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Console transitions bad for gaming, says Newell

Console transitions bad for gaming, says Newell

Thu 07 Feb 2013 6:28pm GMT / 1:28pm EST / 10:28am PST
TechnologyDevelopmentDICE 2013

DICE 2013 Video: Valve head talks about making hardware, the value of open platforms, and what the company is focusing on for the future

Gabe Newell is scheduled to be inducted into the Academy of Interactive Arts and Sciences Hall of Fame Thursday night, but preceded that honor with another one, as the Valve co-founder delivering the morning keynote address at the DICE Summit in Las Vegas.

Newell began his talk by laying out his two main theses. First, the PC ecosystem will expand into the living room. Second, there will be a sea change in the way people think about video games.

"A lot of this is about trying to get away from these really disruptive console transitions where everything that customers and software developers invest in gets rebooted and then we all have to start over"

Gabe Newell

Starting with the long-standing criticism that nobody wants a PC in the living room, Newell noted that the PC has spawned a wealth of industry-shaping innovations in the last decade, with free-to-play, online gaming, and other trends. The one exception where the PC hasn't led in innovation has been input, Newell noted. But it's a great development environment for programmers, and its open nature encourages more experimentation and innovation, he added.

There's no evidence of that innovation slowing down, Newell said, and the PC will be able to keep pace with the trends easily, unlike the dedicated console hardware that has traditionally dominated the living room. And because PC manufacturers have been busy solving problems related to making computing power more mobile, Newell said they've also gone beyond the needs of the living room. PC makers have solved the problems of making the boxes small, quiet, and cool running.

Reflecting on what he saw at CES this year, Newell said the show played host to numerous options for in-home streaming. The integration of the user experience is still tricky, but he added that it's going to become a standard feature of televisions where users can run a game on a PC anywhere in their home, but stream it to their TVs for viewing.

Newell said he's not worried about how consoles will respond to this change, but it's "much scarier" to think of what Apple will do. Apple has a smoother upgrade cycle than PCs, which is beneficial to both consumers and developers. On the other hand, PCs have always scaled well, with users able to tailor their systems to their needs exactly, no matter how high-end.

One question Newell said he's often asked is what the difference is between cloud gaming and in-home streaming. Newell said he's skeptical of cloud gaming, but in-home streaming is an old problem dealing with how one distributes resources around a network. Even if the industry had never made consoles and started with cloud-based clients, Newell said it would have evolved to put power and smart clients at the end of networks because it's a better way to save on the costs of remote high-speed processing. He said there's a place for cloud gaming as a feature (for providing demos, as one example), but not so much as a core piece of the living room gaming experience.

When Newell started Valve in 1996, he said the company had to figure out where to expend the power they had. In Half-Life, they determined that putting a decal on the walls anywhere the player shot was worth the time and effort needed to incorporate that feature. In the sequel, they decided that having non-player characters look directly at the player with realistic eye movement added enough to make it worthwhile. However, that line of thinking fell apart with multiplayer games. When they added a riot shield to Counter-Strike, players played it more. But when they took the riot shield away, players still played it more. So they developed a new way of thinking about multiplayer, which eventually led to their decision to create Steam in the first place.

Now Newell said they're facing another breakdown in their line of thinking. For example, online auction houses and free-to-play. Newell wouldn't have understood years ago that people could spend $2,000 upgrading their character's equipment, or that giving away a game for free could be the basis of a viable business model.

There's also been an explosion of user-generated content in recent years, as Newell noted that the fanbase for Team Fortress 2 makes 10 times as much content as the actual developers of the game. Newell said they can't compete with their own customers on that front; they're building content just as good or better than Valve's, and they're building it at a spectacular rate. Some of those content makers are pulling in more than $500,000 a year by selling their work to other players.

All of a sudden, Newell said customers started using an in-game item as a unit of proxy currency. That has introduced a number of economic concerns, from an imbalance of trade to tax concerns to liquidity crises. All of those things were connected, and Newell said they prompted a rethinking of Valve's approach to games.

