What do you get when you cross gaming with Blockchain technology?
If there is a secret ingredient that binds together cryptocurrency, Web3 and metaverse, you can probably find it in gaming.
Video games often spring from interests in fantasy and new technology, two concepts that also play a role in the rise of NFTs and virtual and augmented reality. Discord, a communications platform catering to gamers, has also become the de facto host for crypto communities.
Indeed, blockchain-based games like Axie Infinity, which let users “play-to-earn” crypto tokens, are gaining popularity and backing from major Silicon Valley investors. But the gaming sector itself is hardly 100% in support of crypto, the metaverse and Web3. Game development company Valve, and its widely-used PC gaming platform Steam, are notable detractors.
In October 2021, Steam quietly banned NFTs and blockchain technology from its platform, leaving money on the table for rival Epic — which swiftly announced that it would be “open” to games using NFTs and crypto.
Despite receiving a letter from blockchain game developers asking it to reverse the ban, Valve has remained firm. Users suspect that Steam is either responding to concerns that crypto and NFTs might be a “ponzi scheme,” or is trying to limit how its platform can be monetized. Valve has also indicated it is shifting resources away from VR to focus more on Steam Deck, a portable PC gaming device.
If the metaverse, blockchain gaming and Web3 take off as anticipated, it’s very possible this stance could continue to make Steam a flashpoint of controversy. Here is more about the platform and how it came to dominate PC game distribution.
The emergence of Steam
Simply put: Steam is one of the largest digital distribution platforms in the world. Owned by Bellevue, Washington-based developer Valve, the platform was estimated to hold 50% to 70% of the market for video game distribution in 2013. In 2017, its business represented 18% of all PC games sold in the world. Users can buy, play, create or discuss PC games on the platform.
It also has considerable influence over the industry, writing the rules on whether a game developer “makes it,” and changing the playing field for large studios like Activision and small independent developers alike.
Valve, founded in 1996 by former Microsoft employees Gabe Newell and Mike Harrington, first rose to prominence in the late 1990s. Its first title, first-person shooter game Half-Life, was released in 1998 and later became a joint effort with Texas-based Gearbox Studios. The game was published by Sierra On-line, the revolutionary studio that brought us King’s Quest and point-and-click adventures of Leisure Suit Larry.
True to Sierra’s origins as an innovator in story-centric gaming, Half-Life took FPS games to a whole new level by making environmental storytelling a major attraction right after the mechanics. It featured a silent protagonist named Gordon Freeman, a narrative device that was seen more in Japanese RPGs than western works at the time.
As this history of the FPS genre for PC Mag notes, Valve truly perfected the genre. Without Half-Life, we wouldn’t have Bioshock and other immersive titles where a linear experience doesn’t take away from a game being highly engaging. Half-Life was a huge hit, helping Valve flourish. Sierra, meanwhile, struggled to remain relevant.
It was around the development of Half-Life 2 that the seeds were planted for Steam. While other game studios and publishers have been notorious for sending cease and desist notices to fans who create their own spinoff games, Valve went in the opposite direction. It encouraged fans to make “mods,” or “modifications” and form communities.
The company was reborn as Valve Corporation in 2003. As Half-Life 2 was being developed with Valve’s proprietary engine, Source, Steam was launched as a digital storefront where you could access Valve’s games.
Reshaping gaming distribution
Until Steam appeared, there was really no universal platform for game distribution or e-commerce.
Most games were purchased at the retail level, and independent developers who distributed their games online were responsible for creating their own storefronts and hosting. Gamers’ libraries were organized or siloed on their own desktops: if you bought a new computer or corrupted your drive and couldn’t recover your data, you had to manually reinstall the game from the physical CD-ROM or track down a digital download link that may have expired. It could be lost for good.
With Steam, the platform wasn’t just a storefront, it also vastly simplified the process of downloading, setting up, patching, modding and playing games.
As Valve expanded upon the release and publishing of more successful games and the acquisition of smaller studios like Left 4 Dead developer Turtle Rock, Steam grew from a proprietary Valve storefront to a platform that would accept third party games. The company redirected its focus from game development and towards hardware, augmented and virtual reality, and growing Steam as a service.
Cloud servers now enabled players to access their games any time, anywhere, on any device. This facilitated revenue generation for both large and small studios alike.
How indie gamers came to flourish on Steam
Today, Steam is a massive marketplace with zero curation, a bustling decentralized ecosystem where indie developers can find an audience. But in the 2010s, indie developers found it difficult to get their games sold on Steam.
Developers initially had to seek approval from Valve, which held their work to a centralized selection process. Acceptance guaranteed a meal ticket. Rejection meant you were left to try direct sales through your own website, a tall order for developers with no preexisting fanbase.
Steam attempted to change this with a project called Greenlight, where players would vote on which games could cross the threshold. But that plan was also axed in 2017. Now, instead, developers have free access to Steam.
Being less hands-on about gatekeeping paid off. Today, Steam is a giant. In 2017, users purchased $4.3 billion worth of games through the platform. In 2019, it had over 34,000 games listed with more than 95 million monthly active users.
It’s unclear whether Steam will retain its Titanic stature. Newer upstarts like Itch.io offer more risque and experimental content. Meanwhile, Epic is clearly positioning itself to steal away some of Steam’s market share. We’ll have to wait to see how all that plays out, as well as Steam’s stance on crypto, Web3 and the metaverse