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Analyst: Steam ‘has to branch out,’ may begin by selling nongaming software

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The engineers that maintain online services like Steam and Origin must have itchy trigger fingers. A few days after a rogue promotion on Origin seemed to confirm the existence of Battlefield 4, the Steam app on mobile platforms suddenly began listing nongame-related software categories.

The Steam mobile appFor a few hours on July 16, performing a genre search on the Steam app produced sections like “accounting,” “photo editing,” and “software training.” While this is far from a confirmation, it suggests that Valve may soon broaden its digital-retail offerings.

“I understand why Steam would do this, since they have built the infrastructure to deliver software, and I understand why vendors would list products there, since Steam has a big audience,” Wedbush Securities analyst Michael Pachter told GamesBeat.

“Steam does have a pretty avid base of  about 40-million registered users,” IDC research manager Lewis Ward said in speaking to GamesBeat. “Steam’s customers tend to be relatively affluent younger males that are obviously amenable to spending money on digital downloads.”

Although this may seem like the next step in Valve’s march toward becoming the Walmart of the Internet, both Ward and Pachter were quick to throw cold water on Steam’s prospects in the nongame-software market.

“I very much doubt it’s going to be the next Amazon or app store,” Ward said. “I think of it more as an incremental opportunity, at least in the next several years.”

Pachter compared Steam selling utilities and productivity software to Amazon trying to sell games. Amazon has had some success in that market but nothing on the level of what Valve has done.

“Developers that sell apps that appeal to younger males will probably go for [Steam] as long as the process is streamlined and the revenue-sharing terms are competitive with other digital stores,” Ward said. “But I don’t think [Steam selling nongame software] will keep other retailers up at night.”

But it’s possible that Valve is more worried about what keeps its executives up at night.

“I think [Valve] has to branch out,” analyst Roger Kay of Endpoint Technologies Associates told GamesBeat. “[Gaikai and OnLive are] threatening game download sites, and perhaps Steam is trying to diversify away from games in order to parry that attack.”

Gaikai and OnLive are a pair of Netflix-like services that stream video games instead of movies. Gaikai was recently purchased by Sony, and OnLive continues to expand its reach on PC and mobile devices.

It’s hard to imagine that anyone at Valve is really sweating about the competition. It’s more likely that the business people inside of Valve decided that it is silly to limit the excellent infrastructure they’ve built to just games. Of course, that’s assuming that this incident was more than an accidental leak of an experimental program.


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