Steam - hypothetical bankruptcy discussion - split from FAQ

[Ahriman]

since offline mode won't work unless the client is updated at the time you set it to offline mode that would actually be fairly easy to accomplish for most players

Which is why you update the client, pay the fee for say 1 month, go offline, cancel your subscription. So yeah, you'd have to pay ~1 month subscription each time you wanted to reinstall.

Unless cancelling your subscription (a financial transaction) can somehow forcibly uninstall your Steam client or force it to connect or wipe its offline mode, I don't see how they could stop you.

And one shouldn't assume that the client would continue working the same way

I guess they could eliminate an offline mode entirely. Would be technically feasible.

 

[The_Coyote]

Unless cancelling your subscription (a financial transaction) can somehow forcibly uninstall your Steam client or force it to connect or wipe its offline mode, I don't see how they could stop you.

Is a time limited use of a product (full game for free as demo for a weekend) not already part of the steam client? (or is for this deals the client in online mode necessary?)

But nevertheless i think it would be "quite easy" to add some bits in the code of the steam client in front of such a change to force most people to renew their subscription every month. (and if not, makes it unable for you to play the games)

Edit: and seeing the move from a game as product towards a game as service, at least it´s part of my interpretation of Gabe Newells words: "as an industry we are going throu a transition, from entertainment as a product to entertainment as a service" (Gabe Newell announcement that protal 2 [together with steam] will come for the ps3 at the E3 2010), i wouldn´t say, paying a monthly fee in the future for an entertainment service isn´t that highly unlikely

 

[eris]

Which do you consider more likely? Steam going bankrupt or down hard enough to lose you your Civ game, or winning the big powerball lottery? I am trying to figure out how much I should worry about either event in my gaming and financial planning. So far, my answer is "not at all", but I am listening for something that would make this scenario seem relevant to my real life.

 

[ori]

for the powerball lottery you know the odds - for Steam's finances you do not know or have any way of finding out how they are since they don't release anything - so there you go: Steam might go bankrupt any day now or have enough money on hand to buy out all the US' debt for all everyone knows

 

[Ahriman]

Is a time limited use of a product (full game for free as demo for a weekend) not already part of the steam client? (or is for this deals the client in online mode necessary?)

I guess when you paid a subscription fee it could embed an autodestruct in your client (a la free demo for the weekend), where it will stop working X days after you last paid your fee.

But then again they're killing offline functionality, because you have to go online again every time your subscription renewal comes up.

If they're willing to kill offline functionality, they could do it, but otherwise its difficult.

 

[The_Coyote]

But then again they're killing offline functionality, because you have to go online again every time your subscription renewal comes up.

If they're willing to kill offline functionality, they could do it, but otherwise its difficult.

I wouldn´t say it´s a kill of the offline functionality completely - eg as long as they offer long term contracts - halve year, full year (monthly fees aren´t a must) you could easily avoid the termination of your subscription if you have a longer offline period. You only must knew in front of a longer offline stay that you will play the game a buy a license for this period of time.

Even if you say you have a month based subscription, you only have to go online once a month ot renew the subscription - the rest of the month offline would be still possible.

Yes you must be online more often than now (perhaps only perhaps, i still don´t know how to judge this 3 weeks reports), but you must not be online if you want to play the game actual.

 

[eris]

for the powerball lottery you know the odds - for Steam's finances you do not know or have any way of finding out how they are since they don't release anything - so there you go: Steam might go bankrupt any day now or have enough money on hand to buy out all the US' debt for all everyone knows

Yes, but what is a "reasonable asumption? You give two admitted extremes on Steam's future. I can't see basing the decision about Steam on such extremes and very low probablitities. Can the failure of Steam be reasonably estimated as less probable than winning the lottery? Not by anything you just showed me. It seems to me to be just as much a waste of time worrying about Steam losing my digitial copy of Civ 5 as a asteroid hitting my physical copy. I am not saying it could never happen, I am asking what makes you think it likely enough to even consider beyond a paranoid fantasy? I am not looking for "it could happen if things went exactly right/wrong/whatever". I am looking for "This is a reasonable or probable worry because of these factors..." I can't find anything in this discussion that looks like anything other than a deliberately stretched worst case scenario that is not very convincing.

Is all this discussion just based on people's differing levels of paranoia and not on any actual likely possibilities? If so, I can easily go back to ignoring these discussions as irrelevant to my particular level of paranoia and let everybody continue hacking at each other for whatever enjoyment it seems to give.

 

[The_Coyote]

Yes, but what is a "reasonable asumption? You give two admitted extremes on Steam's future. I can't see basing the decision about Steam on such extremes and very low probablitities. Can the failure of Steam be reasonably estimated as less probable than winning the lottery?

