Anyone remember when Valve's Steam technology first came on the scene? If memory serves correctly, the first major impact of Steam to gamers came when you purchased Half Life 2 a few years ago. It installed this thing called Steam, which was not an option to get rid of if you wanted to play the game. Many didn't know what it was, other than something to aggravate and restrict them from playing the game offline. Just another way for a big company to squeeze the little guy some thought, and there were no shortage of "Steam sucks" articles spread across various gaming sites and forums.

Steam was Valve's attempt to correct the things it saw wrong with the traditional distribution model. Steam was a way to get the games out to the masses by skipping this step and making it better. Not only did Valve have technical hurdles to overcome to get this Steam technology out to the public, it also had to fight legal battles with publisher Vivendi. The guys making money on traditional game distribution models weren't about to just give up that revenue without a fight. Vivendi lost, and Steam gained...well, steam. The wheels were in motion for a serious digital distribution system to be in place for Valve's PC games.

Fast forward to today, and we see a consistent trend in the change to distribution and sales of entertainment media. Take music for example. The distribution model for music sales has turned upside down, iTunes rules that sector today. Anyone trying to make money distributing physical CD's to stores has watched their profits fall through the floor over the last few years. Meanwhile, Apple has become the world's largest music retailer. The brick and mortar music retailers are dead or on a deathwatch, ala Tower Records.

What's the dissertation about the change in the music industry have to do with games? Well, games (especially PC games) are digital media also, and subject to the same type of change in distribution model. This is where Valve came in with Steam. Now a mature product with most of the technical and legal problems behind it, Steam is poised to be the standard for PC game distribution online. With shrinking numbers of boxes on game retailer shelves, I see this as being the certain future of PC game sales. Valve demonstrated theses concepts with its own games, and now brings on games from other developers to the Steam platform. For example, the indie developers behind Braid, widely considered to be one of the most innovative games of 2008, will be available on Steam. Valve is adding quality games to its Steam repository, adding value to the platform with every acquisition.

Steam allows Valve to shake things up with sales and different pricing schemes. Valve recently ran a weekend special that put its popular game Left 4 Dead at half price, offering it for $25.00 for the weekend. This experiment paid off for them hugely as reported by Valve's founder Game Newell at G4TV's live blogging of his address at DICE 2009:

Last weekend, Valve decided to do an experiment with Left 4 Dead. Last weekend's sale resulted in a 3000% increase over relatively flat numbers. It sold more last weekend than when it launched the game. WOW. That is unheard of in this industry. Valve beat its launch sales. Also, it snagged a 1600% increase in new customers to Steam over the baseline.

Drop your prices and sell a crap load of product, making even more money. This reminds me of Taco Bell's pricing strategy in the early 1990's (I was in college eating alot of tacos then, so I was interested by this) when they introduced the value menu and made a few billion dollars as a result. Lower prices on an entertainment product in a recession? Sounds like win to me, and I think Valve's bank accounts would prove that to be true.

Steam is not just about distribution. It gets better, because it offers more value than just new age PC game distribution. Piracy? Steam has that covered too, baked right in. You have to be online to play, so the games are verified as paid copies before you can play them. Steam offers automatic updates, ,social media elements that connect gamers, in game web browsing, and more. Valve has packed alot of value into Steam, and as gamers we'll be wondering how we fragged each other without it before long. I would also speculate that its only a matter of time before we see a AAA MMORPG title launch on Steam to utilize all the benefits that brings, and wouldn't be shocked if Valve does it themselves.

Clearly Valve's strategy for Steam is paying off, and will continue to do so in the foreseeable future. Valve gambled on Steam, initially upsetting its customers with the growing pains that Steam brought upon them. However, they are poised to be the juggernaut of PC gaming because of Steam, not just because they make great games themselves.