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Steam Business Model

Steam is a Steam Business Model is designed to be an online platform for video game distribution. Users can browse and purchase, play and even debate games on video. Gaming is classified into three categories: PC, Console and mobile gaming. In contrast, while Console or Mobile gaming are controlled by the other major gaming corporations including PlayStation (Sony) and Xbox (Microsoft) — PC gaming is controlled by Steam. Since its inception, Steam serves a variety of game genres, such as racing, sports, strategy and more. It has brought millions of dollars in sales revenues. Steam has grown to become the most played PC gaming platform on the planet.

Contents

  • A short background of Steam
  • Who Owns Steam
  • Steam’s Mission Statement
  • How Steam generates income
    • Commission
    • Hardware Sales
    • Developer Fees
    • Licensing Fees
  • Steam’s Business Model Canvas
    • Download FREE!
    • Steam’s Customer Segments
    • Steam’s Value Propositions
    • Steam’s Channels
    • Steam’s Customer Relationships
    • Steam’s Revenue Streams
    • Steam’s Key Resources
    • Steam’s Key Activities
    • Steam’s Key Partners
    • Steam’s Cost Structure
  • Steam’s Competitors
  • Steam’s SWOT Analysis
    • Steam’s Strengths
    • Steam’s Weaknesses:
    • Steam’s Opportunities
    • Steam’s Threats
  • Conclusion

A brief background on the history of Steam

Steam, which is owned of Valve Corporation, was launched in September 2003. It was designed in 2002 in response to Valve’s requirement for a platform that could update the multiplayer gaming they had.

Valve was established in 1996 through Gabe Newell and Mike Harrington. Gabe Newell dropped out of Harvard University in 1983 to work for Microsoft. He was a prominent part of Microsoft’s Microsoft Development team and had stakes in the company. While at Microsoft Newell had a relationship with Mike Harrington and they both quit Microsoft in the year 1996. Newell was able to sell his stake at a price of $500m. The cash was used to fund the game’s start-up company called Valve LLC. The company was founded with their headquarters in Kirkland, Washington, and began working for their debut game, Half-Life.

The company released Half-Life 1998. The game quickly became a household name. The games of the time were distributed and sold via physical shops (in in the shape of CDs). This left Valve with difficulties in finding a publisher to publish its game. Then, a Washington-based publisher, Sierra On-Line, took an opportunity with them and began to distribute Half-Life. Within a couple of months it was selling more than 1 million copies around the world.

In the year 2000, Harrington departed the company and left Newell in charge as sole leader of the business. In the year 2000, around the moment, Valve renegotiated its contract with Sierra and obtained the rights to distribute their games digitally. The move to an electronic distribution format was essential due to the many issues it encountered with the original release of Half-Life. There were problems with pirates, the breaking of multiplayer games due to patched versions and even cheating. The year 2002 was when Valve launched its first beta release of Steam to the general public and it had more than 300,000 players. Its final version, the official one of Steam was finally released on the 12th of September, 2003.

Who Owns Steam

Steam’s owner is Valve Corporation, which is located at Bellevue, Washington, USA. Valve also owns franchises such as Half-Life, Counter-Strike, Portal, Day of Defeat, Team Fortress, Left 4 Dead and Dota.

Steam’s Mission Statement

Steam transforms every PC and Mac to a game machine through immediate access to an extensive collection of games, and automatically keeping game’s content up-to-date.

How Steam earns money

Steam is currently home to one billion accounts registered and has around 120 million active monthly users. With such a huge amount of active players and monthly users players, there’s an unquestionable fact that Steam is earning profits from their players. Let’s take a look at some methods they make money through the company model.

Commission

Steam earns its highest revenue by charging a commission on every game that is sold on Steam’s platform. Steam offers a 30% just from the first $10 million of sales. If sales are of between 10 million to $50 million and above, the commission amounts to 25%. After that initial amount of $50m, Steam charges a 20% cut.

Hardware Sales

Valve has released the gaming software it owns to help strengthen its position in Steam. It is competing with the other big players in the game. The device is available in three distinct versions , which costs three hundred dollars (64 GB) and $529 (256 GB) as well as $749 (512 GB) and $649 (512 GB).

Developer Fees

To help developers create and distribute their games through Steam, to help developers build and distribute their games on Steam platform Steam provides them with a range of services and tools. This includes feature broadcasts and early access for gamers, enabling developers to market bundles, downloadable content, announcements about new events, updates, etc. A”greenlight fee” or “greenlight fee” is charged before users are able to access them.

Licensing Fees

A fee for licensing is charged for the creation of an Steam PC Cafe. The Steam PC Cafe provides visitors with the similar Steam experience that they can enjoy at home. Visitors to the cafe are able to access all of their gaming library, talk to friends, and much more. Steam charges an initial installation cost of $29.99 and an annual subscription fee of $9.99 per month.

Steam’s Business Model Canvas

DOWNLOAD HIGH-RESOLUTION PDF OF THE STEAM BUSINESS MODEL CANVAS

Let’s take a closer look through this Steam Business Model Canvas below:

Steam’s Customer Segments

Steam customer segments are: Steam segment of customers comprise:

  • GamersUsers seeking the ultimate gaming platform that are able to play with peers on any device or other device.
  • Game DesignersGame game developers that require an online platform to market their games to players.

