Skip to main content

OnLive/Steam Founders Slam Each Other

Forbes recently published an article highlighting Valve co-founder Gabe Newell and the overall success of Steam. The three-page story covered all the aspects, from the launch of Half-Life and Valve Software to Newell's double cornea transplants to Steam's current worth as an online digital distribution platform.

However the article also incorporated a few jabs from rivals like OnLive and Gaikai. David Perry, chief executive of the latter company, called Steam the "iTunes of the game industry." Perry warned that the service could easily follow Apple's footsteps and become a monopoly in the digital gaming sector.

This isn't the first time "monopoly" has been used to describe Valve's Steam platform. November 2010 brought reports that major retailers were threatening to ban Steam-integrated games from their shelves due to fears that Steam has a monopoly on the download market.

The fear is certainly understandable: a customer installs the game, installs Steam, and discovers other great digital titles that can be purchased, downloaded, and stored in the cloud without having to leave the house. This also keeps potential customers from purchasing the same digital games from distribution platforms offered by the major retailers.

"If we have a digital service, then I don't want to start selling a rival in-store," said one retailer executive.

Forbes even reports that Steam controls 50 to 70-percent of the $4 billion market for digital PC games. But one rival plans to take a chunk of that digital pie by reaching into 10 million homes by the end of the year and offering cloud-based gaming. To use the OnLive service, PC gamers won't need to buy expensive rigs or shell out $400 for one specific graphics card to play the latest titles. They can even purchase a $99 standalone OnLive "console" and hook it up straight to the TV, bypassing the PC altogether.

Gabe Newell seemingly recognized OnLive's achievements since its launch in July 2010, but said the distribution method is inefficient and expensive. OnLive Chief Executive Steve Perlman disagreed, indicating that the cost of streaming a game to customers averaged about 3 cents per gigabyte, similar to what Netflix shells out for streaming movies and TV content. He then said Valve's Steam was "limited to people who have a high-performance computer."

For some titles, that may be true. Magicka is a good example: while the game doesn't exactly require high-end PC's to run at a decent framerate, it's currently only compatible with Nvidia and AMD GPUs, leaving out gamers using Intel's integrated graphics. If the game ever lands on the OnLive service, hardware limitations would be eliminated. The big problem OnLive currently faces is its lack of content, offering around 40 titles including Unreal Tournament 3, Borderlands, and Metro 2033.

Currently Steam has around 30 million customers. The number of OnLive customers is unknown, but the service will be heading to tablets, smartphones and Internet-capable TVs soon.