There is nothing I can really report that I have not already. It appears publishers are not concerning themselves with the details, and continuing to support the Steam platform over others.  In the first month of the new year, three games have already been announced to be Steamworks driven and will be tied to the Steam client.  These titles are Supreme Commander 2, Aliens vs. Predator, and Napoleon: Total War.  The latter is of little surprise considering the previous installment of the Total War series was also a Steamworks infused title.

I feel this can only spell disaster for other digital distribution services if this trend continues, as well as for consumers.  While we all appreciate Steam in its own way, do we really want to put all our eggs in one basket?  If we truly care about our games and the industry, we need to encourage competition between services, as well as encourage publishers to support all major digital distributors.  What incentive will there be for service improvement and weekend sales once competitors are knocked out?

In August of 2009, I wrote Steam support to inquire if they had any plans to correct a security flaw within their password reset process, that would allow an account hijacker to continually take over an account. The support ticket was also meant to inform them of the problem if they were not already aware, despite having been posted on the forums a few times as well and sending an email to one of the developers.

The response to my support ticket I found rather surprising. Instead of reading my email, I simply received a form response and my account reset. I personally never asked for my account to be reset, and I am worried that it was so easy to do so via a support ticket, without me providing any actual identification of who I am. I responded back letting them know that was not my problem, but I continued to receive a form letter telling me to cease contact with the person pretending to be a Steam employee. Needless to say, I lost faith in the support ticket system at Steam, but I gave them the benefit of a doubt, and assumed this was just a random mistake.

After the recent holiday sales, a frustrated user on the Steam forums posted a screenshot of his tech support response. Similar to my ticket, the user received a form letter response that was unrelated to the problem at hand. The user claims he was receiving receipts for payments he was told were clearly declined. Instead, the user opted to work with a friend to gift him the game before the sale was over. In response, Steam tech support wrote short, generic responses that did not pertain to the problem at hand. The user only received a proper response after posting it publicly on the forum.

Personally speaking, this is why I find there to be an incredible need for phone support at every digital distribution service. Problems are going to arise no matter where you go, as no service is perfect. I understand the cost of phone support may cut into overall profits, but is it worth alienating customers and losing more money in the long run?

When I run into a serious problem, such as the billing errors I had over the holiday, it is frustrating to sit there with nobody to reach out to for assistance. Instead, consumers are often left waiting for days at a time for email support to respond, and if it is not the correct response like the images above, consumers are left waiting even longer.

I implore consumers to reach out to these services, and ask them to improve upon their support systems and to please implement phone support for more serious issues, such as billing errors or hijacked accounts. It is a reasonable request, and something consumers desperately need. I hope to have a thorough report of each service in the weeks to come.

The Sales
As the Christmas holiday approached, sales began rapidly popping up on digital distribution services.  An especially nice bonus this year was how early the sales began to appear.  Excluding Steam, all the services placed their deals up weeks ahead of Christmas, and some even provided daily countdown deals to keep users coming back.  What makes this nice is it allows for games to be bought and gifted to others or for oneself, and consumers can budget their holiday funds accordingly.

As for the quality of the sales, I must say I am disappointed.  I imagine many people who are reading this are saying I must be off my rocker. There were some good deals in the mix, no doubt, but I could have purchased many of the games marked down at retail for even less.  One of the more glaring examples is Steam recently placed Devil May Cry 4 on sale for $22, while I found many copies of the game for $6 at Half Price Books. Granted, not everyone has access to these stores, but even online retailers were much cheaper, as Amazon had the game for $10.  Many other games were the same way, and I found myself shrugging off most deals. For gamers in places like Australia, where prices are typically inflated beyond reason, this sale was a huge hit.  However, for Americans and many Europeans, better deals could be found elsewhere.

Something else that I found disconcerting is how the Impulse and Gamersgate sales appeared to have fallen short of the competition this year.  The two services no doubt offered a decent selection of games at reasonable prices, but a majority of the games were smaller, more obscure titles.  This is not to say the games were bad, in fact some of them were excellent, but it pales in comparison to the larger sales other services are bringing to the table with a plethora of high-profile titles.  I was truly expecting more from these two services, and it feels like a missed opportunity to gain some ground amongst the competition.

