Microsoft to take on Steam in battle of the digital distribution systems

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A Scary Line Has Been Crossed For VCs

Once again, Microsoft is jealous of another company’s success in a sector adjacent to their own, and is setting their crosshairs accordingly. Unfortunately this is one company that can’t be bought or properly imitated: Valve and Steam are firebrands in the gaming world, and have achieved over the years a level of trust and legitimacy among gamers that is nigh impossible for perhaps any other company to match. The success of Steam has made it the archetype for digital content distribution, and Microsoft doesn’t really expect to dethrone them there. Instead, they hope to grow a marketplace around things not currently offered by Steam, for example Games for Windows Live branded DLC, which would be made available exclusively by Microsoft. But is this really a sound plan?

It’ll be hard for Microsoft: Steam is a much stronger brand than Games for Windows Live, a faceless concept that evokes imperialist Microsoft tendencies and the vast, flaccid tentacles of their Live services. The only way they can make this little adventure work is by shoehorning themselves in, as they have suggested they will do with Fallout 3 DLC, and forcing a market presence. It’s a certainty that they can’t beat Valve, but with the amount of clout they’ve got, they’re guaranteed at least a spot in the lineup.

Microsoft also can’t ignore the fact that Valve is a smart company and receptive to the whims of the market. The service is no longer viewed as a novelty distribution system or Valve’s personal fileserver; the day-one releases of major games like Fallout 3 and Far Cry 2 are indicative of the faith that developers and producers have in the distribution system. It’s not quite ready to be a sole method of release, but it’s really just a matter of time before that comes to pass, too.

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