‘Digital sales don’t cannibalise retail,’ says Valve

Digital distribution of games doesn’t hurt traditional retail outlet sales – that’s the message Steam platform holder Valve Software told assembled media journalists at a briefing in its Seattle offices today.

The US independent developer, responsible for games like Half-Life and Portal, also runs the popular Steam digital distribution service, which in recent months has courted the affections of firms such as Rockstar, Eidos, Sega and Ubisoft, selling their titles through the platform.

But despite becoming a key source of back catalogue sales, the service hasn’t dampened retail’s prospects, the firm said.

"There’s this idea that digital sales cannibalise retail," said Jason Holtman, Valve’s VP of business development.

"Everywhere you turn, people have decided that it’s a zero-sum game – that when digital distribution comes along, it’s taking sales away. But that’s not only not true, it’s actually the reverse situation – having a connected platform on the PC is helping sales both online and in retail, because you can be smart and talk to your audience."

Valve’s assertion comes from data gleaned from a recent ‘free weekend’ for its game Day of Defeat, which allows players to sign up and play the game free for two days. At the end of the period, players are shown an advert with a link to buy the game directly through Steam. Conventional wisdom, says Holtman, would dictate that immediately after this retail sales would drop and digital sales would spike, given the immediacy of being able to buy the game there and then – but actually the opposite happened.

"What’s most interesting is that there was a spike in both types of sales – a lot of the people who played and enjoyed the free weekend took us up on the digital offer, but a lot of other people added just as normal – they went to a retail store and bought the game. What’s particularly striking about this data, though, is that not only is there no cannibalisation, but retail sales were actually 28 per cent higher than digital sales. Not only did retail not trough, it peaked even higher than digital."

The company did reveal, however, that it’s seeing 191 per cent growth year on year in its online sales, while its packaged retail sales are seeing "sub 10 per cent growth rates", and that within the next three months it will cross over to seeing more of its business coming from the online channel.

Also announced were future update plans for Steam in order to ease the problems many users have with PC gaming, including automatic driver updates and automatic system requirements checking, going as far as to suggest how certain hardware upgrades would affect game performance.

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