Analysts weigh in on Steam dominance, Origin growth

By Andrew Yoon, Nov 11, 2011 2:00pm PST

Steam is easily the biggest PC games portal on the web. With 35 million active users and over 1400 games to download, Valve's early foray into digital distribution has earned it a loyal, passionate following. However, can it maintain its success, especially with the growing number of competitors?

A few analysts were queried about Steam's future, and while no one refutes Steam's continued dominance in the space, a few believe cracks may be showing.

Industry Gamers polled various analysts before Valve admitted that Steam had been compromised. It's unclear if consumer faith in Steam has dropped. However, this summer's PlayStation Network intrusion should indicate one thing: gamers are a rather forgiving bunch.

Billy Pidgeon of M2 Research doesn't see any real competition to Valve's stronghold, noting that "to truly compete with Steam, a digital retail service must have market scale and provide significantly more real and perceived value to customers. I don't see any open online marketplaces doing this yet." On-demand gaming services, such as ones provided by Gaikai and OnLive, may prove an interesting alternative to Steam.

Wedbush analyst Michael Pachter agreed, bluntly stating that "I don't think that most people care about Origin. And I don't think many people will switch from Steam to Origin unless a) Origin is cheaper or b) Steam screws up."

Now that Steam has "screwed up," who presents the most serious competition to Valve? DFC Intelligence's David Cole believes that Origin is just "one of many," and points to GameStop, with their acquisition of Impulse as a potential competitor. One of the strengths that EA has with Origin is that it is "following the Valve model" by selling directly to a large installed base of loyal customers. Just like Half-Life fans were forced into Steam, many of EA's properties are now forcing Origin.

Scott Steinberg of TeechSavvy Digital doesn't see it as a strictly Steam versus Origin story, though. He believes that "Origin should help extend interest in downloadable direct to consumer sales," and will help expand the market. Ultimately, that's a good thing for Valve, EA, and consumers.

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