Names You Need to Know in 2011: Gabe Newell
Digital download unit sales of PC videogames overtook unit sales from physical retail stores in the first half of 2010, according to a report from research firm NPD Group. If the writing’s on the wall for the dominance of the digital distribution of PC games, then Gabe Newell is the one holding the pen.
By one industry estimate, Newell’s Steam Web storefront accounts for 70% of the digital distribution market for videogames. There are currently 1,200 PC and Mac game titles on Steam, which has lined up most of the major publishers like Activision and Electronic Arts. The company recently said it had passed more than 30 million active user accounts on Steam. This has not made Newell popular with videogame retailers, who are seeing declining sales.
Newell is the co-founder and president of Valve Corporation, the developer behind popular game franchises like Half-Life and Portal as well as the operator of Steam. A Microsoft Millionaire, Newell quit the Bill Gates empire to found Valve in 1996 in Bellingvue, Washington, with fellow ex-Microsoft employee Mike Harrington.
Valve’s Steam, boasts Newell, is on track to record its biggest year ever in terms of sales and in the last 12 months, has seen sales growth of more than 200%. While Valve is tight-lipped about its revenues, when Forbes profiled the company at the end of 2005, it was already on track to surpass $70 million in revenue that year, doing $55 million in operating profit. Newell says the company has continued to grow in the past six years, so I’m guess-timating that annual revenue figure is much, much higher now, at the very least in the hundreds of millions if not more.
And Newell continues to iterate. Steam early on allowed users to promote and sell “mods” or modified versions of existing games at its marketplace. Recently, Valve introduced a marketplace for user-created virtual items.
Meanwhile, videogame console-makers like Microsoft and Sony long ago took a page from Steam. Both companies now have online networks through which they sell games, movies and music via digital distribution. Microsoft’s Xbox Live now takes in more than $600 million in annual revenue from sales of digital goods.
http://blogs.forbes.com/oliverchiang/2010/11/13/names-you-need-to-know-in-2011-gabe-newell/?partner=yahootix
