It’s Monday, 16 May 2022 and I am sick, having eventually succumbed to the whatever-it-is that lay the kids low over the last two weeks. So far I am three consecutive rapid COVID tests negative, and just feel lousy.
Because I am sick, this is a re-run.
Platforms Corrupt originally ran in s5e10: Platforms Corrupt, published on 22 April, 2018.
Over the weekend, Valve, a company founded by some ex-Microserfs that started out making videogames announced that it had bought Campo Santo, a videogame developer with one critically acclaimed and award-winning title under its belt, Firewatch.
Part of this is going to sound like inside baseball, but my brain likes to make connections so I’m going to try to explain why I think a videogame developer turned platform owner purchasing another indie game developer is interesting, for certain values of “things that have caught my attention”.
The story goes a bit like this: Valve never really set out to make a stupendously successful digital distribution platform. They were a game developer, happily making games and Half-Life, their first game, was - like Campo Santo’s - critically acclaimed, award-winning and praised for having quite unparalleled quality of narrative and storytelling in a very game-like, as opposed to linear, cinematic like way.
(The secret, of course, us that Valve’s storytelling games are very scripted, and more cinematic than you’d think at first blush. The double secret is that Valve were pretty good at figuring out what worked from a scripted cinematic point of view and what works from a gameplay point of view and marrying the two together in an additive way that made something greater than previous attempts to combine “film-like” and “game-like”.)
In another example of the “make something that other people can make things with”, in 1999, Half-Life was modded and turned into another game, Counter-Strike, and the developers of that game ended up being acquired by Valve. So far, so conventional-video-game-developer.
And then it all went a bit sideways. See, Counter-Strike is a multiplayer game and the nice thing about networks and software is that you can update the software to address bugs (irritating to players) cheating (also irritating to players or, at least, the ones who aren’t cheating) and piracy (irritating to the business). But when you get to a large enough install-base, you end up running into logistical issues in making sure that everyone has the most up-to-date software. In 2003, after a difficult beta process, Valve released Steam, a piece of software that would be used to distribute and make it easier (or, even, required) to be running the most up-to-date version of Counter-Strike.
Steam became more than just a method for patching online games and preventing piracy. Because in principle there’s not much difference between patching or updating a piece of existing software or distributing software in the whole, Valve started using Steam to distribute and publish software in 2005. Back in 2005 this wasn’t exactly a novel idea, but the scale was certainly different. 13 years later, digital distribution of software is now commonplace and we don’t really think of anything of using app stores to pay for, download and receive updates to software.
Anyway, all of that is context and background: all you really need to know is that Valve started out making videogames (which were good videogames!), they needed a way to update those videogames and accidentally (and maybe on purpose, but success at these things also depends a lot on luck and timing, too) created a dominant software distribution platform for desktop games. When I say “dominant software distribution platform for games” here’s how dominant: Forbes reckons Gabe Newell, who owns over 50% of Valve, is worth about $5.5 billion dollars. And it’s important to note that this is for desktop games - much of the growth in the industry over the past 15 years has come from mobile games.
The accusation, leveled by “real gamers” against Valve is that Valve doesn’t really make games anymore, which isn’t strictly true. They do make games and acquire game development teams, but what people really mean when they say Valve doesn’t make games anymore is that Valve doesn’t make games like Half-Life or Portal anymore - first person, immersive games that have terrifically strong storytelling chops.
In their last iterations, Half-Life (a series which has a handful of games) and Portal (which has two and a curious licensed bridge-building game) were big, expensive to produce games. Triple-A games - ones with high production values, detailed environments and care and attention paid to script and tirelessly perfected and iterated on in terms of game design - have also gotten more expensive to produce over the last 10 years as videogame hardware has increased in power.
