Print 115 comment(s) - last by johnsmith9875.. on Oct 19 at 10:06 AM

  (Source: Haloz)
"They build a shiny sparkling thing that attracts users and then they control people's access to those things"

You may recall that top video game maker Valve Corp., makers of the Half-LifeCounterstrikePortal, and Left 4 Dead series, as well as the hit video-game distribution client Steam, recently aired some of its titles on Apple, Inc.'s (AAPL) Mac computers for the first time following some teasers.

But while Valve now is vending products for Apple's personal computer platform, it appears like there's little love between the firms.  Valve president and owner Gabe Newell blasted the Cupertino tech giant for its dictatorial approach to the mobile market.

He comments, "I suspect Apple will launch a living room product that redefines people's expectations really strongly and the notion of a separate console platform will disappear.  I'm worried that the things that traditionally have been the source of a lot of innovation are going - there's going to be an attempt to close those off so somebody will say 'I'm tired of competing with Google, I'm tired of competing with Facebook, I'll apply a console model and exclude the competitors I don't like from my world.'"

He continues, commenting that Apple has the "wrong philosophical approach" in its closed model.  

He adds, "I consider Apple to be very closed.  Let's say you have a book business and you are charging 5 to 7 percent gross margins. You can't exist in an Apple world because they want 30 percent and they don't care that you only have 7 percent to play with." 

To be fair, Valve might be being a bit hypocritical here as its Steam is also a closed platform, as the interviewer challenged.  Mr. Newell brushed this question aside, saying that while Steam isn't free, Valve does offer much free engine code and other tools to developers.

David Bluhm, president and chief executive of game company Z2Live, a mobile-focused gamemaker, jumped to Apple's defense after Mr. Newell's remarks, commenting, "I would argue Apple's system is very open but very proprietary ... it's open with their rules."

Source: TechNW: Best and worst of times for games, Valve vs. Apple

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RE: Glad someone sees this...
By TakinYourPoints on 10/14/2011 6:38:31 PM , Rating: 2
There is tons of free content on iTunes. I'd wager that most of the applications that people buy on any mobile device is free.

The business models are different. Valve primarily makes money from software sales while Apple and some other companies make the money from selling hardware. Software is very secondary to them. iTunes is the largest seller of digital music and applications in the world and its net profit is only around 10%, well below the average 25% for all of their products. Gross revenue for iTunes is also far below the rest of Apple's products, so again, it isn't really where they make money. So why do apps in the first place?

Applications are obviously there to give value to the product, but from a pure financial standpoint they increase the cost of switching platforms. To entirely switch platforms whether it is Windows/OS X/PS3/360/Android/iPhone/Windows Phone 7 has cost involved because they all hook the customer in with purchases made for that one platform.

On a side note, it is awesome that with Steamplay you automatically get both OS X and Windows versions from a single purchase, same with Blizzard and Battlenet. But again, that's one more incentive to stay on the Steam platform. Valve's intention is for the Steam platform to be completely hardware agnostic. It's been on OS X for well over a year, and putting it on PS3 and the failed attempt to get it on XBox is just the beginning. If they see a reason to put it on mobile devices they will.

It is a very different approach, a completely closed system based around DRM that they intend to have on multiple hardware platforms and operating systems.

It totally makes sense since Steam's profit is entirely based on the sale of software. As you said, they give away the platform for free and then sell goods within it. It's just like people who say that TF2 or League Of Legends are free. Yeah, they're "free-to-play", but companies make a fortune from transactions made within the game. Riot isn't sponsoring half a million in tournament prizes this year because customers aren't buying characters and skins. :)

RE: Glad someone sees this...
By Cheesew1z69 on 10/15/2011 6:57:15 PM , Rating: 2
I'd wager that most of the applications that people buy on any mobile device is free.
How can something you buy, be free?

RE: Glad someone sees this...
By TakinYourPoints on 10/15/2011 7:16:04 PM , Rating: 2
Whoops, good catch. :)

I'd wager that most of the applications people DOWNLOAD on any mobile device is free.

There, corrected. :)

The point still stands, there are very different business models at work here. Software gives very little profit to Apple as the bulk of revenue goes to software developers, music publishers, and movie studios. They make their money selling hardware. Software partly serving to increase the cost of switching platforms.

It is the opposite with Steam. Valve makes the bulk of their income from selling software, particularly their own, so it is in their interest to be as hardware agnostic as possible. They're on both Mac and PC, and they're just starting to be on console with PS3.

What is similar is that there is an increased cost to stop using Steam or switch away from it entirely since that software can only be used when running it.

I have over 250 titles on Steam at this point. There is no chance I'm buying a game from another download service unless a publisher runs their own, like Blizzard does with Battlenet for Starcraft 2 and Diablo 3.

In the end they are all closed systems based around DRM of some sort, they just go about it in different ways because of their different business models.

By TakinYourPoints on 10/15/2011 7:18:50 PM , Rating: 2
Actually, I just checked and I have closer to 340 games in my Steam library. WTF, jeez, those cheap Christmas bundles threw a lot of stuff in I had no idea about and will probably never play. :)

"If a man really wants to make a million dollars, the best way would be to start his own religion." -- Scientology founder L. Ron. Hubbard

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