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Valve’s Steam Deck follows indie games down the portable path

An image of Valve’s new Steam Deck portable gaming device.

This week in Protocol Gaming, your weekly guide to the business of video games: Valve enters the portables market with Switch-like handheld, Tencent dominates the investment news cycle (again) and Xbox sales outshine the competition.


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The Big Story

The indie game market went portable, so Valve's Steam Deck followed

Valve's latest piece of gaming hardware, the Steam Deck, takes more than just a few pages out of the Nintendo Switch playbook. In a surprise launch just a week after Nintendo did the very same for its new Switch OLED model, the Half-Life developer presented the world with an interesting proposition: What if you had a Nintendo Switch with a PC chip, and it played all of your existing Steam games?

The announcement was met with enthusiasm and sold-out preorders. It's a testament to the power of portable gaming, and in particular the draw of being able to play the diversity of indie games available on Steam on a screen you can take with you. While the Steam Deck can run more powerful software, the device's middling battery life suggests it's more fit for the wealth of smaller, cheaper and less demanding experiences you can find on Nintendo's handheld.

The tantalizing offer is arriving at an opportune time. The game industry is experiencing a major growth moment, thanks to a surge in consumer spending on new hardware and strong investor interest. There's no better moment to sell the gaming public a new kind of hybrid device, and the Steam Deck fits the bill.

  • The device, priced between $399 and $649, is priced competitively alongside low-end gaming PCs and standard game consoles. In that way, it presents an alternative to existing PC players eager to enjoy games on the go.
  • The Steam Deck also targets lapsed PC gamers who like the appeal of a more powerful Switch-style handheld. The trouble will be winning over those consumers with the new Switch coming out this fall. If that customer already owns a Switch, it's unlikely they'll want another portable.
  • The Steam Deck's powerful AMD chip will let it play console-quality games, albeit with pretty abysmal battery life. The real draw is the device's openness. Valve says you can install competing game stores and even operating systems, opening up the possibility for everything from Fortnite and Xbox Game Pass to Nintendo software emulators.

Valve wants its indies back. Indie developers have long preferred the PC platform thanks in part to Steam's generous self-publishing tools and the ease of developing for Windows. But the Nintendo Switch has become a formidable contender in the indie scene thanks to its portability, drawing sales away from PC and locking customers into Nintendo's closed ecosystem.

  • Not every indie game on PC is also on the Switch. But many do eventually come to both platforms, and it's common for Nintendo fans to both badger developers for Switch ports and to patiently await that eventual Switch release so they'll have the option to play a game on the go.
  • A portable console thrives in part thanks to indie games, which often do not require a fast processor but aren't built with a mobile touchscreen in mind. That's helped the Switch remain the bestselling game console for nearly three years running. Valve, thanks to Steam, is perhaps the only company in the industry that can now reasonably compete.
  • The Steam Deck's biggest selling point is that it does not require you to repurchase games you own. Because it plays Steam games, Valve is giving players a good reason to make all their game purchases on its store and not elsewhere. After all, Steam is Valve's biggest moneymaker, thanks to its 30% cut on all sales.

The Steam Deck doesn't seem like a viable replacement for the Switch Pro, despite the many jokes at Nintendo's expense last week. The two devices, though sharing the same form factor, don't have a lot of meaningful overlap. It's likely they can coexist without severely dampening demand for one another.

  • Owners of the Switch like the option to play Nintendo's first-party exclusives. Without Zelda, the Switch isn't as appealing, and it's precisely why Nintendo never opted to port its games to other platforms. So long as Nintendo keeps pumping out new games you can only play on the Switch, its console business is secure.
  • Valve's portable doesn't have Zelda and never will. That's why the Steam Deck has so many extra perks geared toward enthusiasts, from the ability to plug into a monitor and mouse and keyboard setup to its pricey built-in solid-state drive and Linux-based OS. The Steam Deck doesn't need to sell tons of copies, so long as it helps keep the Steam store healthy.

