WeGame, a 4-man startup that’s been around since 2007, wants in on the action. Up until now the company has been primarily focused on building software that lets gamers record and share their in-game exploits using screenshot and video capture tools. And now it’s also launching a digital distribution store that will let gamers pay for and install games, in much the same way they would using Steam. If you want to try it out, you can sign up for the private beta right here.

So why would anyone use WeGame instead of Steam? Founder Jared Kim says that the current situation — where Value controls so much of the digital distribution market — is bad for developers. Valve gets a cut of each sale (even when it’s selling competitors’ games) and also manages which games get featured in the store. Kim says that WeGame will be a better deal for developers (it will take a smaller cut than Steam) and because it’s a third party that doesn’t make games of its own, developers won’t have to worry about handing over money to a competitor.

So far, WeGame has partnerships with Shanda/MochiMedia (who will offer 250 browser-based games), Bigpoint, Perfect World, Subagames, and CMUNE. Down the line it hopes to be distributing AAA titles like Trion World’s forthcoming game Rift.

For now, all of the games being distributed through WeGame are free to play — WeGame is doing revenue share and CPA deals with game publishers to monetize these games. Down the line, it will also introduce transactions, so gamers can purchase software the way they do on Steam.

Of course, in order for the marketplace to be attractive for developers, it needs users. WeGame currently has 1.7 million registered users and 1 million installs of its desktop client; around half of these users are active — nothing to scoff at, but a far cry from Valve’s 30 million users on steam.

WeGame has a long road ahead of it. Kim sounds confident that it will be able to line up quality games (he says publishers are eager to have popular options other than Steam), but it’ll need to give gamers a compelling reason to make the switch, too. And at this point I don’t think the integrated screen capture software will offer a very strong incentive.

WeGame raised $3.5M back in 2008 from True Ventures, Jeff Clavier, Aydin Senkut, Ariel Poler, Naval Ravikant, and Ryan Scott.

http://www.wegame.com/static/flash/player2.swf

The company will announce they’ve closed a $3 million second round of financing, adding to the $500,000 they raised previously. True Ventures led the round, with participation from HitForge, SoftTechVC and a number of individuals.

Kim, who’s 19, dropped out of Berkeley last year to launch WeGame. This is his third startup.

The prospect of founding a successful generic social network these days might be bleak given the dominance of players like MySpace and Facebook. However, there’s still plenty of room for niche social networks to rise and generate lots of participation.

UGAME, which enters closed private beta this week, wants eventually to be the leading social network for gamers. The site will start off as a place where competitive PC gamers in particular can socialize, share their gaming feats, and organize themselves into teams and other associations. While UGAME will initially cater to the World of Warcraft, Counterstrike, and Quake obsessive, its motto points to a more ambitious future with “All Games. All Platforms. All People.”

A key to starting a successful niche social network probably lies in the creators’ ability to balance familiar features with ones that capitalize on the niche’s unique qualities. If this is true then the team behind UGAME is off to a good start. They’ve built in lots of functionality that will be immediately familiar: news feeds, profiles, friends, blogs, photo galleries, status updates, etc.

But they’ve also added gaming twists to these features and built out new features that don’t exist elsewhere. To name a few: members can post their gaming achievements from both tournament and non-tournament events; they can list their favorite games and computer hardware specs; and they can join teams that are allotted their own public-facing profiles.

UGAME grants users an unusual amount of control over privacy settings. While all sections of the site are accessible to non-registered users, only elements designated as “public” will show up to everyone. Privately designated elements such as photo galleries and profiles will remain accessible only to friends and other permitted users. Founder Sam Mathews describes UGAME in regards to privacy settings as a cross between Facebook and MySpace.

If the premise behind UGAME sounds familiar, you’ve probably heard of Shawn Fanning’s social networking project Rupture, which has been in closed beta for over a year. Or it may remind you of WeGame, a YouTube for gaming videos that we wrote about last month (and which shares a startlingly similar name and color scheme).

UGAME will open its private beta in a few weeks; you can email this address with a mention of your favorite game to put yourself down on a preferred TC readers list for when that happens.

When I was younger and addicted to PC games like Total Annihilation and Sim City, my parents figured I was flushing priceless hours of my youth down the drain and actively tried to get me to cut back on playing.

Jared Kim, a nineteen-year-old Berkeley dropout, has taken a similar obsession of video games and turned it into something his parents can certainly be proud of: a new website called WeGame that provides both the place and the tools for gamers to share screencasts of their favorite in-game moments. As Kim puts it, the launch of WeGame is like launching YouTube and giving everyone video cameras, because WeGame not only provides a place to upload and share videos, it provides the tools necessary to create the video content itself.

Capturing screencasts of gameplay is currently difficult because recording programs hog system resources, thereby slowing down the games themselves. They also don’t tend to output video files that are compressed well enough for upload. And if you’ve ever tried to convert and resize video clips, you know how much of a pain that is.

WeGame steps in by providing a free desktop client that works tightly with DirectX to capture screencasts from within games without slowing them down significantly. It also outputs those screencasts to AVI files that are small enough for quick uploading to the web, a process that occurs from within the client itself. To record a screencast, just hit a special key while in-game to start and then stop recording. Once you’ve exited the game, you can click the “Upload to WeGame” button, choose a title and description, and the client will convert the AVI file to Flash and publish to the WeGame site directly. Check out a screenshot of the client to the left to see what the interface for this looks like.

The WeGame site itself is much like YouTube, except with a strict focus on game screencasts. You can browse, search, and comment on videos just like you’d expect from a video sharing site. The hope is that gamers will enjoy watching clips of each others’ gaming experiences, and perhaps produce hit clips like Leeroy Jenkins from World of Warcraft. Game studios love this sort of content because it’s free promotion for their products.

WeGame’s desktop client is currently for Windows only, as most games are built on top of Microsoft’s DirectX technology. The client supports the recording of 16 games with more to come over time. Screencasts can be uploaded in two modes: “web” or “HD”, the former being 640 pixels wide and the latter being 1280×1024 in dimension. Both stream at 600kbps as opposed to YouTube’s 300kbps. The company is also working to provide a recorder for casual games that are played through the browser.

Kim and his team of four have been working on WeGame for six months and have raised $500,000 from True Ventures and Naval Ravikant’s HitForge. The company’s advisers include Dennis Fong, Quake world champion and founder of Xfire, and Matt Mullenweg, founder of WordPress. WeGame is actually Kim’s third company; the first was started in China and focused on creating a matchmaking tool for online gamers. The second was a Dodgeball-like application for college students. He also comes from a tech family of sorts; one of his sisters, Jade Calacanis, is married to Jason Calacanis and another, Joyce Kim, co-hosts the GigaOm show.