Valve's Jason Holtman on Steam Having Many Zombies, But Not Cannibalizing Sales

Written by:  • Edited by: Simon Hill
Published Nov 29, 2009
• Related Guides: Team Fortress 2 | Steam | Valve

Valve's Director of Business Development talks about Steam, PC games, digital distribution, and yes, Left 4 Dead 2 in our interview.

Digital distribution is a buzz word that has been hard to miss even in mainstream press ever since iTunes changed the way people buy music. For gamers, in particular the hard-core player and savy consumer types, the appeal has been undeniable. The selection, prices, and convenience of direct distribution sites like Gamer’s Gate and Steam, amongst others, should be relegating the practice of dragging one’s self to a store and having physical media to scratch to the realm of the quaint and archaic. But, as this article on the penetration of digital distribution of games explains, that isn’t the case.

You think this would worry Jason Holtman, Valve’s Director of Business Development, who obviously thinks a lot about how to make Steam grow. But, as he puts it: “All boats really rise with the tide.” I sat down with Jason at the Montreal International Games Summit, outside no less, as it was unusually warm for a Montreal day in November. In addition to the weather, we talked about the longevity of games created by ongoing free updates, the relationship between physical and digital distribution, Steam’s relations with small developers, and I even got him to talk about Left 4 Dead 2.

Steam Has Zombies, but Doesn’t Cannibalize

Steam: Zombies Yes, Sales Cannibalization No Jason explains that instead of taking existing retail market share, Steam actually grows the market. “When we started with Steam a lot of people thought that it’s always a zero-sum game. There’s only a thousand copies of anything you are going to sell: if I sell two hundred, somebody else is going to sell eight hundred… that’s not what we’ve seen.

“It’s not just about the distribution part… it’s about services. Things like having auto-updating, and matchmaking, and your friends, and the ability to chat; anti-cheat technology – all of those things are actually driving more copies of games to be consumed overall… there’s no cannibalization.

“When we do things like add content, to Team Fortress 2 or something, we see our retail sales go up… When we sell something at a very low price on Steam like Team Fortress 2 for $2.50, it’s not just that people hear about it later and go buy it at a store, it’s that we’ve increased the number of players. There’s other people watching their friends play, and then they’ll go out and buy it.”

Gimme Steam!

Why aren’t more PC gamers shouting this Peter Gabriel gem at the top of their lungs? Admittedly that wasn’t my exact question (you can hear the interview in its entirety here), but Jason continues: “Another aspect of why I don’t think there is this cannibalistic tipping point in retail versus online is people like to shop, and people have cash in their pockets… I like to shop: I have a credit card; I am fully web enabled, and I find myself in Barnes & Noble.

“A pure economist would look at me in a Barnes & Noble bookseller stack and say: ‘Well, you’re crazy: that book costs more here than it costs on Amazon, and it’s probably not exactly [the best one], you could have got a different edition or something.’ And it’s like: I like to shop.”

That explains why people would still use a retail store from time to time, but what about those people who just won’t use Steam? Some of them might just be buying into a very common misconception about having to be online to play Steam games.

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