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Video Game Dollars: 'Steam' Feels the Heat

When privately held Valve Software launched its Steam digital distribution platform in 2004, basically selling computer games over the Internet, it was an enormous bet for the company.

Expensive and untested, the service was something new in the gaming world and served a dual function.

On one level, it was a way for the developer to boost its margins, letting it avoid retail stocking fees and publisher royalties. At its heart, though, it was a piracy protection move, requiring users to authenticate copies of its highly anticipated game “Half Life 2.”

Things quickly evolved. Steam today hosts and sells over 1,100 titles (from virtually every major game publisher in the industry) and has over 25 million active user accounts.

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