Of course, it is easy to blame the companies for what appear to be lackluster sales, but I wonder if something else is happening in the background that we cannot see.  The Valve Steam sale is incredibly popular amongst PC gamers, and is one of the most anticipated game sales of the year.  Is it possible that large publishers are moving a majority of their sales to the Steam service?  Do they feel other services are not worth the effort?  Moving business to one service would no doubt relieve the stress of coordinating contracts between multiple services, as well as coordinating payments afterward.  This is speculation, and Direct2Drive did post some good deals on well-known titles, but Steam no doubt won with the most publishers and games to offer.  I am hoping next year these services can improve upon their offers, and provide better competition for the marketplace.

Regional Pricing
Shortly after the first anniversary for regional pricing on the Steam service, the holiday sales went into effect.  Sadly, little has changed over the past year, and the sales prices for games continue to be higher than what major European online retailers offer.  Games continue to be priced at a 1€ to $1 ratio or higher, needlessly inflating the cost of games.  Additionally, some countries continue to be charged in the wrong currency, causing more headaches for consumers and making digital distribution a less appealing option, even during holiday sales.

One would expect there to be some difference between pricing, but not to the same degree it is through Steam.  For example, Company of Heroes: Tales of Valor costs three times more for the rest of Europe than for the UK, and overall more than US consumers paid. Crysis: Maximum Edition cost US consumers $13.50, while European consumers were asked to pay €20 ($28.59). As for other services, the results are mixed. Impulse and Direct2Drive tend to be the more friendly towards European consumers, but still have their hiccups when it comes to pricing. Gamersgate also varies somewhat, but tends to be more on the average to high side.

Billing Errors
One recurring theme this holiday season is billing errors.  The Steam service has consistently had billing issues for many users according to their official forums, and Impulse has improperly charged some consumers by using the wrong currency.

In regards to the Steam billing errors, I speak from personal experience.  I attempted to purchase one of the daily deals, only to be stuck at a shopping cart that would not go forward.  After entering in my information and confirming my order, I hit the purchase button, upon which it sat there for 10 minutes with a “waiting…” message.   During this time, the game appeared in the “My Games” list, but I was unable to launch it.  Eventually, the website told me the payment was declined, but the Steam client persisted in telling me my payment was still processing.  I was left wondering what is going on, and did I even get charged?  This was extremely frustrating, and I was not sure whether to try again and risk getting charged twice.

It took hours for the problem to clear up, and I was one of the lucky ones.  Other consumers began posting about the very same problem, so I knew it was not user error.  This is where things get even more complicated.  Some users noticed that when they tried to purchase the game again, despite being given a declined payment message, were being charged twice.  Some were charged and never received a game.  Others were left waiting in limbo the same as me.  One user reported calling their credit card company, only to find out the charges are being handled by a company called Global Collect  in the Netherlands, causing more confusion.

Some hiccups are expected, but this opens up more serious concerns regarding Steam and other digital distribution services.  There is no phone support to contact for help, which would be especially helpful when someone is being charged for a game but has nothing to show for it.  There is the support ticket system, but it takes a few days to receive a reply, and by then the sale is gone.  There was also no response in the thread by a developer to assure  the community the problem was being investigated, but instead the thread was closed down the next day and hidden outside the General Discussion forum.

In regards to the Impulse service, one user was charged in the wrong currency and thus paying more than he originally agreed to.  Before Christmas arrived, Impulse was running an experimental daily deal campaign that was advertised only through the Impulse client.  McKnight, a user on the Quarter to Three forums, noticed the daily deal was Demigod for $9.19.  He proceeded to purchase the title, and all appeared to go smoothly.  During a discussion on the forums, he was inclined to double check his receipt, in which he noticed a discrepancy with the final price.

As can be seen below, the receipt clearly states the user will be charged in US Dollars, and lists the product as Demigod for $9.19.  However, at the bottom right side of the receipt, it clearly switches over to British Pounds, charging McKnight £9.19 ($14.89).  This is more than the user agreed to pay, and he notes he likely would not have purchased the game at this price.  We are still waiting to see what the exact charges on the billing statement will be, but according to the receipt, it was £9.19.  If anyone else has run into similar issues, please email me so that I may add it to the list in hopes Stardock will investigate their billing system.

