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Are retail game stores dying due to Valve’s STEAM ?

It is hard to believe that when Valve initially launched their STEAM platform many analysts felt it wouldn’t last. Fast forward 10 years and it is now one of the strongest gaming platforms, worldwide. Valve are said to be valued at $2.5 billion today.

STEAM is actually so powerful now, that it accounts for over 70 percent of the PC games bought and downloaded on the internet. Much of their success has to be down to the management within the company and the ‘uncorporate’ culture.

The New York Times ran an article yesterday focusing on the company and their progress in recent years. They say that the 300 employees are not given a ‘title’. All of the staff are given the opportunity to ‘self assemble’ themselves into ‘interesting projects’. All of their desks have wheels on them, so they can freely move around the offices.

Valve encourage experimentation and exploration and we feel the platform highlights their way of thinking. I personally can’t remember the last time I walked into a retail store and bought a physical title. Then again, I have no interest in the ‘collectors’ boxed sets which still prove popular with fanatical fans of a particular franchise. You can’t after all download a limited edition pewter figure, or a thick hardback book with holographic covers.

The problems with retail stores are widespread. I think Valve have had a huge impact on the industry, but it is not the only reason that dedicated game retail stores are struggling.

This weekend I walked past our local GAME store and had a look inside. The stories of their failure to adapt within such a competitive market are well known. I walked indoors and started up a conversation with a young man, one of only three customers in the store. He was looking at the latest Guild Wars game. He was buying the game, but not in this GAME store, as he said that the local TESCO’s store was selling it for £10 less. He also pointed out that Amazon were often much cheaper, especially for the ‘collectors’ edition box sets he liked to buy and collect.

Not only do GAME stores have to deal with the rising popularity of online stores, but with the considerable buying power of supermarket retailers.

Valve seem to be a company who are constantly adapting to the market, and they are keen to move into different sectors. We ran a story recently that highlighted their interest in the hardware market.

The company are also focusing on new ‘virtual reality game goggles’ and there are apparently some working prototypes. New York Times writer Nick Wingfield tried them out and said they were ‘a 22nd century version of View Master’.

Valve are also running a public beta test of their new television friendly user interface ‘Big Picture’ which is designed for purchasing Steam games and to play them on computers in the living room.

Valve are currently locked in a battle with Microsoft over their launch of Windows 8.

According to Venture Beat “Valve is still in a deep dispute with Microsoft over the launch of Windows 8 and its requirement that apps be distributed through the Microsoft-owned Windows app store, preventing Steam from playing a major role in game downloads. In doing so, Microsoft is starting to mimic Apple in closing off part of its ecosystem from competition. The approach has been successful for Apple, but Newell argues, in a self-serving way, that closing off avenues for innovation could accelerate Microsoft’s decline. Of course, the New York Times pointed to Valve’s run-ins with Electronic Arts over Steam, where Valve has insisted that it get a cut of virtual goods revenue in addition to a cut of game download fees. Valve says it doesn’t want game publishers to game the system at Steam, but it’s no surprise EA has moved to its own Origin game network and store.”

Kitguru says: Is the retail gaming industry dead?

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