For the past few years at least, a few things looked like they were happening:
a) at some point, Valve’s revenue tipped from coming from selling its own games to selling and publishing others’ games via the Steam platform;
b) Valve tried quite hard to make a new entry in the Half-Life series of games;
c) … but it never came out
d) In fact, when you run the cost-benefit of producing a big, expensive game and the likelihood of recouping your costs, you might get some performance anxiety and paralysis that all goes away when you rationally decide that it’s not worth making a new first-person game when other kinds of games attract larger audiences (in the meantime, the genre of multiplayer battle arenas had grown up, as well as more ‘casual’ games)
e) … especially when those other kinds of games come with built in revenue mechanisms that allow you to make money continuously, instead of a one-time $60 purchase.
And then, Valve buys Campo Santo, an independent developer with a great pedigree. Could it be that Valve has decided that it can solve its “we don’t make triple-A first person environmental storytelling narrative games” problem by… buying someone who’ll do it, do it well, and is a good, what is the phrase these days - cultural fit?
Here’s the problem:
From the outside, Valve already had a team that could make a great Half-Life or Portal game (although this requires us to ignore the stupendous psychological creative pressure of keeping up a great streak and, sometimes, you just might want to do something). But for the purposes of this, let’s assume that Valve has all the talent that they need. Why didn’t another game in the Half-Life ilk come out?
One reason for this that I’ve seen before was when I worked on the launch of Facebook’s Paper,(which some of you who’ve been reading for a while may remember). Paper, released in January 2014, was designed as slower, more immersive, “curated” and visual take on the Facebook timeline. It was, in a way that Mark Zuckerberg continues to plead, designed from the top-down to be better at helping us make close, genuine connections with people and, uh, the brands that are important to us.
Paper wasn’t a hit.
I mean, it was a hit. It would’ve been a hit anywhere but Facebook. But what’s a hit in a company that, at the time, was hitting a billion monthly active users on mobile. Mobile - a platform that the company had been accused of completely missing the boat on, but had managed through just that stat to execute a genuinely un-Titanic-like about-face.
Paper was shut down about two and a half years later in June 2016 with the cliched news that its distinctive features “made their way into other Facebook apps”.
So here’s my theory: platforms corrupt, and absolute platforms corrupt absolutely.
You can’t compete with a monster like 1 billion monthly active users or the revenue derived from a dominant platform for games distribution. Everything else is going to be tiny in comparison. You can’t run the numbers because nothing could ever get that big, or nothing else can ever really be justifiable and, I think, it’s in human nature to look at a genuine mountain and say: well, I don’t see how it’s worth doing anything else compared to this giant mountain we built over here.
I think we see traces of this kind of behavior at Apple where it’s incredibly difficult to resist the gravitational attraction of something like the iPhone. Nothing else comes close in terms.
Talking about this with friends, one tactic I thought that might help deal with this is what intuitively, I feel doesn’t happen anymore: the spin-off. If you’ve got something that’s so successful that it’s practically a business in its own right, then separate it out. Stop it from being a distraction, hive it off, retain an ownership stake so you still get the revenue. The arguments against this of course are, uh, a loss of synergy and, in a company like Apple that prides itself on thinking holistically, losing the ability to work in a vertically integrated manner if something has just been yanked out. It’s also difficult if there are business/product/services dependencies.
Steam is an example where I think it’s significantly easier for Valve to spin out the platform business and - if it wanted to - keep at the game development business. But that’s Valve’s prerogative. The platform business is interesting! There are lots of things happening all the time and lots of problems to solve all the time. They’re different problems than a different area of aesthetic, subjective creativity involved in game design and development.
So, I’m pessimistic about whether Campo Santo will release Valley of the Gods (though I genuinely hope and wish that they do), or that they’ll be a creative saviour that will produce the new entry in series fans have been clamoring for. Valve could have made another game in the vein of Half-Life either with internal resource or buying a team in (as it had done with Portal, in any event), but it hasn’t and it didn’t, and in the end I see those types of outcomes coming from leadership decisions.