Now he thinks games are productivity platforms for goods and services, which he acknowledged is a "super-weird" way of thinking about games. Economies get better the bigger they are, Newell said. And if there's no way to exchange goods and services in DOTA 2 for goods and services in Skyrim, he called it a global failure.

If Valve is right about this way of thinking, Newell said there are other conclusions to reach. There's not much difference between the way traditional applications create productivity (like Photoshop) from the way games do that, so Photoshop should be free-to-play, with Adobe getting a revenue share of the productivity that users create with the tool. The two things are now different expressions of the same underlying economy, Newell said. That changes the role of game developers, as now they have to increase the opportunities their players have for productivity.

"Think about what people are doing, then try to create frameworks that allow them to do it better," Newell said.

As for what Valve does next, Newell said they're working on input hardware. The goal isn't to sell a bunch of hardware so much as to move things forward. Valve is dependent on the vibrancy and success of the PC, and if making hardware is the best way to push it forward, Valve needs to do it. Valve is also working with in-home streaming vendors like Nvidia's Project Shield and Mirrorcast, as they need help making it a seamless experience for users.

If user-generated content is the way forward, then Newell said Valve needs to think about other ways that can happen. Stores need to be thought of as user-generated content. It's just a collection of content, Newell said. The Steam Store is a boring entertainment experience, but other people's versions of stores may be more entertaining. Each community or editorial perspective could be represented by a different style of storefront that would (ideally) be superior to the Steam Store for its intended audience.

Curation is another issue. The notion of a global gatekeeper for stores is a pre-internet way of thinking for distribution, Newell said. They still need to worry about viruses and people distributing content they don't own the rights to, but the more they can strip away the rest of the curatorial duties, the better.

Beyond that, Newell said Valve needed to identify what its users were doing that was valuable, and provide them with ways to monetize that, which is light years away from the old way of thinking about what the next weapon to be added to a single-player experience was.

So why is Valve doing this? Newell said it's the same reason it created Steam. Valve has been utterly dependent on the openness of the PC and the internet, and Newell said it needs to give back a bit to ensure the future of the platform as a place for innovation and competition.

"A lot of this is about trying to get away from these really disruptive console transitions where everything that customers and software developers invest in gets rebooted and then we all have to start over," Newell said. "I don't think there's a whole lot of value to that anymore, given modern software development and networking."

22 Comments

Bruce Everiss
Marketing Consultant

1,692 594 0.4
1) PC moving into the living room. Wishful thinking from Gabe. It is up against Microsoft, Apple etc, it is expensive and it is not user friendly in a plug and play manner.
2) He is right to think what Apple might do as being scary. Apple have the best strategic positioning to take over the living room.
3) It is interesting that the growth in FTP, a multi billion business, just passed him by.
4) User generated content. Minecraft has made a quantum jump for gaming. Other will follow.
5) Console transitions were bad for gaming when they were the dominant platform. But now they aren't so the current transition will be less important.

Posted:A year ago

#1

Martin Holm-Grevy
Lead Artist

2 4 2.0
Wishful thinking? yet you mention Microsoft and Apple. Aren't they exactly the "PC" moving into the living room?

Posted:A year ago

#2

Bruce Everiss
Marketing Consultant

1,692 594 0.4
Apple and Microsoft are already there!
And they are both preparing highly optimised living room content hubs that will be plug and play. And connected to a myriad of services.
Also they both have a bit more money than Valve to throw at their products.

Look at what is going on in preparation: http://uk.ign.com/articles/2012/09/18/microsoft-hires-cbs-exec-for-original-xbox-tv-content

Posted:A year ago

#3

Andrew Watson
Programmer

92 200 2.2
Popular Comment
> "It is interesting that the growth in FTP, a multi billion business, just passed him by."

TF2? Potentially DOTA 2?