The points is, can the failure reasonable estimated?* And the answer is no. If you have a different opinion provide figures which would help to make a resonable estimate, sold figures, revenue, fixed costs, gains per account, costs per account, ... .
All of us here only make a guess, but imo nevertheless both sides could agree to the opinion that a bankcrupt will not come immediately. But because every situation analysis already for now is only a guess, every future scenario is much less (much more unkown variables: market favour, new competitors, ...)

And there is a major difference between personal beliefs and highly subjective probabilities and knowledge and fact based probabilities. And calling someone paranoid because of the own personal beliefs and the own subejctive probability is almost zero without real knowledge is a bit "over the top".

Not that i expect that valve will go bankrupt tomorrow or this year, but this is only my personal belief and no hard fact.

*There are reason why stock corporation have certain publication obligation considering their business figures.

 

[eireksten]

@eris:

I don't think anyone is really concerned that Valve goes bankrupt (except perhaps some that seem to be worried about everything they can think of) any time in the foreseeable future. You can of course never know, but this discussion was very hypothetical from the start. Just as you can be ran over by a bus tomorrow, Valve can go bankrupt. But spending your time worrying about it is a waste, imo.

 

[arstal]

I don't think you have to worry about Valve (or Stardock/Paradox) going bankrupt. I know all three of the big players are in great shape financially now.

If Valve failed to fix the DRM, some hacker would in the worst case scenario.

 

[KMRblue1027]

I used to thing some companies were practically invincible from bankruptcy but the recession changed my view on that. I never expect GM to declare bankruptcy but they did. (Lucky they reorganized or I would have lost a lot of free credit towards my next car.) Heck I don't know how many banks closed... and what if we had a true depression the entire video game industry could fail what then?!

 

[ori]

@eris: it is far more likely that Valve will be bought up by one of the big players than that it goes bankrupt/liquidates. It is still a privately held company controlled by its founders and more often than not they will sell given the right offer - I wouldn't worry all that much about a liquidation, but I wouldn't actually bet on the company being independent in 5 years either. There have been advances to buy up Valve in the past and with increasing market share it becomes more likely. This may or may not impact its business model, though.
That said: since their finances are unknown, they could be on an unhealthy expansion course paid for by irresponsible debt and none would know (I don't think it likely - but it wouldn't be the first time a company boasts huge success in their area, especially in IT related areas, and folds within a very short time frame).

 

[Rebel44]

@eris: it is far more likely that Valve will be bought up by one of the big players than that it goes bankrupt/liquidates. It is still a privately held company controlled by its founders and more often than not they will sell given the right offer - I wouldn't worry all that much about a liquidation, but I wouldn't actually bet on the company being independent in 5 years either. There have been advances to buy up Valve in the past and with increasing market share it becomes more likely. This may or may not impact its business model, though.
That said: since their finances are unknown, they could be on an unhealthy expansion course paid for by irresponsible debt and none would know (I don't think it likely - but it wouldn't be the first time a company boasts huge success in their area, especially in IT related areas, and folds within a very short time frame).

Valve is fully owned by Gabe Newell (Mike Herrington sold him his part pf Valve 10 years ago) so if he dont want to sell it wont be sold (IIRC EA was rumorred to try to buy them few years back) - and he already have shitload of money.

If he would like to sell Valve (including Steam) I doubt that price would be less than 10 000 000 000$ and not many companies can afford that.

I wouldnt be surprised if they went and bought some other company

What "unhealthy expansion" do you think is likely? They didnt have any major new expenses lately (like buying another game studio) and only added expense I noticed this year (related to Valve) was when Steam doubled its server bandwith in January/February, which wasnt really surprise - Steam is increasing its bandwith every year.

 

[ori]

never said anything is likely - I even stated it in my post - I just say since there is literally no information about Valve's finances out there there is no way to know whether its financially sound or not.

As for corporate buyouts: they are very common, and quite convenient ways for company founders to cash in on their investment, the number you state is obviously just projection, but there are quite a few players out there that could easily afford such a price, microsoft and google (the latter was rumoured to be interested in it a year or two ago) for example. EA could afford such a deal as well (as it wouldn't need to be cash. And there are quite a few more names out there that might be interested.
As for them taking over other companies: unless they have a lot of cash on hand they'd need to issue stocks first - or finance it through debt - which is actually one of the ways a sound company can go belly up, one expensive takeover that fails and the debt suddenly isn't covered by profit anymore...

 

[Rebel44]

never said anything is likely - I even stated it in my post - I just say since there is literally no information about Valve's finances out there there is no way to know whether its financially sound or not.

As for corporate buyouts: they are very common, and quite convenient ways for company founders to cash in on their investment, the number you state is obviously just projection, but there are quite a few players out there that could easily afford such a price, microsoft and google (the latter was rumoured to be interested in it a year or two ago) for example. EA could afford such a deal as well (as it wouldn't need to be cash. And there are quite a few more names out there that might be interested.
As for them taking over other companies: unless they have a lot of cash on hand they'd need to issue stocks first - or finance it through debt - which is actually one of the ways a sound company can go belly up, one expensive takeover that fails and the debt suddenly isn't covered by profit anymore...

