The games industry is fundamentally changing from a world of boxed goods to a world of relationships. In this new world, publishers and developers are connected directly to their customers. By correctly managing this relationship, game companies can increase sales and their customer base.

The transition will make creators more money and let them operate at lower risk, explained Gabe Newell, president of Valve Software, who gave a keynote address at this year's DICE Summit Wednesday evening. The games industry is about to experience the same transition as movie industry as it moved from DVDs to Netflix and music business as it switched from CDs to iTunes.

"You don't have the excuse of being a game company anymore," says Newell. "You're an entertainment company."

That is, of course, why Valve built Steam--so it could directly manage its relationships with its customers. When Team Fortress 2 launched 14 months ago, it was just the beginning, explained Newell. The game has been updated 63 times so far. These weekly updates add value for Valve's customers. The new content doesn't always have to be a major update--it could be bug fixes, commentary, new achievements, or map packs--but the constant dialog between developer and customer keeps game players engaged.

Enthusiastic and loyal players are more powerful than any media buy, says Newell. They are ambassadors to potential customers. When Valve announced it would offer a map pack free of charge, sales on Steam increased 106% and new users increased by 75%--driven by guest passes and free weekends.

The secret to entertainment as a service is understanding what it is customers are looking for. They want to be able to play content anywhere, they want to continue there games without worrying about saves, and they don't want to be bound by geographical location, and they want you to administer your own software, says Newell.

Most importantly, games as a service industry allows developers to do their jobs better. They have access to hardware and gameplay data that can be used to improve products. Validation and encryption methods ensure compensation for their products. And overall it makes it easier to experiment and manage your business.