The one thing in common about movies, television shows, music or books is that they’ve all gone digital. I use Netflix instead of cable, Spotify instead of iTunes, and Kindle Reader instead of paperbacks. Want to guess what I use for video games? Yup, Steam.
Steam has been around for a while and was one of the first digital distributors who really figured it out. The Valve team noticed that video games don’t have to have a $60 price tag. Lower pricing means more volume sold – cutting out the packaging and selling digitally is very cost affective. They are constantly having specials, game bundles and discounts because they know the profit of a customer doesn’t end with one sale. I know the first time I used Steam was for a super discounted Portal. Since that day I’ve bought two other discounted games and have some pretty boisterous brand loyalty.
With Steam already owning over 50% of the video game digital distribution market they have a huge head start on competitors. They have set the standard of rewarding game developers over twice what they receive from their normal retailers. This is going to be a tough pill to swallow for companies like GameStop. They have been screwing over their customers and clients forever. Now that they must deal with a dying business model, they better jump on board the digital distribution train. [Via]174