Valve's Jason Holtman
The business development director addresses Steam concerns, Modern Warfare boycotting and how publishers are learning from the digital platform
As the leading platform in digital distribution, Steam is the benchmark by which all others are judged. It's the platform all PC games want to be on, and although Valve won't reveal official market share numbers, it's clearly leading, growing and inspiring the online game sales market more than any other service.
Here, in an interview with GamesIndustry.biz, business development director Jason Holtman throws light on how Steam has evolved over the past five years, and addresses some concerns about the size of Steam, it's relationship with Valve's own games and the recent boycotts of Modern Warfare 2 by rival online service.
Q: Can you give us a quick overview of your role at Valve on the Steam service?
Jason Holtman: One of the things that we do is we run the soup to nuts part of it so we do everything from marketing for titles, planning for the years ahead, and we also carry that function through the life of the title, manage the store and managing the game. Once a game is released we're constantly in touch with the developers asking if they want to do an update, how's the game doing, what about adding additional features etcetera. We think of ourselves as taking games from the cradle and we haven't had one that's hit the grave yet [laughs]. We keep them going from the first day.
Q: Can you give us an update on the number of users you have on Steam, and the amount of titles they have access to?
Q: Localising the service sounds like an underestimated part of the job...
Jason Holtman: Once you get it programmatically and you start paying attention to the rest of the world it's actually not too difficult. And once you realise it scales you have to do it. If you're going to have a worldwide platform you need to deal with people in Danish and Russian. You have to, and if you don't you're going to miss customers. One of the fundamental things we've always thought about Steam from the very beginning is that we wanted to make sure we weren't just going by the old ideas of territory and retail distribution models. A good example is you can be in the US, England or Russia, but if you speak Spanish, you can get the Spanish version of the game. German speakers in the US can get the version of the game they speak in, and that's fantastic.
Q: Steam is five years old and this is a big question but what have been the fundamental changes over that time?
Jason Holtman: It's original goal was as a back end for games. It solved this problem for Counter Strike that we had which was we had a community that really wanted to play Counter Strike together, and if we wanted to give them content we had to break it up. Steam was the solution of how to keep customers together, playing with the people they want play with. That's how it started and that's still one of the really powerful features of Steam, the matchmaking services and the auto-updating services.
Then one of the first things we did once we had a number of connected customers was to give them content. We started by giving them Ragdoll Kung-Fu from (Media Molecule co-founder) Mark Healy. And that was a great success so we started getting some of our first publisher partners like Strategy First and then Activision and 2K. That was a certain period of Steam where we were growing our catalogue and our relationships and getting credibility as an online distributor. And now we've reached the point where people understand that we're one of the valuable channels to get PC games through. If you've got a PC game, you're probably going to come to us and put it up in our store. That's the evolution of the store at least.
Q: How has the Steamworks platform evolved in that time?
Jason Holtman: Really what's happened in the past two years is we've expanded the services and features part of the business. So we've always had services in our own games and the team has been really focused in the past two years in packaging those features up and making them easily consumable by developers. All of a sudden we're in the business of making good APIs and documentation. That's what we call Steamworks. We've always had these services, they were home-grown, ad-hoc services that we could use really well, and the past two year's we've made those really useable for outside users. And they are taking them on, they're using them everywhere from the small to the really big titles.
Q: How do you manage the different relationships between the smaller indies and people like Activision how do you ensure both get the service they need?
Jason Holtman: There are a lot of differences but more similarities than you would think. The differences are simply in scale. If you're going to deal with Introversion or Dylan Fitterer and Audiosurf, then that's just a phone call away because we have one-on-one contact and we can all move very rapidly. But at larger companies there are multiple people, and it's difficult to reach decision makers. When we were first getting larger publishers online that was always the case because they have hosts of people that deal with those kind of functions. The funny thing is that now, those relationships have begun to look like the smaller developer relationships. Larger developers and publishers have learned that they can move quickly. We have great one-on-one relationships with their team members and we can call them and you can watch an Activision, EA, or a 2K turn on a dime. We're all learning from that model because at its heart, the digital distribution marketing model really demands speed and elasticity. You have to do the smart thing to make your customers happy the next week so you have to think within days. Publishers are learning that, they're taking advantage of it and they're doing well from that thinking.
Q: It highlights the credibility and respect that Steam has amongst publishers, and you've helped push through an evolution of thinking on digital distribution...
Jason Holtman: For some reason when people think about online distribution or the way the games industry is changing as human beings we think binary we like to think somebody wins and somebody loses. It's a fun story, but in terms of the games we're carrying, everybody is benefiting from the breadth of content on Steam. I would hazard a guess that Left 4 Dead 2 and Modern Warfare 2 do better because games like Torchlight and Audiosurf exist on Steam, and vice-versa. There's not this perception that we've gotten so big that the front page is going to be EA and Activision games. That's not the case, because if you look at the front page of Steam at any given time which is driven by customers needs and wants you'll see Torchlight is in our top-ten sellers. People are spending as much and consuming as much as some of the triple A releases that are out there. We don't make those decisions that somebody has to lose to the get the marketing that somebody else would have. We're literally looking just at what the customers want and need.
