Is Steam too big to fail?

Gaming
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#1

Steam is PC Gaming. It is the leading platform for delivering and offering games on PC, and one of the biggest single gaming platforms in the world. The biggest and most played games are all available on Steam, with only a limited number of exceptions. Steam has enjoyed this monopoly for many years, and it doesn’t look like it will relinquish that monopoly anytime soon.

But imagine a world where Steam is hit with backlash and scandal and financial mismanagement. All these are firmly within the realm of possibility looking at the last few years of Steam-related news. Let’s say that Steam gets into that unlikely scenario that its continuation is threatened due to these financial and brand problems. When you have this picture in mind, ask yourself, will Steam actually fail? Or is it just too big to fail at this point?

The answer may be different than a simple yes or no. And as everything in life, it comes down to money and value.

It is impossible to say for certain what the value of Steam is. Being a private company, they have no interest divulging company values and revenue and other financial reporting to the public. We are only felt to speculate the value of Steam. Luckily, with the help of sources like SteamSpy, this is at least plausible. And looking at the numbers on SteamSpy paints an interesting scenario.

At the moment, there is approximately 3.1 Billion copy of games owned by gamers on the entire Steam platform. Seeing as only about 2.1 Billion of those copies are paid-for games, we can roughly estimate the value of all the games owned on Steam. Taking an average of about $9 per game, the current average selling price of games on Steam, we get an estimated value of $19 Billion. And that is just the value of all games currently owned on Steam. There are at over 21200 games available to be bought on Steam. Couple that with its monopoly stake in the market, that value quickly moves up by a fair couple of billion dollars.

So if Steam had to be put in a position of financial or brand peril, it would literally be billions of dollars of value at stake.

So what will happen in our fictional scenario? The most likely of scenario is that a different company, someone like say, Tencent, would swoop in and buy all the available Steam assets. This company would most probably rebrand the service, decoupling itself from the stigma that Steam would leave, and ultimately provide the same, if somewhat different service than what Steam did. Ultimately, your games should most likely be safe.

So yes, the idea and assets of Steam are too big to fail at the moment. There is no way that another business would not pick up the pieces of a broken Valve and run with it themselves. But the brand Steam can never be too big to fail. So you can sleep safely tonight, knowing that all those thousands of Rands you’ve spent in Steam will most likely be safe. It might just not be the same Steam as you know it.

#2

i dont think any company or platform is too big to fail, case in point

look at nokia,siemens and motorola they where the dominant forces in the mobile industry, (the iphone came and destroyed them) and look at where they are now, they were not able to see between the lines what the next big innovation or thing in that industry might be.

Another example is silicon graphics, they were the dominant force in the 3d graphics industry they were everywhere.

or look at 3d fx, they where dominating the 3d graphics field glide was way more efficient and advanced compared to nvidia and ati’s d3d cards and look how that ended.

or another prime example is blockbuster video, they didnt see the market shift that netflix saw and boom netflix is thriving and blockbuster is dead.

i have a feeling that the shift to games as a service, services like EA access and MS Gamepass will definately grow over the next few years (the only deterrent is probably bandwidth costs and line speeds in certain countries thats stagnating adoption rates at present) will threaten steam or cause its downfall in the end.

1 Like
#3

Steam tends to polarize people, but I personally think the PC gaming market could have been in a far worse position if not for Valve. Then again, maybe someone else would have stepped up and filled the gap. The online storefront was an inevitable development. I reckon that even if the almost-unthinkable happens and Steam ceases to exist, the gap will be filled by others. Preferably not any single publisher (EA, Ubisoft, ect), but a more neutral party that is willing to sell everybody’s games.
Honestly though, killing Steam at this point would require some epic disaster.

#4

Don’t stress - GOG has got us covered (sort of) with the GOG Connect games that they are adding. Eventually we’ll have a fairly large library of DRM free games available to us out of our Steam libraries. Of course that would mean hoping that GOG woldn’t fail - or undertaking to download and store all of the DRM free games on spare HDD’s

But I believe you are right in saying that Steam is too big to fail in that another publisher or company would swoop in and buy it off of Valve’s cold, dead hands.

#5

One year later, Epic is on the offence.

Do you expect Valve to respond with more than just complaining?

My 2 cents :
They’re to big to fail right now, but it will be these small things that will make other stores more favourable in the long run. Can’t imagine a world without Steam though.