Valve On Steam: Part Two

Jason Holtman and Doug Lombardi talk marketing, Portal 2 and Steam for Linux

Last week, GamesIndustry.biztalked to Valve's director Business Development Jason Holtman and marketing VP Doug Lombardi about the company's plans following the launch of Steam for Mac.

In this second and final part of the interview, the pair discuss Steam's business in general, the issues of marketing in a multi-format age, how Half-Life 2 remains their internal benchmark for success, and whether Steam will move to Linux.

Q:How much more loquacious and open to publishers are you with your figures, given you have a policy of never revealing sales data to the public?

Jason Holtman:Well what they're seeing is their own numbers. So that's the feedback loop. So once you see that and you have one title come out because it's an old port, you go "oh, there's some customers out there I just made happy." And then it's really easy for them to translate that. So that's where they're getting their feedback loop from, it's really very one to one, it's with their own customers.

Doug Lombardi: But then there's also a certain level of information that is shared in business meetings that isn't shared with the public. You have to let people know what the risks and the opportunities are in any business discussion. So we try to do our best to share at least our own data on our games and what have you, and help them understand what's possible there. Because there are some folks who have really huge catalogues and have thrown some Mac titles into the mix and they get it. And then there are some people that don't, so we try to do our best to educate everybody to the opportunities and risks that are out there. Like I say we have a pretty decent catalogue of our own that we can use in those private discussions.

Q:Has there been any specific resistance from anyone who hasn't got any Mac titles up there yet?

Jason Holtman:Oh yeah, it's going to take time. It's obviously going to take time. But nobody's resistant to it, everybody who sees it goes "oh, that's really interesting, that's something new." Nobody's fighting it, but everybody's wondering what they do over the next year or two with their titles. It takes time to play a title and to fund a title, so they're thinking about it and they're incorporating this new data and this new way of thinking about their target, their target hardware, into these plans they're making for a year or two.

Doug Lombardi: Yeah people were opposed [laughs] to Steam when it first happened in 04 and 05, but nobody's opposed to Steam for the Mac today in 2010. But to answer Jason's point, there are people are trying to figure out which title makes the most sense and when can they do it simultaneously with their other releases. Because that's something that I think people are getting true religion on. People are looking at their titles for this holiday and saying "a Mac version would screw with my schedule or I'd have to ship it late. Neither of those is super-desirable. But the titles that I have in Spring of 2011 or in holiday of 2011, let's have a discussion and let's see those numbers and start to figure it out."

So that's when folks can really start to see the advent of simultaneous releases on new Mac releases really start to kick in, now that the foundation has been laid this year if you will. You'll see some new releases coming in 2011 – including our own one, Portal 2.

Q:I was going to say, looking from afar it seems like the list of releases has declined somewhat, but I did wonder if it was a sign that people were beavering away on a second wave following the proof of concept?

Jason Holtman:That's exactly right. The things that you saw come out, we tried to collect as much as we could that made sense that could come out then, and now I think you're honestly going to see this lull for a year or so while people think about what to do. And then we're going to come out first –we always tend to move first – with Portal 2, but it will take time. It will take time for people to incorporate this into their dev schedules and their production schedules.

Q:So when this happens, at the mid-point next year, is that the paradigm shift for Mac gaming?

Jason Holtman:Yeah, you'll see it happen. I'm sure you will. Because there are people out there with Macs and they're playing games. It's just going to take time to build on it.

Doug Lombardi: And this follows Steam's momentum patterns of the past. We came out with Counter-Strike Condition Zero, first title sold on Steam, March 2004. And we sold a few units. Half-Life 2 came out November that year, we sold a few more, and we had a bunch of problems, a bunch of stuff we had to fix and then by the time we got to Orange Box, we had figured out how to sell our own titles. Around that time we really started selling third party titles, and it really wasn't until two years or so ago that you saw third-party games really on Steam. Like, a lot. And today you see them all.

So it's always been that something comes out, it opens the door, it works as the test example, then there's the second iteration of stuff, and that second iteration or really third iteration is, all of sudden it's holy cow, that happened really really fast. So it depends whether you're looking at the first couple of months of it or three years out. Having said that, going from Condition Zero to where we are today in six years, there's a lot that's gotten done. There are 1200 games on there now on two different platforms, etcetera. That's pretty good pace. Again this Mac thing, it follows the same characteristic. There's the launch period, things get proven and then you can feel this revving up for the second wave, and that's really where the big momentum hit happens.