Price Error Receipt

Ethics
It may seem out of place to include a discussion on ethics regarding a holiday sale.  After all, they are simply marked down games where some consumers are able to obtain a great bargain. What is so wrong about that? The problem lies in Steam placing many games on sale, then marking the price down even further the next day.  This caused many users to get frustrated, as they had just purchased a game on sale, only to find the game listed as a daily deal the next day at greater savings.

In a normal sale for any store, sales prices prices tend to be the final price.  It is perfectly reasonable to assume this is still the case, and consumers began to make holiday purchases.  One moderator was cheering people to buy right away, and consumers did so as some games had a tendency to run out of keys quickly.  Those who began making purchases were quickly faulted by others for being impatient, and another moderator joined in against those complaining about price changes, saying “How hard is it to understand what  a sale is?”  Personally, I have never known a sale to have constantly changing prices. In the US, retail stores even offer store credit for price changes within a few days, but Steam simply went with the tough luck approach.

Personally, I see such behavior as questionable.  Steam is changing prices mid-sale, not offering to refund the difference, and essentially alienating the very consumers who were the quickest to support them.  Why they would want to frustrate this group, I will never know.

Conclusion
I know it may sound like I am being unappreciative of these services, and a little too hard on them.  After all, there were some excellent deals in the mix.   However, I feel that if problems are not mentioned and we continue to blindly praise these services, things will not improve.  I cannot believe the amount of billing issues that have plagued consumers this year, as threads are still cropping up of people unable to buy anything or charges not showing up.  Errors are going to happen, but Steam clearly did not prepare for the influx of users that would make purchases during this time period, and Impulse is randomly charging users in the wrong currency. These events are simply not acceptable in my opinion.

I am wary of the holidays will bring this year.  More than anything, I hope these services are better able to improve their infrastructure, and be able to handle large volumes of customers without added stress.  Additionally, I also hope the other services are able to step up the quality of their sales, and regain some marketshare.  I would like to see more balance in the marketplace, and not one or two services having all the major deals.

Overview
Regional pricing is nothing new to companies and consumers. However, it came as a surprise when Valve converted the prices within their digital distribution service to British Pounds (£) and Euros (€) practically overnight.  Consumers based in Europe were greeted with quite a shock as they woke up the next day, and found games priced significantly higher than normal due to odd currency conversion rates.

With Valve taking the plunge into regional pricing, publishers began demanding other services follow suit.  According to multiple statements made throughout the Impulse forums, Stardock simply does not have a choice as to how games will be priced regionally, and must comply with publisher demands.   If a distributor does not agree to publisher terms, they lose rights to the game and fall behind their competitors, putting them in a difficult spot and at risk of losing more marketshare to the Steam service. All major digital distribution services have now implemented regional pricing in some form on their website, excluding Good Old Games.  This is likely due to the company’s focus on older games over newer ones, allowing them to avoid the pressure other services are under.

Controversy
There is nothing wrong with the idea of regional pricing, and I imagine few can truly argue against it.  However, the problem lies in how this pricing method was implemented.  Valve made these changes overnight and with little warning.  More importantly, Valve took the liberty of changing these prices as they saw fit, which meant ignoring currency exchange rates and equating 1€ to $1.  This resulted in an extreme price jump for many games, and European gamers found themselves being charged far more than those in North America and other popular regions.

After the prices were altered at Steam’s discretion, the company contacted publishers to inform them of the changes and to reply back with any adjustments that need to be made.  Some publishers adjusted prices accordingly, but many did not and left games overpriced.  European consumers demanded answers, but only received silence in return.  As gamers compared prices on the forum, it became apparent Valve also grouped European countries into different tiers, and charged completely different prices between them.

