console but have no ground in the PC world.

Valve/Steam’s qualities:

  • Takes games, which are downloadables and installables, and makes them feel like streamables
  • A high level of customer loyalty and respect
  • 25+ million people who already have the Steam client downloaded
  • Authentic Community
  • Tried-and-true DRM
  • Possible “Steam Console” that allows wireless connects your livingroom TV to the media on your PC.

█ Adding Movies and TV Shows to Steam

Sadly, this is an over saturated market. Hulu, YouTube, Amazon, iTunes, Microsoft, Netflix, have all been selling video for a while now and are nearly untouchable with their well established networks, patents, and infrastructures. I don’t see what Steam alone (without the help of hardware) can do to differentiate itself here. Steam can use its tried-and-true DRM to sell or rent movies and TV shows but iTunes already does that. Steam can go all out and sell DRM free video content but no Hollywood studio would ever agree to this. Yes it’s true that currently illegally downloaded films come with more privileges and freedoms than legally purchased ones, but those freedoms, I feel, don’t matter to the majority of consumers. There’s just no reason to be so open with video, it’s not like music where it needs to be highly portable. As long as it plays on their TV and their computer folks are happy. The only other option is to go for the “just another video marketplace”, which is fine actually, I’m dying to be able to buy movies on Steam and have them tied to my account. But that’s not a way to compete with iTunes or Amazon. Sure, Steam can sell video to its already established 25+ million customers but again, that’s not a way to compete with iTunes in the long run. If people want to download movies, they go to iTunes, if they want to stream movies they go to Netflix or Amazon. Why should they go to Steam?

Here’s why they’ll buy video on Steam
Because of Steam’s “Console”. Steam should come out with a wireless adapter kit that wirelessly sends movies, music, and video games from their PC to their living room TV. That is something that iTunes cannot do. You have to buy AppleTV for that and consumers don’t want another set top box. With the wireless kit, which I call the “Steam Console” because it allows it to compete directly with set top boxes like AppleTV & GoogleTV and game consoles like PS3 and Xbox360, consumers can download a movie, game, or song once, and wirelessly watch, play, or listen to their media all over the house. That’s awesome. That’s easy. And that’s game changing. There’s no reason to own separate crippled computers when you can have a centralized PC that streams out music, movies, and games to TVs.

█ Adding Music to Steam

The iTunes store sells about 70% of all US music downloads with Amazon in second place with 12% and the remaining share split among small players with 1% – 3% shares. Steam, you can’t beat Amazon and iTunes, they’ve already gobbled up market share, have contracts, licenses, and fees worked out with major studios, and the music market is saturated with big competitors anyway. Even Google is entering the music selling business (or trying to at least). Nor can Steam compete with music subscriptions like Napster, Rdio, Zune, or Spotify. If Steam wants to enter this market, it has to provide something that no one else is. Don’t make “Steam Music” another iTunes, it will fail. “Steam Music” has to be something different. So here’s something that no one else is doing.

  • Sell DRM free Video Game Soundtracks (undiscovered niche market) to compliment Steam’s established gamer demographic.
  • If iTunes got the gold, go for the platinum by selling extremely high quality lossless music to audiophiles in either DVD-Audio /or/ Super-Audio-CD format. This is as high as music quality gets. We’re talking a few GB per album and god-like high sampling rates, frequencies, and dynamic ranges. CD quality doesn’t stand a chance against these 2 premium formats which were introduced over a decade ago but haven’t toppled MP3s and CDs because of their insanely large sizes, locked down formats, and inability to be played on portable music players. If you ever get a chance to listen a song in DVD-Audio 5.1 Surround Sound or in Super-Audio-CD format, grab a pair of normal headphones and you’ll hear the difference right away. Put on a pair of $300 high quality headphones and you’ll swear it’s live. Listen to a song you bought from iTunes, then listen to it in Super-Audio-CD format. There’s no comparison. Sound is amazingly crisp, has an extremely wide range of quiet and loud, high pitched and low pitched sounds, and you’ll swear you’re hearing it live. And the best part is that there’s a community of music lovers that would love to pay for something like that. In fact, despite being near impossible to find in music stores, artists like Pink Floyd have sold 800,000+ copies of their album “The Dark Side of the Moon” on Super Audio CD. Despite being a niche format, 440 labels put out over 6,000 releases on Super Audio CD alone. And at least 3 major labels (EMI, Warner Brothers, & Universal) have released or still release music in DVD-Audio but it’s hard to find. Extremely high quality music in lossless 5.1 surround sound DVD-Audio isn’t sold by iTunes, Amazon, or anyone else. Audiophiles would love something like this. I wouldn’t buy entire albums like this, but there are about 20 or so songs in my life that I find so profound that I’d pay $4 a song if I could get them in DVD-Audio.
  • Do what Apple didn’t do with Ping. Create an authentic community around music creators and music fans where fans can request remixes, talk to their favorite artist, submit questions and suggestions for their next albums, and even vote with their wallet on different versions of a release.