Valve is competing for a different kind of customer. Sure, there is the lapsed PC gamer that might skip out on a new Switch and opt for a Steam Deck instead, and they may now transfer their Switch spending over to Steam. But that's a small niche and far away enough from the mainstream not to threaten the type of player that sticks with the Switch. For now, Nintendo is likely safe playing in its own world.

Players

  • "There's probably some work that we'll do on the controller. I think Sony's done a nice job with their controller and we kind of look at some of that and [think] there are things that we should go do." ―Microsoft's gaming chief Phil Spencer hints at a potential revamp of the Xbox controller in a recent episode of the Kinda Funny Gamescast, though he says there's no obvious additions to the design that come to mind right now.
  • "I feared this day. I warned about this for years and feel no one really took it seriously. Devs being paid based on playtime is the true horror of the subscription-based future -- it's the death of creativity, of shorter experiences. I hate this with every fibre of my being." ―Gaming news curator Ryan Brown had a strong, negative reaction to Google Stadia's engagement-based revenue share announced last week.

A MESSAGE FROM ENVOY

When it comes to hybrid work, let's be honest: People don't know what to think. Are two or three days a week in the office the sweet spot? Are five days a dealbreaker? We repeat what we hear others say or go with our gut, but how do any of us really know?

Learn more

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Lootbox

  • On Protocol: Google will cut its Stadia store commission to 15% starting in October. The company will also start sharing 70% revenue from its Stadia Pro subscription with game makers using an engagement-based system to dole out payouts.
  • Dead Cells finds success as a paid mobile game in China. The popular roguelike hit is dispelling the myth that paid mobile titles can't succeed in China, after developer Playdigious revealed last week its smartphone port has sold more than 2 million copies to date.
  • Tencent continues chasing big-budget blockbusters. The gaming conglomerate is opening a third North America studio dedicated to building triple-A games, VentureBeat reported, this one in Montreal under its TiMi Studio Group subsidiary. TiMi also has studios in Los Angeles and Seattle.
  • Another delay for one of Microsoft's PS5 exclusives. Ghostwire: Tokyo, one of two PlayStation exclusives now owned by Microsoft, is delayed until next year, developer Tango Gameworks announced last week. Arkane's Deathloop, another timed PS5 exclusive Microsoft acquired via ZeniMax, was delayed, too, but is now due out in September.
  • Scopely invests $50 million in European mobile studios. The developer, known best for translating big franchises into mobile hits like Marvel Strike Force, is linking up with studios in England, Scotland and Spain to expand its publishing efforts.
  • Peloton is entering the video game business. The exercise equipment maker is expanding its media arm with a new video game carrying the working title Lanebreak, The Verge reported on Monday. The game will mix Peloton's existing licensed music with an endless runner-style design involving keeping a tire moving along a track.
  • Xbox scores a rare hardware win for June. Microsoft's new Xbox Series X/S consoles were the bestselling hardware in the U.S. last month, The NPD Group reported last week. Microsoft didn't break the Nintendo Switch's nearly three-year winning streak in the hardware department, but the Xbox consoles did exceed the Switch in dollar sales and broke a 10-year record for Microsoft's console business.
  • Tencent goes on yet another spending spree. The Tencent money continues to flow, this time to U.K. developer Sumo and Sweden-based Stunlock Studios. For Sumo, Tencent is buying the portion of Sumo it didn't already own in a major $1.3 billion acquisition deal, Reuters reported Monday. As for Stunlock, Tencent is acquiring a majority stake in the Battlerite developer, which is now working on vampire survival game V Rising.

Look Out For

Gaming event organizers are eager for in-person festivities

This year's all-virtual Game Developers Conference kicked off yesterday, but we're already onto talking about 2022. Events like GDC thrive on in-person networking, and digital conferences are tough sells to a world weary after more than a year of pandemic whiplash. That's perhaps why the organizers of GDC have already said next year's event will be the standard live gathering in San Francisco.

PAX West is slated for September in Seattle, and it'll be the first major in-person gaming event since the start of the pandemic, while board game convention Gen Con later that same month will experiment with a mask mandate for unvaccinated attendees. Expect many more gaming events to strive for that live component, so long as rising case numbers and the spread of the Delta variant don't interfere.

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