More importantly, Valve failed to consider some significant differences between countries. Instead of learning which countries were part of the European Union and which were not, Valve lumped them all together and used the corresponding Euro currency to price games.  However, this becomes puzzling as the United Kingdom, a European Union member who retains the use of their local currency, received a special store with games priced in British Pounds (£).   Meanwhile, gamers in non-European Union countries, such as Norway, were unclear why they were being forced to use the Euro.

Another source of tension is Valve’s decision to include Value Added Tax (VAT) in the price of the game itself.  Previously, gamers would add a game to their shopping cart and see how much VAT was required upon checkout.  Now the product price gamers see is the price they pay.  This sounds like an easier and more simplified system, but it still poses some problems.

Countries each have their own percentage of VAT that is applied to products and services, typically ranging from 5% to 25%.  By creating a unified price for multiple countries and hiding VAT inside of that price, consumers in some countries are likely paying more than what is required. This is no doubt a boost for Valve, as Valve can pocket the overcharge for certain countries after the required VAT percentage is deducted.

Current Situation
As we approach the one year anniversary for the changes Valve implemented, one would imagine many of these problems have since been rectified.  Sadly, this is not the case.  Steam has remained tight lipped about the price changes, and has left European consumers with more questions than answers.  After nearly a year of posting and asking for help via the official forum thread dedicated to the topic, no answers have been provided.  In regards to other digital distribution companies, Stardock appears to be the only one providing any sort of transparency by communicating with forum users about regional pricing.

Prices for European consumers still remain excessively high.  As I recently reported in the Price Debate section, games on Steam run approximately 43% higher than they do in popular online retail stores.  Some publishers have taken the time to adjust prices accordingly, but a majority have not and have decided to keep inflated prices using the 1€ to $1 ratio.   Some publishers have even inflated the price more so, as with Colin McRae DiRT 2 ($39.99 USD / 49.99€).  Countries which are not part of the European Union have not fared any better, as they are still forced to pay in an alternate currency that is not their own.

Overall, the move to regional pricing has been detrimental to European gamers.  They no longer have any viable options for digital distribution.  Publishers continue to pressure these services to comply with their demands, and have the ability to influence the prices games are sold at.  This creates a market with very little competition, forcing European gamers to pay excessive prices for games, or return to the retail market.

The only sign of progress we have since the implementation of regional pricing is more services being created to specifically cater to the European demographic.  Eurogamer recently launched its new Get Games digital distribution service.  Although this service is still in its infancy, many have high hopes it will grow into a consumer friendly service.  However, if Get Games allows publishers to influence prices as they already do with other services, then I fear little change will come.

There seems to be little change or progress on the horizon as we hit the one year mark.  There is also a constant debate about who is to blame for the current situation regarding regional pricing.  Personally, I feel both the publisher and digital distributor are equally guilty.  The publisher has a great deal of influence regarding the price games are sold for through these services.  Digital distributors are to blame as they allowed this behavior to happen, and preferred to gain a larger product catalog instead challenging publishers on their tactics.

I understand companies must comply with regional requirements by publishers, but when prices average more than 40% higher than retail, something is clearly wrong. While it would have meant a somewhat smaller catalog, I know my loyalty would have gone to the company that took a stand for consumer rights over rights to a bigger catalog.

Conclusion
As someone who does not live in Europe, I must admit I gave little thought to regional pricing before Valve implemented it within their service.  Yet, over the past year, I have constantly been amazed at how this was handled by the major digital distribution services.  There is simply no excuse in my opinion for not communicating and working with consumers to create a better service.  Instead, European gamers are being pushed away from these services to the cheaper retail market, or are reliant upon American friends to purchase these games at a cheaper price and gift them back.

Despite there being little to no progress since this time last year, I implore consumers from all parts of the world to continue contacting publishers and distributors, expressing concerns about the price structure they are currently using.  Even if this situation does not affect you personally, I feel it is important we stand up for each other as gamers.  Who is to say publishers will not target other regions next, and inflate prices more so?

Post in the comments below how you feel things have changed, for better or worse, since regional pricing was introduced.

Previous high profile games that adopted Steamworks are Dawn of War 2 and Empire: Total War, as well as a handful of small independent titles.  The adoption of Steamworks requires the games to install the Steam client and tie the game to an account.  However, the release of immensely popular Modern Warfare 2 as a Steamworks title has brought to light a much larger question.  Are Steam exclusive games good for the consumer and the industry?