Q:How are things going on a technical level? Not the platform itself but the games that have come out so far – is there some degree of DirectX emulation going on there?

Jason Holtman:On our stuff we've done native versions, an Open GL layer for Source and it's not an emulator, but we're taking other games that are doing a variety of different approaches, whether it's a subset of what we're doing or using some of our code or they had native Mac versions out in the past or they've done some of the other porting processes. From Steam's standpoint it's agnostic to it. From our standpoint we think there's value in doing native versions as it makes it easier for us to update them etcetera and hopefully get the best performance out of them as there's OS changes and driver changes.

Q:Yeah, there's been some observation that some of the Mac versions have higher system requirements than the Windows ones. Is there a universal reason for that, or is it people getting used to the new platform?

Jason Holtman:They're just different versions and they're going to have different requirements. But right now as we look at customers experience on that Mac, it's just like any other version that we have. They're universally pleased, right. They like playing, they're having a good time, so we're going to continue doing what we're doing with all versions of our games. We'll look, see the feedback, we'll autopatch, autoupdate as it goes along.

Q:What about the issues of Macs in general having lower system specs, especially in terms of graphics? Does that present serious impediments?

Doug Lombardi: Well, you've got a marketing guy and a business guy on the phone, I don't want to try and even pretend I can talk about that super-intelligently. There's common knowledge stuff though. The Pc has been targeted as... look at the amount of software that's been sold PC games over the years. NVIDIA and ATI and the other guys that make the graphics cards have been chasing that and working with those vendors for years and years and years for multi-billion dollar businesses. That hasn't occurred on the Mac over the past couple of years, so their systems are tuned for different applications.

Doesn't mean we can't run our applications on those systems, but they're not tuned for that ultimate high-end gamer who wants the fastest frame-rate: and a framerate that most people can't even detect the differences between. Yeah, that's still going to happen on PC given the current state. What Apple does in their next couple of refreshes, they may close the gap there. There's certainly been a lot of momentum since the Intel CPUs were brought in to their systems and their architecture. I don't know that we could have done this prior to that move. So we'll see what happens.

Q:Yeah, you've got to wonder what ATI and NVIDIA are up to for the Mac. It seems impossible that they won't be all over it, given the boom in ownership lately and that graphics board sales are down on PC...

Jason Holtman: [Laughs] Yeah, I don't think any of those guys are allergic to doing business, so wherever there are opportunities they're going to be there and making fast parts. That's the business they're in. Again, I don't think it's "oh, it's a total freakin' ghetto." That was the case a while ago, today it's the difference between whether or not you drive a Maserati or a Ferrari", and frankly I'm not even sure which one goes faster, so it's not applicable to me.

Q:What's the plan for updates for you guys, outside of whatever Apple may end up doing? Is there any kind of divergent path for how you plan to or have to evolve the Mac version as opposed to the PC version?

Jason Holtman:It is platform agnostic. Steam goes with you wherever you are and it's the same Steam wherever you are.

Q:What about the reception from the audience? I know you've said they've been universally pleased, but do they seem to have fully grasped what Steam in its entirety is? As you were saying there've been these jumps in it evolution – multiplayer, a story, then a universal store, then Steamworks... The PC guys had a chance to get used to the platform as it evolved, but in this case you're launching them straight into this huge and complicated thing.

Jason Holtman:In terms of the experience of Steam themselves for an Apple user, I don't think there are any bumps at all. I think people are very, very used to it, they understood it, they know the features, they know what's good about it. So it wasn't anything like when we first launched the platform back in 2004. You didn't have that great experience. These are seasoned folks who know exactly what it means to get a service.

I think the only negative we got from folks was everybody wants more content. If you can call that a negative reaction. We constantly get these torrents of mails, kind of like when we first launched third-party titles on Steam, from customers saying "I see this mac version can you go get it, I wanna do this." So we're feeling that pressure from customers and that's a really good pressure to have. That's what people want from it now, they want more games.

Q:Moving on to an admittedly rather speculative question, how concerned are you that Apple might one day release a version of the App store on OSX and come along and steal your thunder a bit?

Jason Holtman:Life is filled with risks. [Laughs]. Who knows? I mean we've charged ahead with this, and we'll see what happens in the future. Lucky for us if we make a killer version of Portal 2 for the Mac, it'll sell regardless of whether we're selling it or Apple's selling it, and we'll be happy. The future is unknown.

Q:How much of your marketing for Portal 2 will be based around it having a native, simultaneous Mac version?

