Gabe Newell

Gabe Newell

Gabe Newell

Valve founder and managing director Gabe Newell believes all the old
rules for marketing and the developer-publisher relationship are being
rewritten.

Few independent developers have Valve’s influence — not only as a
prominent content creator, but also as a force in changing the
traditional rules of developer-publisher relationships. Last week’s
deal with Ritual, to distribute content via its Steam system being a
case in point.

We asked Newell whether he felt Valve was treading too heavily into the
domain of publishing given its use of Steam for e-distribution and the
fact that it funds all its own development and marketing efforts.

"One problem with Valve is that we don’t follow the traditional
models," he answered. "If you ask me if we’re self-publishing, I’d say
no, but we’re doing some of the things that developers might have
publishers do."

Quickly evolving

The way Valve communicates with its customers is quickly evolving, he
says. "It’s not about media buys. It’s not about buying television time
on MTV. A lot of this stuff is being invented right now. People are
saying hey, we dropped $5 million in a media buy on this product and
saw zero return on that, what are we going to do? If somebody’s going
to be thrashing around, learning how to do that stuff, it’s probably
easier for us to do it with our products rather than rely on some third
party."

Never at a loss for words, the Colorado-born Newell has a warning for
other developers who put too much of their destiny in publishers’
hands. "Publishers may not be telling you this, but they don’t know
what they’re doing,” he says. “It’s like all the traditional mechanisms
no longer scale. If someone told me to go spend twice as much on a
marketing campaign, I’m not sure very many people would be able to come
up with rational ways of spending that money. You can double the amount
you spend and sell no additional product."

In terms of marketing, Newell believes that customers are continually
becoming more educated and content, now more than ever, is king.

"The entire history of the industry has been a move toward a more
efficient valuation of the content that’s being created,” he says. “I
think that good games are going get into people’s hands more
efficiently than less efficiently. That goes against distribution
increasing as a percentage of the value chain.

Lotus sports

"Whether it’s fans of first-person action games or fans of Lotus sports
cars, if you get those people talking to each other, they’re an
incredibly effective vehicle for generating sales. If you’re sitting in
your Lotus sports car, and on your LCD in your car you can see a forum
with other users that tells you fun places to go drive your Lotus this
weekend, the end result would be you would sell more of those cars. And
it doesn’t look at all like a traditional glossy photo ad in Scientific
American, yet it would be far more effective return on our customer.

"I have no reason to believe that [these mechanics] are not wildly
generalizable and a function of the Internet. It’s not something that’s
only in the game space. Now that information is flowing, it’s much
easier to connect with your customer base and it’s changing the rules.
It seems to be killing off lots of traditional familiar mechanisms for
doing promotion.

"If you do something useful for your customers, be it information or a
new tool or something like that, that’s much more interesting to them
than seeing a glossy picture."