The Consumer
The primary concern with games becoming Steam exclusive is what this means for the consumer.  Few will argue against the success of Steam and the convenience it offers.  The service provides a variety of community features, achievements, unlimited downloads, and removes the hassle of managing discs.  Generally speaking, consumers are happy to use Steam, and those who do not wish to use the service are the minority.

Despite the success of Steam, I feel there is more to this decision than meets the eye.  PC gaming has always been about freedom, as gamers are not tied to any specific service or required to pay fees to access games.  Gamers have the ability to choose when and how they play games, and where they would like to purchase from.  As games become exclusive to Steam, part of this freedom is removed.  Instead of a consumer purchasing a game via retail and installing it on his or her system, this consumer must now tie it to a third party service which must authorize the consumer every time it is launched.  If the Steam network is overloaded or network issues are present, games typically cannot be accessed.

As more games become Steam exclusive, consumers will also lose the ability to trade or resell a purchased game.  In the United States, consumers are protected by the first-sale doctrine which allows the resell of legally purchased media without permission.  Games that are Steam exclusive lose this right.  Whether it is purchased through the service or through a retail store, the game is tied to a single user account and cannot be removed by any means.  The consumer effectively gives up his or her rights to manage the game as they wish.

For some, these issues may not be important.  However, for others, including myself, I find it worrisome to lose control over games I purchase.  When I purchase games through a digital distribution service, I understand exactly what I am buying.  When I purchase a game through retail, I expect to have more control over it and avoid being tied to a service.

The Controversy
The news of Modern Warfare 2 requiring the Steam client also came with a wave of controversy.  Direct2Drive made a statement they would no longer be selling titles that forced the Steam client upon their customers.  Impulse and Gamersgate followed Direct2Drive’s lead, and have also refused to carry Steam based titles.  The creators of Impulse state it is not practical to distribute such games through their service.

I wish I could offer more insight behind the motives of these statements.  I have seen a variety of blogs, news articles, and forum posts that all speculate what these companies are thinking or trying to accomplish.  Are the companies genuine in their stance against distributing third party clients? Are they simply trying to garner attention, especially from consumers who are already set on not buying Modern Warfare 2? There is no way to know, and the amount of speculation and comments made on this subject is bothersome.

Instead, the important issue is what this means to the consumer.  The primary concern is this removes multiple digital distribution services from the picture, and consumers become more limited in where to purchase these titles.  The only remaining online digital distributors that carry Steamwork titles are Metaboli, Real Networks, and their white label partners.

Essentially, this becomes a no win situation for digital distributors.  They can continue to distribute games that require the Steam client and gain some extra cash, but at the expense of sending them to a competitor’s store.  This is the equivalent of buying food at Burger King, and distributing this food in a McDonald’s wrapper with a menu attached.  It is understandable why companies do not wish to do this.  However, by taking a stance to not distribute these games, the companies lose the opportunity to make additional revenue, as well as flak from various news outlets that tend to favor Steam to start with.

Conclusion
This is not to say there are no benefits to this.   Having games tied to a single service eliminates many headaches for developers and publishers.  It prevents companies from having to create multiple copies of the game to match each digital distribution service and their protection scheme.  It also makes the PC a slightly more attractive platform with a standardized distribution, community, and achievement system.  Gamers tend to enjoy the immediate satisfaction that comes with purchasing games through Steam, as well as the additional features it provides.

My only real concern is what this means for the consumer.  Steam is a good service with a lot of attractive features.  However, despite the success of Valve’s digital distribution service, we cannot turn our backs to what this means for us.  Are we ready to give up complete control over games we purchase at retail stores and tie them to a third party service?  Is it worth having a dominant service with exclusive games to attract publishers back to the PC?  Do the benefits outweigh the negative?

This is of course a personal decision and one we must decide for ourselves, but I ask people to look beyond the immediate convenience and at the overall picture before deciding how they feel about Steam exclusive games.

