Valve: Online Sales to Overtake Retail Soon

Speaking at Valve's PC gaming market conference attended by Shacknews at its offices in Bellevue, Washington, company co-founder and president Gabe Newell said that online PC sales revenue has seen massive growth rates and will soon pass over retail revenue.

"Within the next three months we see sub-10% growth rates in our traditional core packaged goods retail business," said Newell. "But right now we're seeing close to 200% growth in the development of these alternative ways of connecting with customers."

Newell added that the company expects online distribution sales from its Steam platform to pass over its retail business. A graph was also shown illustrating that the company anticipates online revenue to dwarf retail by 2012.

"There have been a bunch of stories written recently, both by the gaming press and the industry business press that PC gaming is dead. There's a perception problem. A lot of the stories written recently aren't what's actually happening."

The company cited the PC's massive install base—260 million PC owners online, playing games, with 255 million PCs being produced every year—and lack of subscription and online sales data reflected by game sales trackers as impetus for a change in thinking about the health of the PC platform.

Moreover, Valve business development director Jason Holtman noted that data collected from its recent Day of Defeat free weekend, which allowed Steam users to play the game free of charge for two days, revealed that online sales do not detract from traditional retail channels.

"People would say 'you just stole a bunch of sales from stores,' but actually the exact opposite happened. What's most interesting about this is that you can see there were spikes in both types of sales," stated Holtman. "Everyone who participated and had fun with Day of Defeat, a lot of people took us up on the digital offer, a lot of other... went to Wal Mart, Best Buy, GameStop, and bought the game."

Holtman continued, "[The free weekend] didn't reach a bunch of online customers or digital customers, it reached a bunch of customers. Not only was there no cannibalization--we actually sold 28% more in retail."