There’s one more analogy I want to make, which is Yet Another Comparison To The Move Industry, which is something that’s really tired in the game industry, for one because games have always (in my view and feeling, at least) been jealous of the movie industry with all its sexy celebrity and place in popular culture. The position in much different in 2018, about 10 years after I last really worked in the games industry, because (whisper) we kind of won and anyway it wasn’t a zero-sum game in the first place.
The comparison is this: the Campo Santo deal looks a bit like when a studio (say, Paramount Pictures), sees some creative talent it likes (say, JJ Abrams) along with a production company (say, Bad Robot) and enters into an expensive and lavish first-look deal. In 2006, Paramount signed what’s called a first-look deal with JJ Abrams a couple years after Lost debuted and Abrams’ stock was unambiguously rising.
Here’s my (naive, very sketchy) view of what a first-look deal is:
Studio: Hey! You! You make good stuff! We like it! Wanna make stuff with us?
Talent: Uh, maybe?
Studio: OK how about this, you and your production come to our lot, right, we give you an office
Talent: ok great, don’t have to pay rent now
Studio: And, uh, you just think of some awesome ideas, right? Because you’re awesome.
Talent: It is very nice to be told you’re awesome.
Studio: And when you have those ideas, we might fund them, right? And make your movies. Then you get to make movies and we get to make millions of dollars.
Talent: OK yes but what is the downside
Studio: Well someone might ask you to make Star Wars and if you’re not in a good negotiating position and you need us more than we need you, then you won’t get to make Star Wars but let’s just not think about that right now, it’ll probably all be fine
So! Campo Santo are JJ Abrams. They’re great, established talent. Valve are the movie studio! They make money off entertainment. But… here’s where it breaks down a bit and, again, here’s why I’m nervous about seeing any output from the Valve/Campo Santo deal:
Studios have to make movies. They don’t have huge piles of cash lying around. Apparently, most movies don’t even make any money in the first place, and that’s before you even get into the creative accounting that might happen in order to screw someone out of a few points of participation. It would be really dumb and weird if Paramount signed a deal with JJ Abrams to make movies and… didn’t make any movies with him. And just kind of had him and his Bad Robot team on the lot to think of stuff that might be cool.
Valve doesn’t have to make games. Valve is sitting pretty as some weird movie studio that through a combination of hard work, luck and timing, is literally just printing money right now and it’s hard to see what might shift their platform dominance in Steam (other than, say, the long-term decline of the conventional desktop and needing to shift platforms). I mean, everyone knows the computing industry is going to continue to evolve, but maybe Valve don’t need to worry about that because for human-scale timescales, they’re doing OK.
Valve don’t have to publish anything Campo Santo make. They don’t have to produce and publish a new game of the kind that won them critical acclaim and fans. At some point, Valve had to make good games because if they didn’t make games that were good enough people would be willing to exchange money for them, then they wouldn’t have any money any more to, well, do anything.
And this is before you get into the whole “constraints breed creativity” perspective which a) I totally agree with and b) is hard to think about when you’re working at a company that has a stupendous passive revenue stream.
By all accounts, the deal is a no-brainer for the Campo Santo team. It just doesn’t guarantee that anything will get made and see the light of day from Valve.
Anyway. Platforms corrupt. Absolute platforms corrupt absolutely.
And, thanks to Andrew Losowsky, for this update on Upton Sinclair: “It is difficult to get a platform to remain uncorrupt, when its business model depends upon its being corrupted.”
That’s the re-run then. Hopefully I’m better tomorrow.
 Valve Corporation - Wikipedia
 Campo Santo (company) - Wikipedia
 Firewatch - Wikipedia
 Steam (software) - Wikipedia
 List of Valve Corporation video games - Wikipedia
 Facebook is shutting down its Paper newsreading app on July 29th - The Verge
 Corporate spin-off - Wikipedia
 Andrew Losowsky on Twitter: “It is difficult to get a platform to remain uncorrupt, when its business model depends upon its being corrupted. (with apologies to Upton Sinclair)… https://t.co/uuEmmKcddg“