Earlier this year, Gabe Newell noted that a recent sale for Left 4 Dead, Valve’s popular survival zombie shooter, caused a sales increase of 3000%, rivaling the sales of those during launch week.^[1] This is no doubt impressive, allowing publishers to continually promote their games and spur additional sales through weekend deals.  However, without specific numbers, percentage figures could mean a wide range of things.

For example, Newell stated that one particular third party title saw an increase of 36,000% during a weekend sale.  This number is incredibly large, and leads one to wonder what the initial sales were beforehand.  If it only sold one copy the previous week, then 36,000 during the weekend sale, that seems far less impressive.  I imagine the true numbers for this title were much larger, but it shows that we cannot rely solely on percentages for a true grasp of how effective weekend sales are.

Thanks to Garry Newman, the creator of Garry’s Mod, we finally have a glimpse of actual numbers based on his September 14th sale.  After the sale ended, Valve sent Newman a set of stats and graphs on the overall performance of his title.  According to this information, the game sold 2,975 units 8 days prior to the sale.  During the sale, Garry’s Mod sold 34,927 units for an increase of 1074%, which now accounts for 9% of his overall units sold since release.^[2] An impressive chart of overall sales can be found on Garry Newman’s blog.

This is an impressive increase for a product that previously started out as a free mod, and turned retail in 2006.  Three years later, with the help of weekend sales, the game continues to thrive.   Information such as this echoes the concerns Newell stated earlier this year, that games are not being priced correctly, which I for one could not agree with more.^[3] Recent research by Russell Beale and Matthew Bond of the University of Birmingham help confirm this theory, stating, “The most important factor to avoid is a bad pricing – if your game fails at everything else, an accordingly low price might just save it.” ^[4]

A special thanks to Tom of The Steam Review for referring me to the statistics for Garry’s Mod.

Source
[1] Left 4 Dead sees 3000% jump in sales on Steam
[2] Garry’s Mod Sale Stats
[3] Valve: Are Games Too Expensive?
[4] Graphics? Storyline? Or Price?

Recap
For those who have not yet read the interview in full, when asked if he believed Steam made it easier to buy games, Pitchford stated that the service does help, but as a member of the game industry, he doesn’t trust the service.  Instead, Pitchford believes Valve should create a separate business for the Steam service and break it off from the parent company.  He believes there is a severe conflict of interest between the two.  Additionally, he believes Steam is a “money grab,” exploiting smaller developers and publishers by taking a larger cut than it should be.

When asked if he believed brick and mortar is the future, Pitchford stated that he loved the digital option as he is buying a “credential” that can be used at any location.  However, he prefers to purchase games from companies who only act as retailers and their only interest is the consumer.  A company cannot be trusted unless that is their primary goal.  Pitchford states that brick and mortar stores work because their only business is retail, and if they lose customers then they go out of business.    He then added a variety of his own rhetorical questions including:

“How much service are they offering? Are they creating opportunity for us to manage some of those resources themselves? We’ll bear the burden of the cost of the service, but we want more of the reward. Are they creating that opportunity for us or is the only way their way?”

The response to this article has been both fascinating and disturbing.  I have read a variety of well informed comments from both sides, as well as comments claiming Pitchford is simply jealous and to “QQ (cry) more.”  Sadly, it appears there is more of the latter, and comments are being blown out of proportion and not entirely discussed.

Conflict of Interest
The primary source of confusion lies around Pitchford’s statements regarding there being a conflict of interest within the company, and that the Steam service should break apart from Valve and become its own entity.  If one takes a moment to step back and look at the situation as a whole, the conflict of interest becomes more readily apparent.  Valve is both a game developer as well as a company that controls one of the largest digital distribution portals currently available.  One conflict is Valve is promoting the games of competitors, and has the ability to abuse this power if they feel the need to do so.  There are no accusations currently being made that this is happening, but as time goes on and Valve continues to dominate the digital scene, the ability itself grows stronger.

