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Analysts: Steam to continue dominating until competitors “meet or exceed” its performance and value

Saturday, 12th November 2011 16:05 GMT By Stephany Nunneley

With EA expanding its Origin service to include third-party titles, analysts have weighed-in on whether the service stands a chance at competing with Steam’s 35 million user accounts and 1,400 strong game library.

Speaking with Industry Gamers, the analysts all seem to agree Steam is the king of digital distribution services, and because of its dominance, David Cole of DFC Intelligence doesn’t see much room for grow at this point due the service’s already massive share of the market.

Cole also doesn’t feel Origin will have a significant impact on Steam’s user numbers, but  EA will still benefit from the amount of consumers using its products.

“EA does have a great deal of consumers that use their products so they are in a good position to act as a distributor to those consumers,” he said. “That is basically how Steam got started, as a way to distribute to players of Valve games which they naturally leveraged for other games.

“But there are others like GameStop, Best Buy that may have more consumer ties and really that is what EA is competing against. Yes, EA is joining the party and following the Valve model, but they are doing so at an awfully late date.”

EA has said before that it’s not competing with Steam, and it hopes that adding third-party titles to its Origin will make it the “HBO meets Netflix for gaming,” according to a comment made by CEO John Riccitiello in October.

“The way we look at it is like retail distribution, digital distribution is all about getting in as many storefronts as possible,” continued Cole. “Right now Steam is far and away the dominant distribution channel; no one else is even close. So it makes sense that new, would-be competitors would pop up and publishers are willing to try out those new distributors. Origin is just one of many.

“Right now I would say Steam, from a market share perspective, has nowhere to go but down, but that is just the nature of the beast in an expanding industry. If you help pioneer a new category it will create competition and some of those competitors will eventually chip away at market share.”

In order for Origin or any other digital distribution service to compete, though, the service “must have market scale and provide significantly more real and perceived value to customers,” according to Billy Pidgeon of M2 Research.

“I’d agree that EA isn’t competing with Steam, but neither is any other publisher or retailer,” he said. “When it comes to digital retail, Steam is peerless. I don’t see any open online marketplaces doing this yet, outside of subscription and free-to-play models, and next generation games on demand such as OnLive and Gaikai

Michael Pachter of Webush Morgan agrees: ”I don’t think that most people care about Origin, and I don’t think many people will switch from Steam to Origin unless: a) Origin is cheaper, or b) Steam screws up,” he said.

“I don’t see either of those things happening.”

All seem to agree, though that Steam will continue to lead in the digital distribution market until a competitor can “meet or exceed Steam’s performance on customer experience and value.”

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4 Comments

  1. Stardog

    The reason Steam is so expensive (not during sales) is because the publishers set their own prices. If Steam/Origin where proper retailers, Origin would be able to undercut them, but they can only do that with EA games.

    They’re screwed.

    #1 3 years ago
  2. ultramega

    @1

    Well, Valve has shown just how many units get moved on average when publishers hold sales. It’s HUGE. Many games I just wait out for for a sale now, because of the great deals.

    The other thing that a lot of people don’t do is go to sites like GreenManGaming. You can get new games off Steam pre-ordered with discounts between 10%-33%. I know I paid almost half price for Dead Island at launch.

    #2 3 years ago
  3. Lounds

    Steam is amazing and XBL and PSN should learn how to do that model properly.

    #3 3 years ago
  4. GrimRita

    @1 while EA charges £40 for BF3? Sure……

    I’ve picked up some bargains on Steam – Company of Heroes(all of them!) for a fiver is one.

    Steam is superb in every way possible and is getting better all the time. The best feature is the one that allows you to download your game on any PC – so if you are away and want to play, makes it nice and easy.

    Community features such as screenshots and videos add to the mix which is why I cant see anyone beating Steam now or in the future.

    #4 3 years ago

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