Doug Lombardi: Looking at how you do that, how you actually spend the money, and thinking about the platforms is like saying oh I'm doing this ad to drive this platform or what have you, is really I think old school and tied to the old print mentality. So when I was managing the budget for Half-life 1 about 60-70 per cent of the dollars were going to print and in that case, even though Half-Life is a bad example because it was PC only, had that been multi-platform, platform spending would have mattered. Because I needed to spend in PlayStation magazine, OXM for those ads blah blah blah.

Today, the websites are all multi-platform. If you're doing television ads, which are where a big, big percentage of where the dollars are going, those are all multi-platform. If I'm buying on a premiere football game, is that a console buy or is that a PC buy, or is it both? I don't know. I'm just advertising the brand and the project and the game. So, it's really really hard to say that we're doing something that's Mac-specific or even PlayStation-specific anymore. So I guess I just don't really think of it that way, of being divvied up by platform and I don't think anyone else here does when we get set to spend the tens of millions of dollars that we put behind this titles worldwide.

Q:So you think game marketing is going to by necessity become about simply creating awareness rather than targeting specific audiences?

Doug Lombardi: Well I'll put it really concretely. Of the $25 million that we spent for Left 4 Dead 2, which came out on PC and Xbox, only two different platforms, at least $23 million of it was spent just promoting the brand and the game. Without any thought of it was PC or Xbox. We were advertising Left 4 Dead 2.

Jason Holtman: The piece I would add, you were asking about advertising the Mac version, the other advantage we have in the case of Portal 2 – the PC and Mac version are the same thing.

Q:Ah yes, if you buy it in one version of Steam it appears in the other too.

Jason Holtman:Absolutely. That's the same box in the same place to the same people. So we don't think about it as you have to go buy a box that says a Mac on it or do specific advertising for that.

Doug Lombardi: That's also gotten worse as you've talked about; we've gone from being on two platforms with Left 4 Dead 1 and 2 to four platforms now with Portal 2, with PlayStation 3 and Mac being added. So I think that whole thing gets diluted even further as you add more platforms to it. It seems that's more the norm for other games to be on multiple platforms. We're sort of one of the last hold-outs to being on only one or two platforms. It seems like most games that come out now are on like 14 different platforms...

Q:Yes, everything has an iPhone version now as well.

Doug Lombardi: Right, exactly [laughs].

Jason Holtman:Did you guys talk about our Commodore 64 version of Portal 2? Big news!

Doug Lombardi: I'm crusty, the one I always have to slag is the Atari Jaguar, but I wasn't going to go there...

Q:It's always be the ZX Spectrum for me.... I guess Portal 2 must be your biggest launch by quite some margin then, if you've got four platforms. That's a lot to deal with.

Doug Lombardi:Well, it's forever going to be competing with Half-Life 2. Everything that we do competes with Half-Life 2. That was a huge, huge launch. It was six million or something in the first year, so we're always chasing that one. But yeah, Portal 2's going to be really, really big. Coming out of E3 with the way it showed there and the awards we won there and adding Mac and PlayStation 3, it's definitely going to be the biggest one we've done since Half-Life 2. ...

Q:Really? I remember you were talking up both Left 4 Deads as having your biggest-ever pre-orders? Does that mean pre-orders aren't that effective a barometer of absolute success?

Doug Lombardi: Well, it was a different world. Pre-orders back in the day weren't as big a deal as they are today. Console games get pre-ordered a lot more than PC games. That was true then, that's still true now. Half-Life 2 was PC only. In Europe, the idea of pre-ordering really has only come in to vogue pretty recently, and really the UK is the only one that does it in big numbers. So it was a different time, and the multi-platform thing adds to the pre-order thing.

Plus the thing that happened with Left 4 Dead 1 and 2 was both of those just started taking off versus our forecasts. Part of it was the pre-order thing which has been phenomenal and our biggest in history, but also the game catching us by surprise a little bit in how it performed. Both the first and second time. The first time was the number one new IP in 2008, and was EA's best-selling title for that year. It achieved some things that I don't think anybody thought it would six months before it came out. Left 4 Dead 1 is special. ...

Q:Yeah, it really caught the zombie zeitgeist just before everyone else started doing it. Let's talk about publishers' attitudes to Steam in general, beyond just the Mac. Some people have suggested that Steam has too much domination of the download market; how have attitudes towards it changed recently?

