The Insider #2: Steam Powered

So Half Life 2 has finally killed everyone’s monthly bandwidth limit, and is the game currently on everyone’s lips. Unfortunately I haven’t had the opportunity to play the game, even after spending my $70 on the silver pack. Why? Well I was one of the unfortunate people who purchased HL2 via Steam with the full intention of giving the developer – Valve – my hard earned, rather than buy retail which would have lined the pockets of the retailer, distributor and publisher. I am also one of the unfortunates that is getting the “memory not read” error whenever I try and play.

So what is the general feeling about Steam as a new content delivery system that places your hard earned money in the pockets of the developer rather than everyone else? Well my view is split down the middle, having worked for publishers in the past and now with an independent developer, I should be firmly in the court of Steam over retail, however with my own experience and the shock that hidden in the Steam EULA is the draconian clause that no refunds shall be given under any circumstance, I can see that the consumer could well pull away.

Steam has its benefits for independent developers, don’t get me wrong, but it needs far more work before I believe it can be classed as successful. The main obvious benefit is that the developer gets to keep far more of your hard earned than he previously did with a publisher handling the distribution side of the product. Indeed, many people are surprised at how little money the developer actually receives from each retail sale as most of the time it is nothing until the sales figures trigger royalty payments.

Even the publisher doesn’t get as much as you would think. For each £40 console game sold at retail, the publisher can get as little as £5 out of that sale by the time the retailer, the distributor and the platform licensor (Sony, Microsoft or Nintendo) have taken their own chunk. Making games is not as profitable as people think!

So a developer driven content delivery system allows more money to go to the developer themselves. However this then causes the problem of who is going to pay for the development of the product? If reports are to be believed, HL2 cost in excess of $40m to develop, and even an average title will cost anything between $5m and $10m to develop. There are only a handful of truly independent developers who can fund that sort of cost themselves, without having to go to a publisher. In addition to the development costs, the developer has to think about the cost of PR and marketing for the product – this again is normally funded by the publisher and can actually match the development budget pound for pound.

In effect, only a few developers could self-fund and use a content delivery system such as Steam to maximise their financial potential so what about the rest? Well with the advent of Gen3 (Xenon, PS3 etc..), most independents will either turn into outsourcing houses for other companies, or pick up exclusive deals with the larger publishers. Gen3 could have a much bigger effect on the industry than any of previous historical platform changes, primarily because technology will take a lesser role within development, and content will be king. I can personally see projects in the future where 80% of the developers are artists and level designers.

Gen3 is exciting and could provide entertainment experiences never dreamed of back in the 8 bit days, but it will also sort out the boys from the men. The UK development industry has already taken a knock this year with the loss of large companies such as Acclaim and Argonaut, and also from the assimilation of independent studios such as Criterion, and unless the independent developer can adapt to the Gen3 changes, we could lose more of our home grown talent.

But back to Steam…. I will sit here refreshing the news page every 5 minutes in the hope that Valve will eventually release a patch that will fix my HL2. I just hope that it is worth it …!

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