Steam’s Value Propositions

Steam value propositions are: Steam Value propositions include:

  • Gamers Cloud-based gaming to let you play your favourite games on any device, along with other services like matchmaking and anti-cheat protection.
  • Game Designers providing an unhindered game distribution via digital technology to millions gamers around the world.

Steam’s Channels

Steam channels are: Steam channels comprise:

  • Steam Platform
  • Integrations (Microsoft, Nintendo, etc.)
  • Retail

Steam’s Customer Relationships

Steam Customer Relationships Steam customer relationship are comprised of:

  • Steam Community
  • Customer Service
  • Social Media
  • User Experience
  • Support

Steam’s Revenue Streams

The Steam streams of revenue comprise:

  • Sales
  • License Fees
  • Subscription Services

Steam’s Key Resources

Steam’s Steam most important resources comprise:

  • Platform
  • Developers
  • Employee Knowledge
  • Steam Cloud

Steam’s Key Activities

Steam’s Steam principal activities comprise:

  • Platform Maintenance
  • Software Development
  • Digital Right Management
  • Payment Processing
  • Customer Service

Steam’s Key Partners

Steam’s Steam principal partners comprise:

  • Gamers
  • Game Developers and Studios
  • Hardware Suppliers

Steam’s Cost Structure

Steam cost structure is comprised of: Steam Cost Structure comprises:

  • Salaries
  • Platform Maintenance
  • Management and Administration

Steam’s Competitors

  • Epic Games: Epic Games, founded in 1991 was a video game as well as a software-development company. It launched their first online game ZZT In 1991 and since then, a variety of games were released. In 2017, Epic Game released Fortnite Battle Royale, which has led to an increase in the market share of Epic Game on the PC gaming market. It is considered to be Steam’s most powerful rival;
  • Origin Origin is an online distribution with digital rights as well as a social network platform designed by Electronic Arts for buying and playing video games. To match Steam’s offerings, Electronics Art added cloud game saves and achievements, as well as auto-patching and cross-platform releases to Origin. The most popular games that are available on Origin include Assassin’s Creed Series, Theme Hospital, The Sims, Battlefield, The Batman Series, FIFA, The Witcher 3 as well as SimCity 2000;
  • Itch.io:Itch.io is an online platform that allows users to sell hosting, host and download independent video games. It was created in 2013 by Leaf Corcoran in 2013. The platform also permits users to organize game jams which allows participants to develop games within a duration of 3 days. The company in 2015 launched the desktop application that allows users to install games and other games and play games that are browser-based via the app, even when offline.
  • GOG.com: GOG was previously known as its previous title, Good Old Games, provides video games via its online gaming platform GOG Galaxy. GOG Galaxy allows its players to purchase and play games and to share them with acquaintances on GOG.com. GOG has a strict zero Digital Rights Management (DRM) rule, meaning that gamers are not bound to use any purchase made on the platform. The most popular games that are not protected by DRM that are available on GOG include The Witcher 3 and Original Sin 2.

Steam’s SWOT Analysis

A thorough SWOT review of Steam can be found below:

Steam’s Strengths

  • Massive Usership: Steam had approximately 120 million active users per month at the time of 2020.
  • A plethora of games: Steam is currently home to more than 50,000 games
  • Steam is available Steam Games Steam are playable anywhere that has an internet connection.

Steam’s Weaknesses:

  • Cheaters: Cheaters are usually an issue on Steam. They can negatively impact the gaming experience of other players.
  • Downtime occurs during maintenance times, but occasionally it can be the result of hardware malfunction or a glitch with a point-of-presence service provider, or a malfunction in the network
  • Legal Tussles Steam occasionally gets involved in legal disputes with partners. This can hinder the release of certain games or content.

Steam’s Opportunities

  • The game industry is growing. Industry Video game industry increased to 23% in the course of Covid-19 compared to the previous year and it is estimated that revenues will hit 219 billion in 2024.
  • A broader selection of Multiplayer Games: Steam adds an average of between 6,000 and 8,000 new games to its catalog every year since 2017.
  • Innovations in Technology: advent of new technology has made gaming on Steam smoother and more efficient.

Steam’s Threats

  • Strong competition: Steam faces increasing competition from other major gaming platforms like Epic Games, EA, and GOG.com. They are taking over Steam’s market share
  • Other Game Companies Other Game Companies like PlayStation and Xbox are competitors to its hardware business
  • Hackers The hackers are always on the lookout to exploit the vulnerabilities of Steam and take user accounts and their data.

Conclusion

Steam offered a novel solution to a major issue when it was first launched. It was able to solve the problems of game piracy and connection between players and tracking sales. Although Steam continues to be faced with growing competition from both existing and innovative gaming platforms huge number of users and its constant improvement continue to keep it ahead of other players in the market. Certain industry experts believe the PC game market is becoming more mature, which is why there has been requests for Steam to expand beyond its initial demographic men who are gamers downloading complete PC games.

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