Abuse of power could come about in a variety of ways.  Hypothetically, this could occur through the delay of contracts or the appearance of “technical difficulties” if a popular game coincides with the release of a Valve game.  Information also has the ability to be slightly altered and presented to consumers and publishers.  For example, gamers have noticed discrepancies with the Steam “Top Sellers” list, finding that when Valve games finally fall off the list, they quickly reappear shortly after.^[2] Steam is also developing a habit of not disclosing third party DRM till after the initial sales period is over.^[3] These are merely simple examples, but show that as Steam gains momentum and hooks consumers to their service, they have the ability to abuse the service and control how third party games are distributed if they conflict with Valve’s own games.

I do not believe the comments are directly pointed at Valve and calling them would-be criminals, but echoing the concern that a competitive developer controls one of the most popular digital distribution services for games, and consistently has access to an immense amount of sales data regarding these competitors.  Any company that has a serious stake in its future is correct to worry about one distribution service becoming a possible monopoly, and how it could possibly affect the future distribution of games.  Regardless of who the company is, it is safe to say a monopoly is not good for any consumer.

Pitchford also added that Steam should separate from Valve, creating two independent companies.  The goal is not to remove Steam and break Valve apart, but simply create a company whose sole focus is retail.  This would be the best possible way to improve upon the service and focus on consumer and publisher relations.  If the service fails to serve consumers and begins to lose business, it would be in serious trouble.  Making this the primary focus of a secondary Steam company would guarantee employees do everything possible to make the service work.

Pitchford, as implied by his statements on brick and mortar stores, is worried about a company that must manage both game development and distribution.  This could lead to additional conflicts of interest.  If the company begins to lose money due to unforeseen problems, Valve will be forced to decide if it wants to focus on game development or continue the service.  It is not uncommon for Valve developers to abandon one project over another, leaving consumers waiting for patches and updates to existing problems until the second project is over.^[5] So I find the concern to be valid, as it could easily scale to more serious decisions regarding Valve and the Steam service, should trouble arise in the future.

However, there is the question of why Pitchford is picking solely on Steam. After all, Impulse, GamersGate, and Good Old Games are also services created by game publishers.  I would assume this is due to Steam boasting over 20 million consumers, making it one of the largest digital distribution companies on the market, and thus a greater target.  The company is often at the forefront of digital distribution news due to its popularity, causing more consumers to flock to it, and allegedly creates a ‘locked in’ feeling by forcing a third party client upon consumers.  Consumers, assuming other services do the same, refuse to buy games elsewhere as they do not want to deal with the hassle of more clients.  It is difficult for publishers to take games elsewhere when many gamers now demand the games on Steam, or they will not purchase it at all.

Additionally, GamersGate and Good Old Games already operate as separate entities.^[4] Although they are part of a parent company, they operate independently as their own service.  Impulse is the only service that is truly comparable, and I imagine they were not mentioned simply due to the lack of popularity and not requiring constant use of the Impulse Client.  Direct2Drive operates independently of a game publishing company, and operates through the IGN network.

Money Grab?
Valve claims to be an ideal portal for for game releases from both small and large developers.^[6] The company provides greater exposure and access to games, which benefits any publisher.  So is Pitchford correct in claiming it is a ‘money grab’ system?

Although contracts vary per publisher or developer, the only publicly known percentage Valve takes from sales on Steam is 40%, providing the publisher with 60%^[7].  However, this figure is from 2005, and it has recently come to my attention that on average this number is far less, although my source is unable to reveal specifics for the company.  According to Northwestern Journal of Technology and Intellectual Property, retailers capture 40% of the retail price of a video game.^[8] This number may vary slightly for PC games as the initial research focused primarily on console releases, but personal research has shown 20-40% to be the norm.

Without personal experience, it is difficult to comment on exactly how independent developers are treated.  People should be wary of jumping to conclusions for either side, as when it comes down to it, a majority of us do not know the finer details.  At most, we can draw some insight from developer blogs, which both state good and negative comments regarding the service, and appear to be very situational.

Industry Response
Garry Newman, creator of the popular Garry’s Mod, has posted that he is perfectly content with his experiences with the Steam service.  Newman states that while more money would be great, it is not low enough to turn him away from the service either.^[9] However, one must remember Garry’s Mod is a Source based mod that helps promote the sale of Valve games, and may likely receive special concessions.   Secondly, his views are slightly biased, believing ‘Steam IS the PC gaming platform’ and is under the false impression other digital distribution services require additional software.  Only Impulse requires this, as GamersGate and Direct2Drive are client free.

