5 Reasons Why Apple Should Acquire Valve

Say it ain't so!

Valve’s Steam game distribution service for Mac is available now and officially introduces the Mac to a gaming environment only PC owners could enjoy so far. Conceivably, Steam for Mac has huge implications for gaming on the Mac, but for Steam as well and the more you think about it, the more it makes perfect sense that Apple and Valve are working together. In fact, why hasn’t Apple purchased Steam yet? Here are 5 reasons why Apple should write a check now.

It has taken Valve nearly seven years to bring Steam to the Mac (with one reason being an arrogant and notoriously unsupportive Apple.) But the service has finally landed and is now available to Mac users via a dedicated “lightweight” client. There is no doubt that Valve will be able to extend its user base, which already includes 25 million customers (as of last January). Initial Valve games available include Half Life 2, Left 4 Dead 2, and Team Fortress 2. More than a thousand third party titles are accessible through Steam. and if the Mac version is successful, we should see more and more games become available over time. 

That is, of course, if Steam remains what it is today and Apple does not buy Valve. Here are 5 reasons why it is entirely feasible why Apple could buy Valve. Feel free to jump into the discussion below and use this article as food for thought.

It’s the content, silly!

If you haven’t noticed yet, Apple is rapidly developing a money printing machine that is based on its iTunes content distribution service. Chances are that the share of revenues generated from iTunes will increase, rather than decrease. So far, Apple has been offering music, TV shows, movies, podcasts as well as software (AppStore) and books. So what about games? Are games just part of the AppStore? Or do they deserve their own store?
What made me think was Valve founder Gabe Newell who recently said that gaming is transitioning from being entertainment as a product to entertainment as a service. Of course, this statement promotes Steam, but it fits in Apple’s business model as well. Given the size of the gaming market, I absolutely believe that Apple will turn gaming content into its own (service) store.

A Proven Platform  

Steam has matured for almost seven years, is available in 21 languages, offers social networking and supports pretty robust digital rights management. If there is a game distribution platform that can alleviate Apple’s piracy concerns and work very well from the start then it would be Steam.

Yes, Apple could develop its own service, but it needs to invest time it does not as well as money (which it has) into the software, service and marketing. Steam is established and it is anchored deep in the PC gaming community – a crowd that could be a particularly attractive target group as Apple gets more serious about its gaming efforts on platforms other than the Mac. Steam would be outrageously expensive for Apple now, but we know it is sitting on a pile of cash and Steam simply works. In fact, the usage model is very similar to that of what Apple users are used to: Install the client and it just runs.    

iPad, iPad, iPad

That of course, brings us to the iPad. It would be foolish to dismiss the iPhone, iPod or iPad as inferior casual gaming platforms. Apple has already shown that gaming content on those devices is critical and the iPad will only increase the company’s traction in this segment. The AppStore may soon not be enough anymore for Apple to promote and offer game content. So, what about Steam? I truly believe that the iPad, if it is as successful as analysts believe today, could singlehandedly prompt Apple to make a considerable investment into gaming. For Steam, that could mean that game content would branch out significantly to (Apple) mobile and handheld devices. Imagine the potential of sales to iPad owners. Breathtaking.  

The Cloud

Steam Cloud was released back in 2008 and gives Steam users the ability to store game settings and saves in a central location that can be accessed via an Internet connection. If we think about the fact that Valve plans on offering Steam to Mac and Windows users simultaneously and enable a user to play a game via both a Mac and a PC (free Mac downloads will be available for those games that have already been purchased), the obvious thought is how well this concept could work for Apple and its MobileMe service – which offers cloud-based information storage across multiple platforms. If Apple promotes cross-platform gaming (Mac, iPad, iPhone, iPod), it does not get much better than a cloud service that could be integrated into MobileMe – Valve already has it.

Control

It is believed that Steam holds a 70% market share in digital game distribution these days. This fact gives Apple great reach with Steam as a partner. However, if Steam for the Mac is successful and if Steam gains traction among Mac users, Steam could potentially pose a risk to Apple’s approach to control its platform – hardware and software. We know that Apple prefers control over the content that is provided to its platform. It is rather unlikely that Apple will allow Valve and Steam to become a powerful force in the Mac gaming market and potentially expand into a service that could compete with the AppStore as Valve could possibly add games for the iPod, iPhone and iPad. Given the financial opportunity, it would be rather silly if Valve passed on offering content for Apple’s other platforms. This fact alone turns Valve int a potential acquisition target for a deep-pocketed company such as Apple.

From today’s perspective, it seems rather unlikely that Apple in fact would acquire Steam. But the opportunity is there and the financials could easily support such an acquisition. Whether Apple acquires Steam or not, it will make much more significant investments into gaming and expand its presence in the global gaming market.    

^{Wolfgang Gruener is a technology journalist and analyst. He was managing editor for the Tom’s Hardware news section from 2003 to 2005, before launching and acquiring TG Daily. Today, Wolfgang works with startups and publishes his thoughts and analysis on critical and emerging technologies and products at Conceivablytech.com.}