Steam controls up to 70% of the PC download market and is "tremendously profitable"
Valve CEO Gabe Newell has been speaking out about Steam's success, saying that, per employee, Valve is more profitable than Google and Apple. Estimates say that Steam controls between 50% and 70% of the PC download market and is "tremendously profitable."
Newell was profiled by business magazine Forbes, who have examined Steam's dramatic growth since it was launched in 2004. They estimate that Valve's profits for 2010 were in the "high hundreds of millions of dollars", and say that the company is valued between $2-$4 billion. Impressive numbers, especially given the fact that Valve only employ 250 people.
Forbes attributes Steam's success to the way it simplifies the process of installing and patching games, while at the same time offering a good deal to publishers, who earn "a gross margin of around 70% on Steam, compared with 30% via retail stores." Gabe Newell also mentions that Steam could easily be used to sell films and music, but that Valve are concentrated on giving customers more ways to interact with the games they buy, and on trying to make Steam a "better piece of content" for PC gamers.
Steam's success looks set to continue. Last October Valve announced that Steam's user base had grown by 200%. 6 million unique users log on to the service every day.