IMO in case of buyout Google is most likely buyer. EA cant afford it (Valve is most likely worth much more than EA - EA has market cap. "only" 5.33 Billion USD). MS looks to be more interested in consoles. Activision/Blizzard is also likely able to put together enough money, but if Gabe offered Valve for sale I think that Google would get it.

Reason why I dont think buyout is likely to happen anytime soon (next 5 years) is that Gabe already have tons of money and no reason to sell.

I agree that it would be great to know financial results of Valve (Steam). I wrote article about digital distribution services few months ago and it was wery difficult to make reasonable estimate of marketshare (several Steams competitors are also private companies).

 

[BTA47]

Valve suddenly going bankrupt isn't how business works. They'd be bought up long before they'd be forced to go under. What happens after that, no one knows - I would bet the last dollar I own that Steam would still be up, with little to no changes to games you already own licenses for. However, this is speculation, depending on who buys it - if it's Google, nothing really will change, based on their past business models, but if its Activision/Blizzard, prepare to pay $10/month to access Steam, $15/month to access online, $70 for games, and possibly brand new ways to screw the customer.

 

[Afforess]

I have read that statement posted here multiple times and either the specific Government Employee doesn't understand bankruptcy or he is not exactly telling the truth or both.
In the event of a Government bankruptcy no one will remove the DRM - since anyone doing that would be held liable for any perceived damages, no bankruptcy court on this planet would allow a Government that goes bankrupt to willfully destroy its remaining assets - no matter whether they can actually be sold in the end. If the US Government goes bankrupt and no one takes over operations the notion that they would as a last act remove their DRM is so far out there that I cannot even start conceiving that a Government official, much less a President of the US wouldn't know that this statement is on the same level as other fairy tales.

Hey look, I changed valve to Government, and your post makes exactly the same amount of sense -- None. In the case that Steam goes Belly up, I think that it won't matter, because a much superior competitor will have to exist in order for Steam/Valve to die out. Same thing with the Government; in which case, there isn't a whole lot we can do, and it makes no sense worrying about either scenario.



Even if Steam gave you a DVD with an old fashioned serial key that didn't use the internet at all, the discs degrade after 10 years. You guys ask for the impossible, and whine when we tell you that it's impossible...

 

[surv]

Hey look, I changed valve to Government, and your post makes exactly the same amount of sense -- None. In the case that Steam goes Belly up, I think that it won't matter, because a much superior competitor will have to exist in order for Steam/Valve to die out. Same thing with the Government; in which case, there isn't a whole lot we can do, and it makes no sense worrying about either scenario.

Or should we begin driving everywhere instead of walking, 24/7 in case a someone, on the off chance, mugs us?

Even if Steam gave you a DVD with an old fashioned serial key that didn't use the internet at all, the discs degrade after 10 years. You guys ask for the impossible, and whine when we tell you that it's impossible...

I'm sure the IMF would bail out STEAM. We would surely appreciate it

 

[Thyrwyn]

Understand that Steam's DRM functionality is an ancillary benefit to their primary function of providing a cross-platform gaming platform.

Steam will not charge for its service because it would degrade its value to developers interested in using the Steamworks API. It would increase the real cost to potential buyers of their (the developers') products. And for games that did not use the Steamworks API, buyers would just turn to other outlets to get the game. It is a lose/lose for Steam: their API becomes less attractive AND they lose sales. Which would result in fewer Steam users, which further devalues the API in the eyes of potential developers.

 

[arstal]

@eris: it is far more likely that Valve will be bought up by one of the big players than that it goes bankrupt/liquidates. It is still a privately held company controlled by its founders and more often than not they will sell given the right offer - I wouldn't worry all that much about a liquidation, but I wouldn't actually bet on the company being independent in 5 years either. There have been advances to buy up Valve in the past and with increasing market share it becomes more likely. This may or may not impact its business model, though.
That said: since their finances are unknown, they could be on an unhealthy expansion course paid for by irresponsible debt and none would know (I don't think it likely - but it wouldn't be the first time a company boasts huge success in their area, especially in IT related areas, and folds within a very short time frame).

Given Steam's insane profitability, and the fact that they keep their costs low in many areas, and all the free stuff they provide for TF2 as a loss leader, I'm very positive that Valve's in good shape.

Stardock has said that while their games division makes a good deal of profit (GC2 did make 8-figure profit according to Brad Wardell, and even their worst game made a little profit- Demigod), but their games division is less profitable then their application division. They are in good shape, maybe even better then Valve.

Paradox I don't know as much about, but they've expanded pretty heavily over the past year gobbling up studios. I'd have a little worry about them- but only due to that.

I know Stardock's answer to Steamworks is going to provide the same functionality, and be compatible with Steam (aka you make a Steam version, the Impulse client won't pop up). Just will require you to sell the game on Impulse as well. I saw one game from 1C on Impulse using it (Capcom may end up using it also)