Edited 1 times. Last edit by Andrew Watson on 8th February 2013 10:03am

Posted:A year ago

#4

Sandy Lobban
Founder and Creative Director

312 196 0.6
Good article. Enjoyed reading it. If you are going to do better number crunching, I think a console or hardware transition is inevitable though, Hard to see everyone always agreeing that the tech is good enough or going in the right direction in terms of architecture. That will always be there. Apple will make sure of it.

Posted:A year ago

#5

Brendan Adams
Marketing Executive

1 0 0.0
imo the future is smartphones streaming directly to tvs wirelessly from content provided by entertainment apps like netflix, iplayer, steam ect.. providing the content. Bluetoothing any needed perhiphals to the smartphone/tablet.

Edited 2 times. Last edit by Brendan Adams on 8th February 2013 1:48pm

Posted:A year ago

#6

Andrew Jakobs
Lead Programmer

227 88 0.4
i guess Newell has to say that to try to sell his steambox in a year.. But we all know Newell is always full of s**t..

Posted:A year ago

#7

Anthony Chan
Analyst

86 70 0.8
I respect Newell, but he does talk like a dreamer. I think his fear though is in the right place, which is good thing. Apple is rightly feared, as they do have control over the "living room". But I think his fear should go beyond that. Consoles are still here for one reason. Consoles are not just a gaming device. See the problem with developers is that many still do not see the big picture.

A game that exists on a device that is classifed as a general every day use device is always bound to reach a wider audience than a game that is on a device that is strictly for gaming.

For example, in the world of mobile gaming, Gameboy was king. Even PSP 1st generation held a very lofty spot for a very long time. Then what happened? The smartphone - especially iPhone. Now 2013, I am willing to bet from a investment perspective, there are more people gaming on smartphones than dedicated portable gaming devices. Why? Because the regular consumers need phones anyways, why not buy a device that is capable of doing it all. "Normal" people would forego graphics and sound and game on a smart phone than carry a 2nd device for the sole purpose of gaming.

Same thing for the console. The console started as a dedicated gaming device. Nintendo 8 bit was king. Now, consoles are being bought as general consumer electronics - as media hubs, streaming devices, and blu-ray players. Oh and it plays games!! - BONUS!

This leads to the point, gamers are not the majority demographic. As such, the success of a gaming device is actually based on its ability to be anything but a gaming device. Gaming should not be the only thing the device can do. Unfortunately, the steambox is nothing that we don't already have available. Being able to access Steam on TV? To the regular consumer that means absolute s h i t. We don't need Steam on TV, we don't need to game from a PC on TV either.

So if Gabe wants his box to be more than just a brief nerd orgasm, he needs to really think how to turn it into something everybody needs. Similar to how Apple convinced the whole world, that smartphones with touchscreens are the only phones worth using.

Edited 1 times. Last edit by Anthony Chan on 8th February 2013 5:25pm

Posted:A year ago

#8

Adam Campbell
Associate Producer

1,148 928 0.8
I agree with him, I do think console cycles are incredibly disruptive and cause uncertainty. Both waiting and jumping to a new set of closed platforms is an increasing problem.

Look at how concerned people are about cost of buying a new console, specs and backwards compatibility. Then there are those desperate for a new console generation and those who just want more games on their chosen platform. Its the same story every time...

Nothing is without its challenges but I do feel its time we move to something more open and more flexible in the living room. That's probably why I'm so inclined to support OUYA, PC based consoles and potential moves from Apple and their App Store business model expanding into the living room.

The concern is then a lot less about hardware and more about the content. From both a consumer and developer perspective.