Daniel Hjelmtorp, Product Manager of  GamersGate and a primary contender with the Steam service, responded that his company has already taken these steps and split their service from their game development teams.  Hjelmtorp believes this allows the company to focus on the consumer experience, the catalog, and special offers and deals for consumers.   Not surprisingly, he agrees Steam should split from the Valve company and become its own entity.^[4]

Many forums have pointed to comments by Derek Smart, lead developer and president of 3000AD, Inc, who has taken a bold and vocal approach to the debate.  He originally makes some interesting points, noting that Valve is no more evil than other digital distribution services, and the 20 million subscribers does not translate into instant sales for third party games.  Additionally, Smart claims Valve cuts are in line with industry standards and the company does not act in an exploitative manner.^[10] However, in usual fashion,^[11] Smart’s comments are also worrying as he continues to discuss the article and flame Pitchford and gamers who disagree with him.^[12][13]

In a recent interview with GamaSutra, John Gibson of Tripwire Interactive stated that accusations of independent developers being exploited is inaccurate.  Gibson believes Tripwire Interactive would not have succeeded if it were not for the Steam service.  When shopping for traditional brick-and-mortar publishers, they were often receiving deals that provided them with 15% royalties, loss of IP, and a $1.5 million administrative fee.  For an independent, this was simply not possible.  Gibson continued stating Valve provided a straightforward contract that was in line with other digital distribution services, and recouped development costs in a matter of weeks.  He also finds there to be little conflict of interest, and the company handles third party titles well.^[14]

Conclusion
While I do not agree with all of Pitchford’s points, he does raise some interesting topics regarding the Steam service and create an awareness of the current digital distribution situation.  In the future, Steam could pose a serious monopolistic threat to PC game digital distribution and thus create some severe conflict of interests within the company.  This is not to say it will happen, but that it is definitely something that should be discussed to ensure the healthy development of game distribution.

More worrisome than the comments themselves are the responses to Pitchford.  Primarily, the amount of people who flame the article and vehemently defend Valve as the only service out there, and how jealous Pitchford is.  Comments like these are what reinforce the original concern, that Valve is becoming the most dominant and will evolve into a Monopoly as gamers refuse to try other services.  As seen by various comments, people refuse to even look at another service, and are consistently demanding publishers release games on Steam or else.  It is surprising how many refuse to look at the individual comments, and immediately become defensive.  The same can be said for those who immediately become hateful towards Steam and are unable to make coherent arguments.

There is nothing wrong with using a service and supporting it wholeheartedly, but as a consumer, we must be wary of what we sow.  We must always question and promote discussion regarding the services and products we use.  Through this discussion, we can promote the advancement of healthy knowledge that will better inform gamers as well as help companies follow a path that benefits consumers and their rights.

Source
[1] Randy Pitchford Talks Borderlands, Piracy, and Why He Doesn’t Trust Valve
[2] WeGame Discussion: I’m calling BS on Steam’s Top Seller List
[3] DRM Being Hidden From Consumers
[4] Randy Pitchford Talks Borderlands, Piracy, and Why He Doesn’t Trust Valve (Comment #4)
[5] TF2 Official Blog: Did That hurt? Sorry!!!
[6] Valve Steps Up, Defends PC Gaming
[7] Steam: Who Sets the Prices?
[8] Use of a Game Over: Emulation and the Video Game Industry, A White Paper
[9] Is Valve Exploiting Us?
[10] Gearbox’s Pitchford Says Valve is ‘Exploiting’ Smaller Devs with Steam (Comment 21103240)
[11] Computer Gaming World: Resurrection
[12] Gearbox’s Pitchford Says Valve is ‘Exploiting’ Smaller Devs with Steam (Comment 21100712)
[13] Gearbox’s Pitchford Says Valve is ‘Exploiting’ Smaller Devs with Steam (Comment 21101617)
[14] Opinion: Tripwire, Steam, and How We’re Not Getting Exploited