█ Adding Software to Steam

Software might not fit with Steam’s entertainment branding and media consumer demographic but I think it can really add something new to the software market that app stores can’t. Now, I don’t want Steam to just add software just for the sake of being able to get in on the “app store” revenues. This isn’t about following in Apple’s footsteps. Steam’s software store can do something no-one else can. Create a real, authentic community around software that connects its creators and its users. App stores can’t do that. Apple can’t. Steam can. I’d buy software on Steam for the following reasons:

  • I know the software is legit and not riddled with viruses or malware.
  • I feel safe not having to give my credit card details to anyone other than Steam.
  • If I’m selling software on steam I like not having to deal with PayPal.
  • It’s tied to my account and I feel safe knowing I can’t loose any CDs or serial keys.
  • Download and installation is automatic.
  • Updates and upgrades are simple and automatic without the need to re-download or put up with annoying “update managers” (I’m looking at you Adobe).
  • I feel comfortable knowing there’s a community linked to the software I’m buying, even if it’s just a forum with some user groups.
  • I feel like I have a voice and a connection to the makers of the software I’m buying. I want to be able to submit bug fixes, suggestions, annoyances, and ask questions much more easily.

Look above at all the wonderful feelings we’ve created for customers; safety, security, ease, simplicity, comfort, and community. If I had to spend $20-30 on automatic backup software like Bvckup like I plan to soon, or even $600+ on Adobe Illustrator I’d like to buy it from Steam so it’s linked to my account, downloaded, and installed overnight. Oh, how I wish that day would come.

Microsoft has stated that it’s working on an app store for Windows 8 but it more than likely will take longer than expected and fail to create an authentic community around software the way Steam can.

█ A Case AGAINST Turning Steam into a Media Player

Something I do NOT think the steam client should become is a media player. Do you really want to bloat Steam by trying to make it compete with iTunes, Windows Media Player, or Winamp? Think about it.

It can’t compete
We already have enough media players. Believe me, I’m a big music lover and I’ve tried nearly all of them; Zune, iTunes, Windows Media Player, Songbird, Winamp, Sonique, VLC player, TDK, and the list goes on and on. Media players like Winamp are years ahead in features and stability. I just don’t see a reason for Steam to compete with them. What would Steam offer that the others can’t? You’ve got iTune’s all-in-one store to computer to device connectivity, Winamp’s quality, speed, and customization, and VLC’s simplicity and amazing format support. What’s left? What gap is there left to fill?

It would bloat Steam too much
Steam already takes up 17mb of RAM just sitting there. Windows Media Player takes up 30MB of RAM, Winamp is at 40MB, and iTunes is at 40MB with some reporting 100+MB. The lovely VLC player only takes up 9MB. Valve would wind up having to double or even tripple the amount of Steam’s code just to match the playlist, format support, device syncing, and other features that iTunes and other media players have.

It’ll take years to create a stable, featureful, media player
It would take a good 2-3 years to get Steam to catch up to the features of Winamp, Songbird, or iTunes. Even if it could, what would be the point? What would it do differently?

█ A Case FOR Turning Steam into a Media Player

If Steam can make a name for itself as being a functional simple media player, it might stand a chance.

A fluid all-in-one entertainment experience is important
My theory is that casual users (the majority) like all-in-one experiences. They don’t like launching 3 different pieces of software for 3 different types of media. When they want to be entertained they want to launch an “Entertainment Player” like iTunes, not a separate MP3 player, then a separate movie player like WinDVD, then Steam for Games. Non-casual users, however, don’t mind and some actually prefer software specialized for each medium. Some serious usability studies would have to be done to confirm this.

Current media players have flaws
There’s a serious lack of media player libraries that are simple and easy to browse and use. Seriously all those playlist options, visualizations, and other features might not be what everyone wants. Honestly, iTunes and Songbird look daunting to the average user. Windows Media Player is complicated, iTunes is bloated and sluggish, Songbird’s performance is unpolished, VLC doesn’t have libraries, and Winamp is scary looking. No one wants to search for songs by using an excel spreadsheet, which is what the libraries of Winamp and most media players resemble. I’m assuming most users have Steam startup when their computer does, so Steam stays loaded and ready to go throughout the day. If this is true then this makes Steam a perfect candidate for a snappy, light-weight media player that’s ready to go. Something like my Songapore Media Player UI (would need some polishing but you get the idea) would work well I think. As long as it releases RAM back to the system when a user isn’t browsing or playing media, I don’t think users will complain about a more bloated Steam client. I don’t see it surpassing Windows Media Player usage but…… (my next point is)

Media should be enjoyed at the same place where it is bought
There’s a general rule, if you sell music you need to play music so the customer can have a seamless transition between purchase and usage and that will keep them coming back as return customers. Same with video. Also, I think media makes more money in the same environment where it’s consumed. The transition between player and store needs to be seamless. The same way I load up Steam to play games and end up buying a new game because I saw the ad for it, I need to be able to watch TV shows and movies and have recommended content shown to me. I’m more likely to see it and more likely to purchase it.

Also, it will help the “Steam Console”
The Steam Console is something I’ve been fantasizing about for the past 2 months. It’s really just your PC with a wireless adapter that transmits video+audio+input to your TV in your living room. This way you can get netflix, amazon, itunes, video games, music, and movies on your tv without buying a video game console or set top box. (more on this later, in part 5)

800 Comments

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    I really like this idea… Because at this moment I kind of searching for “streaming”, “digital buying” movies…

    The only thing I have mixed feelings about is music (iTunes)… I use iTunes (Apple Stores) for my music & apps for my iPhone. If it could come with some support to read the music files bought via iTunes, sure :p
    Steam I use for the Games (off-course).

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