Doug Lombardi:Oh, you're talking about the conspiracy monopolist theories... Y'know, I would point you as I probably would back then to other people – ask a group of people who work with us. Don't ask us. We're always going to say people love us. If I tell you my kids are handsome, you're not going to believe me. If someone else tells you they're handsome you'll believe them. ...

Jason Holtman: – Doug, you have very beautiful children. ...


Q:What's been your reaction to those NPD figures last week, claiming digital distribution constitutes 43 per cent of the PC market?

Doug Lombardi:Yeah, we're unsure as to how they came up with those numbers, so commenting on them would feel strange. ...

Q:Blizzard told me exactly the same thing a little while ago, as it happens. Funny business, eh?

Doug Lombardi: [Laughs] It does point to what we've been trying to say forever which is that the PC is not dying, the business is just moving elsewhere. And to their credit, they're starting to make strides to give everyone that information and paint a more complete picture. But again those reports that came out weren't based on any data that we've provided, so it is what is. ...

Q:Final question, and one I'm sure you're not super-keen to answer, but I promised one of our tech guys I'd ask it. What truth is there to rumours that you're also working on a Linux version of Steam?

Doug Lombardi:There's no Linux version that we're working on right now. ...

Jason Holtman is business development director at Valve. Doug Lombardi is marketing VP. Interview by Alec Meer.

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Latest comments (5)

Igor Macukat Studying Computer Science (Games), University of Brighton11 years ago
I think Steam on Linux is not only a brilliant idea but it's also a massive marketing opportunity. As far as a few games are concerned that are heavily based on OpenGL that can be run through Wine, Linux is practically untouched by the "main stream" gaming market. Valves presence won't only be influential in helping to bring Linux on the gaming radar but it might also bring a lot of people to the Linux platform in general, including myself. The only reason I still use Windows is because of Steam and Games, but I'm sure Valve is not even remotely interested. Not to forget that bringing Steam to Linux must be a pain :D
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Phonixor Secret11 years ago
its not a massive marketing opportunity...
if only it was.... i would love games on my ubuntu machine :)
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Delan Azabani11 years ago
(Cross-posted on part one)

This is a classic chicken-and-egg problem for the Linux family. There is currently a very small selection of games for Linux-based operating systems. This is because of the small selection of gamers in the market using Linux. However, this is because there aren't many games. There must be games available before gamers can play games.

I don't see game porting as a technical problem (as the ones who claim Linux market fragmentation through distributions would say) because dependencies are handled well among most major distributions, as well as the fact that binaries are standard across the board.

I don't see game porting as a monetary problem for two reasons. Firstly, as Mac OS X is very, very different to Windows, but Linux is closer, sharing OpenAL, OpenGL, and, in some cases, X11, most of the work for porting is done. It's just the heavily operating system specific code that should be sorted out. The porting of the graphics rendering subsystem itself is almost done with the Mac OS X port.

Secondly, any expenditure required for the porting would be paid off by Linux users purchasing these games. Market share measurement should not be relied upon, but as a general community "feeling", there is strong demand for Linux operating systems to have major retail games.

I would also like to clarify the general misconception about the "Linux user mentality" and how Linux users are not actually afraid of DRM or proprietary software. Organisations such as the FSF, and people such as Richard Stallman give us a bad name. They see DRM and proprietary software (which is the default method of making money through software) as the root of all evil, and only see money being made for software through support, such as with Ubuntu.

This is not true, and represents only a minority of users' views. I for one, can say the same thing as most users, in that I have no objection to proprietary software, and would be very happy to pay for any closed-source software that I need, especially retail games, if Valve ports Source to Linux.

Having a Linux version of retail games, especially Valve's games, as well as Steam, would be very beneficial for Valve.
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Show all comments (5)
Aurélien Dussalve11 years ago
I agree with the precedent comments and, as macukat said, the only reason I still having windows in my computer is for Steam (love counter-strike) and other AAA titles.

Let's all join hands and pray for a linux-based Steam :)

Edited 2 times. Last edit by Aurélien Dussalve on 26th August 2010 6:36am

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gi biz ;, 11 years ago
As a Mandriva user, I only keep Windows for running games when Wine doesn't work. But not having any enabled connection under Windows, I still can't use Steam or any game requiring an online activation.
I keep on waiting, and I'd like to remind everyone how well Unreal works on Linux ;)
And yes, I agree with Delan's post: I wouldn't mind buying proprietary software. Free software is an alternative to "traditional" models, and when I say alternative it means companies are free to choose!
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