Q: You've said it yourselves, and we've heard it from independent developers too: weekend promotions really boost sales. How do you decide on those promotions, what are they based on and how do you manage those deals?
Jason Holtman: It's really more based on consumer feedback and talking through our relationships with publishers. So we don't have anything in a contract that forces anyone to do anything in the future. It's more about if a game is succeeding at a certain level or doing something interesting we'll go to focusing and see if we can build a promotion or try to add something extra. The sell to do that a year or two ago was harder, because nobody actually understood it. Now everybody understands that curve. They understand that if they try something and they don't like it in the digital world, it ends. We don't have to do this super-convincing job of getting all the marketing together and buying ads and print things and put things on shelves to get ready and if it fails you're in trouble. We can just try it out. Publishers might suggest 50 per cent off a game, but we'll try to get them to try 75 per cent and see what happens. And if you don't like that, they can try something less.
Q: Is it difficult convincing publishers and developers that they should discount their games so radically?
Jason Holtman: There's lots of things that go into whether or not you want a sale. It's not just case of cutting price and it'll improve revenue. We've always seen that to be true, by the way. We've never ran a sale where it's been detrimental. Sales have always made more money than the amount of discount. But there are things like timing some companies might not want to run a discount too early, they may want to spread it out and wait a little while after release. But in general it's pretty well understood that running a sale and promotions on Steam is always a good thing. The other thing we've noticed is that unlike at retail or the traditional model where sales are really just parts of a plateau as you're stepping down to the bargain bin, on a connected community you can run a very deep sale that you wouldn't run for a year or two on the High Street, but then you can stop it and go back to your original price point and customers don't punish you. It's a different phenomena.
Q: That's something that has been picked up and used to good effect on the App Store for the iPhone. Games drop in price for a week and then go back up...
Jason Holtman: The most radical version of it we did for Team Fortress 2. On Halloween weekend we had some special content and ran three sales for two hours a piece, where we took the game to £2.49. It was radical and unannounced. The fun thing about it was not only are our sales stronger, but the really interesting thing is that sales and buying things, in and of themselves are kind of a game. Marketing is not this thing where people say "I don't like being marketed at, I don't like being forced to buy something." People like to consume and they like games, and when you add these elements people react to that. Even those that didn't buy the game were watching their Twitter feed and laughing at their friends passing the information on and going a little crazy.
Q: What percentage of the digital distribution market does Steam have in the US or globally?
Jason Holtman: We don't share those figures but we know we're strong. I would say we're market leader. It depends by game and by publisher. It's definitely somewhere you would want to place your PC game.
Q: The fact that some digital distributors refused to carry Modern Warfare 2 because of Steamworks speaks volumes. Did that affect your sales? And what's your impression of that boycotting?
Jason Holtman: Well Steamworks is this set of tools where we've got all sorts of services that make the game better and we give them out for free and developers can choose to use them or not. In this case, Modern Warfare 2 used quite a lot of them. We try to make those services that developers and our customers want. Whether another distributor wants to carry them or not, we don't have any say in the matter, that's between Activision and other online distributors. To our minds, we think that if you're making a good game and it's got the services a customer wants it should get out in as many channels as possible. If you have a good portal and you're good at collecting money from folks, and attracting them, there's no reason why you shouldn't be. The interesting thing is those games that have Steamworks features in them are really made to be the things customers want. Developers are choosing the features that make the game better. There's no service where there are features you have to have, developers are choosing between those. There's a lot of games that came out in 2009 with Steamworks, and they'll be a lot more games in 2010 that have Steamworks.
Q: And how were Modern Warfare 2 sales through Steam? Can you give us an impression versus previous titles in the series or other big first-person shooters?
Jason Holtman: Oh, it's a big triple A title for us. I'm trying to think of a way to put this so you can grasp onto something about the size of it... Steam sales actually scale with the game. So if a game sells better on all channels it's a blockbuster, it's going to move an awful lot of units on Steam. As third-party triple A titles go, it's by and large one of our greatest sellers right now. It's doing very, very well. If you look at the player numbers, you can see there's a lot of people enjoying it not just playing it that are constantly enjoying it now. Hats off to Infinity Ward, because they made something that people really want to play.
Q: Do other developers and publishers have a reason to be concerned about the size of Steam? There's have been some concerns about Valve using Steam to sell its own games on the service...
Jason Holtman: There's nothing better in the world for anyone making an Xbox 360 game than the fact that Halo exists. It's awesome, there's nobody saying boy I wish Bungie hadn't made Halo because it sold an awful lot of Xboxes that you can sell your games on.Having the content and the distribution that go hand-in-hand make it a stronger platform, make it a platform to reach more consumers with your own game. If you look at any given time on our top-sellers and our marketing, it's clear that [Valve games] are not the only push out there. In terms of whether we get too big or maybe our content shouldn't be on the platform, it's just doesn't make much sense. Because the content helps the platform grow. And the other thing about PC in general is that unlike a closed platform you can make your own. We have a force of openness on the PC that's always pushing on us. If we started doing things that were bad decisions for customers or developers, they can just move and go somewhere else.
Jason Holtman is director of business development for Steam at Valve. Interview by Matt Martin.
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