Posted:A year ago

#9

Morville O'Driscoll
Games Blogger & Journalist

1,510 1,283 0.8
Popular Comment
@ Andrew Jakobs

I don't mean to be rude, but if all you're going to do is post a two sentence paragraph ending with a vulgarity, without any critical analysis whatsoever, perhaps you should rethink posting? :/

@ Bruce

http://gamasutra.com/view/news/164922/GDC_2012_How_Valve_made_Team_Fortress_2_freetoplay.php#.URVAIGeIhAo
Fortunately for Valve, its four-year efforts ended up paying off. Once the item store was introduced, revenues from item sales alone were four times larger than revenues from sales of TF2 itself, and after the free-to-play transition was finished, overall revenue was up 12 times higher than monthly TF2 sales were.
Valve have known about the benefits of F2P for awhile, considering that article is from May last year, and it went F2P in 2011.

Finally, Gabe Newell said
"A lot of this is about trying to get away from these really disruptive console transitions where everything that customers and software developers invest in gets rebooted and then we all have to start over," Newell said. "I don't think there's a whole lot of value to that anymore, given modern software development and networking."


Edited 3 times. Last edit by Morville O'Driscoll on 8th February 2013 6:24pm

Posted:A year ago

#10

Anthony Chan
Analyst

86 70 0.8
@Morville
nobody likes dropping money every several years, but to try to go against it is madness. Technology (especially in this century) is meant to move forward at increasing speeds. If you think dropping 400 USD on the new PS4 is bad, I assume you are not going to be the one bringing a 4K LED TV home anytime soon either.

Ragging on the console cycle as if it is a problem is like ragging on technological innovation. Nobody stands up and complains about the switches from SD to HD, analog to digital, VHS to DVD to Blu-Ray and the hardware costs to make the move (which are a lot more than just console upgrades)... but we bitch about console changes. It does not make sense. Sure the technology of gaming
seems to be moving faster, but that is the nature of the beast.

Sure it is costly for developers. But in all honesty, can we say there will be one platform and architecture that will last decades and decades that will keep the end user (gamer and consumer) enthralled - especially as I said before the next gen of devices need to be far more than just gaming devices, and able to unite all our commonly used devices in a meaningful way?

Edited 1 times. Last edit by Anthony Chan on 8th February 2013 6:41pm

Posted:A year ago

#11

Neil Sorens
Creative Director

17 48 2.8
Wow. The Photoshop analogy is completely off-base. You can't monetize creation with a software tool in any sane way unless you control the entire system in which those creations are used. And not every creation should be monetized, even if it can be. This is metrics-based thinking run amok.

In terms of consoles, the current generation is lacking in many ways, and progress always has a cost. But progress is still necessary, unless one wants Steam machines not to have any real competition down the road. Hmm...now who would want that?

Posted:A year ago

#12

Morville O'Driscoll
Games Blogger & Journalist

1,510 1,283 0.8
@ Anthony

I have no real problem with technological advancement, but staggering it more would I think benefit consumers. No-one complained about the switch from VHS to DVD to BluRay, because that was 2 changes of format in the space of... 20 years? With noticable improvements in both storage and viewing quality. Likewise, I'm not going to be dropping money on a 4K LED TV anytime soon, no, because many shows I buy or watch barely take advantage of the 1080p HD standard currently (even something like Leverage, which is downscaled to 1080p for transmission, isn't available on BluRay), so what would be the point?

That said, I am fine with upgrading my PC every couple of years, but there's a subtle difference with this (and with any SteamBox which allows modular upgrading), which I touched upon with my previous comment - backwards compatability. Just like BluRay players allow watching of DVDs (which means no-one has to throw their Buffy box-set out because it only works on outdated tech), so too the SteamBox will allow playing of games from 10+years ago, and games 10+ years in the future.

