The developer of the smash hit Half-Life video-game series said Thursday it will let customers buy and download the latest version of the game online, a move that will cut out brick-and-mortar game retailers.
Valve will sell Half-Life 2 – one of the most eagerly awaited games of the year – in boxes through traditional retailers. But players also can go to Valve Software's Steam-powered website and either purchase a one-time download, or subscribe for $13 a month to play the game and get subsequent multiplayer versions and mods.
The move will represent the first time a major game developer will market an A-list game directly to consumers via download on the day it is released. Valve is also actively licensing the commerce software that manages the game's download and purchase process to other developers, publishers and Internet service providers in exchange for 5 percent of their gross sales.
"We've sold 10 million units of the Half-Life family of games at retail," said Doug Lombardi, marketing director for Valve, based in Bellevue, Washington. "We don't think everyone's going to go over to Half-Life 2 on Steam and that retail's going to get blanked. If that happens, we'll be as surprised as anyone."
Executives at key retailers, such as Electronics Boutique, and at Vivendi Universal Games, which publishes the Half-Life series, could not be reached for comment.
Industry analyst Michael Pachter of Wedbush Morgan Securities in Los Angeles called the Steam experiment interesting, but doubted it will have much short-term impact. Most big publishers already sell boxed games through their own websites but would be leery of going in a direction that could alienate retailers – at least for now.
"If (the industry's biggest publisher) Electronic Arts said it was going to distribute Madden themselves, that might work, but then Electronics Boutique would say that it's not going to help them build a new title like Def Jam Vendetta," Pachter said. "Valve only makes a game every couple of years, so they can get away with it."
The potential of selling games directly through downloads may be appealing to small developers who find it difficult to get shelf space for their new games, said Alex Garden, CEO of Vancouver's Relic Entertainment, maker of the successful Homeworld series. He added that it also could help North American publishers break into Asian markets, such as South Korea, where broadband penetration is high or growing quickly and where game distribution already is done online.
Distributing directly to consumers through broadband could help restore the industry's glory days, when small developers were able to make small bets to bring innovative products to players, executives said.
"The Web does a great job of self-filtering and propagating," Lombardi said. "Counterstrike (a Half-Life mod) wasn't advertised, but we put it out there, and it's an international phenomenon."
Beyond broadband distribution of games, updates and billing capabilities, Steam's Swiss-army-knife-like features include antipiracy measures, listing of game servers, instant messaging and even casual games to pass the time. Valve also says Steam could be used to distribute any kind of software, such as office applications.
