How Steam Succeeds: Thoughts on DRM, Piracy and the PC Gaming Industry

16 Feb

Panic! by Phillie CasablancaLast week I attended a series of talks on web 2.0 technology in libraries. The final speaker brought up a number of interesting topics, including the impact of digital rights management (DRM) on consumers. The gist was basically that DRM needlessly complicates media access for library patrons in a number of ways. I won’t reiterate the talk, however, it (and a photo of Steam) led me to ponder the gaming industry, specifically PC Gaming sales via Steam, which account for near 70% of the online digital PC game sales market. Forbes reported that last year, PC game sales via digital purchase outsold brick and mortar store sales: a historic first.

Why is Steam Successful?

If piracy is killing the PC gaming market, and “traditional media” in general, how can an online gaming platform succeed, which has inherent DRM built-in? Steam requires that users authenticate through a program log-in, in order to access purchased games, even if they’re already installed via Steam on your PC.

This of course comes during a time where certain stores are reducing the number of available titles (I noticed my local EB Games has one rack for PC titles). Curious that PC game sales on Steam are doing well, yet seemingly not so well, when it comes to brick and mortar sales.

Thoughts on Success Factors

So why is Steam so popular? Here’s what I think:

1) Steam provides a rich user experience, prior to purchase: users are not limited to reading the textual promo material, but can watch product trailers, see meta-critic reviews, and see which of their friends actually owns the title. Lesson? Provide a rich user experience, beyond just having racks (digital aisles if you will) of titles.

Spackletoe - that was easy!2) Steam makes it easy: Buying a game requires under five clicks, after you set-up payment details with your account (this of course could be dangerous, if you have kids). This idea of making the experience simple translates further, where steam will update installed games you’ve purchased, in the background.

3) Buy it once, take it everywhere:  Regardless of which computer you’re using, you’ll have access to the titles you’ve paid for. As long as you can gain access to the internet, you’ll have the titles you’ve purchased. No longer are you limited by the location of your home PC, or that DVD that you rolled over on your computer chair.

4) Steam adds incentive for customers to buy through its platform:

  • Steam runs weekly sales, drawing customers to purchase games they may not have bought at full price. As opposed to the “perpetual full price” model used in many stores, this seems like an easy way to snag sales from price sensitive customers. I may not be willing to spent $60 on a title, but for a title that I’m on the fence on purchasing, a discount down to $15 is enough to make me pull the trigger.
  • The Steam Cloud: Games which support this feature allow you to have your save file, regardless of which computer you’re on.
  • Achievements: Steam creates further incentive to replay games, given the addition of Steam specific achievements. Given the motivation of working towards and a feeling of having completed something, this is a customer added value.

5) Steam facilitates community: Steam allows gamers to connect with other gamers, creating a social experience. Beyond chat and shared online matches, users have profiles, which track the aforementioned achievements. Gaming is not done in a silo, where even single player games share your progress with other gamers in your network.

6) Steam has vision: Valve didn’t merely do what every other game publisher was already doing, they catered to a need that gamer’s hadn’t articulated directly or even knew they had. This takes vision – be it Amazon, Apple, or Netflix, a common factor seems to be, provide a high quality product or service and it may reshape the market. A “but the industry always worked like X” mindset will only get you so far.

Ultimately, while Steam uses DRM, the service provides more to customers than it takes away. This seems to me to be the only type of DRM that actually makes sense. I understand the idea of protecting one’s investment – build in DRM if you must, but reward your paying customers. Restricting freedoms does not make sense, if the goal is to facilitate a lifelong customer relationship, with repeat purchases.

The Changing Market as an Opportunity

busy.pochi - changeIn the end, I think Steam provides a good case for the argument that, while digital distribution and the ease of piracy have certainly changed the traditional media market (be it through books, music or computer games), by adapting to customer needs and providing increased customer value, profitability is quite possible. Things like DRM may dissuade the common user from piracy (which is the common argument), however, if media organizations provide richer experiences, draconian DRM may not be quite as necessary. Cater, do not alienate.

Back to Books

This translates directly for the book publishing industry: with solid user experience, provided by buying books through services and products like Amazon and the Kindle, or the iPad and iBooks, I suspect the publishing industry has a strong digital future ahead. The death of the book is largely overrated. If anything, the digital economy provides opportunities to be seized. Adapt to customer needs, be where your customer is, and remain relevant. “All” it requires is, catering to customer needs, adding value, providing an easy, quality user experience. Profitability is monitoring and anticipating where your customers are going, beyond relying on traditional sales strategies.

Header image by Phillie Casablanca – Panic! // CC BY 2.0

Second section image by Spackletoe – THAT WAS EASY! // CC BY 2.0

Third section image by busy.pochi – change // CC BY 2.0

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