Finally, you say
But in all honesty, can we say there will be one platform and architecture that will last decades and decades that will keep the end user (gamer and consumer) enthralled - especially as I said before the next gen of devices need to be far more than just gaming devices, and able to unite all our commonly used devices in a meaningful way?
And seem to forget that the PC has been around as a gaming machine - and much more - for 20+ years. The SteamBox may be marketed as a gaming machine (the clue is in the title :D ), but at heart it's a PC, something which does indeed have the possibilty of uniting all our commonly used devices in a meaningful way. And, let's be clear about this, it's not just gaming and applications. I can wirelessly sync the comics reader I use on my phone with its desktop counterpart. I can stream all my music from my PC onto my phone; the same with video. Sure, I can watch .avi and .mp4 files on my PS3, but I need something to transcode .mkvs... Like PS3 Media Server on the PC. I could go on, but I think you get the idea. :)

Edited 2 times. Last edit by Morville O'Driscoll on 8th February 2013 9:32pm

Posted:A year ago

#13

Adam Campbell
Associate Producer

1,148 928 0.8
I agree with Morville consoles are a different beast and not half as flexible either.

But it comes back to what I said about openness earlier if you look at some of the biggest problems. Openness or lack of could be one of the biggest factors in the next generation consoles' future success.

Posted:A year ago

#14

Paul Gheran
Scrum Master

123 27 0.2
Yo Brendan,

Thats called wi-fi direct and has been out for a couple years! Look into it, some pretty cool stuff.

Posted:A year ago

#15

Paul Johnson
Managing Director / Lead code monkey

808 1,005 1.2
Anyone notice that his face looks like a texture map?

Sorry!

(It just does)

Posted:A year ago

#16

Simon Dotschuweit
MD SE / CTO

25 2 0.1
@Paul: Yes now that you say it, it totally does, someone up for putting it on a 3d model head? :)

Posted:A year ago

#17

Lee Walton
Co-Founder & Art Director

33 4 0.1
I watched this talk a few days ago but it seemed rather rambling and confused (it confused me). The key feeling I got from this is: Valve are a PC based business, and as we enter the post-PC era they are quite rightly scared of sinking. They need to search for any life rafts that anyone throws into the water... and currently they are trying to create their own life rafts. Simple survival tactics.

Posted:A year ago

#18

Craig Page
Programmer

382 218 0.6
@ Lee Walton

LOL, I got the same feeling from reading this, that Gabe was just rambling and didn't have anything to say.

Posted:A year ago

#19

Adam Coate
CEO & Founder

34 34 1.0
Console transitions are definitely bad for developers, especially the coming one. Not only do developers have to spend more on development, they have a smaller market that they're selling to. And really, have the potential of the PS3 and Xbox 360 been fully tapped yet? Do these games really look substantially worse than they do on PC? The average gamer probably can't even notice the difference between say DMC on Xbox 360 and on PC. Yet the hardware manufacturers are going to try and convince them that their current machine is obsolete and that they need to spend another $300-400 to replace it? In my opinion, the next generation of consoles is going to be disastrous for all 3 major manufacturers. I predict the new consoles selling a maximum of 50% as many units as their previous offerings. I see the casual types holding on to their old hardware using it for Netflix and not really feeling sold on new hardware.

As for Valve's plans with the Steam Box, it remains to be seen what will happen. They'll probably learn that there's no money to be made in hardware. I like the idea of them creating a "mini supercomputer" that can do all the computing for several monitors at once. How far it goes all depends on the price point and how they leverage it. Considering they are having someone else manufacture and sell it, they have to allow those companies to make a profit as well. So that will push the price up. I'll wait and see. I like Valve as a developer. But as a curator they don't stand much higher than Apple, Microsoft, and Nintendo for me.

Posted:A year ago

#20

Paul Johnson
Managing Director / Lead code monkey

808 1,005 1.2
It's just fine for most developers - they're all on mobile. No really, true story.

Edited 1 times. Last edit by Paul Johnson on 10th February 2013 11:03pm

Posted:A year ago

#21

Rick Lopez
Illustrator, Graphic Designer

1,269 941 0.7
Why cant the hardware be upgraded, without changing the PSN or Xbox live networks and why cant thinks be backwards compatible. Why cant old contrillers run on the consoles? Why a different Operating System. Why does the whole infrastructure have to change to simply to upgrade the RAM and CPU speed of the box.

Posted:A year ago

#22

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