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How Valve Is Countering Nintendo, Epic Games With Steam Deck

How Valve Is Countering Nintendo, Epic Games With Steam Deck
Cheyne Gateley/VIP+; Adobe Stock; Valve

Announced mid-July, Valve’s handheld Steam Deck console is already taking preorders and targeting a December release.

This is a great time for the operator of Steam, a PC gaming digital storefront, to up its consumer hardware efforts, for two reasons.

Nintendo’s upcoming Switch model is more of a consumer gesture than a necessity.

Since the beginning of the pandemic, software and hardware unit sales for Nintendo’s hybrid Switch console have stayed remarkably robust, with the first quarter of 2021 maintaining the trend of year-over-year increase.

That doesn’t mean Nintendo shouldn’t make improvements where it counts.

Exclusive games like “The Legend of Zelda: Breath of the Wild” and “Animal Crossing: New Horizons” were designed with the Switch’s limited graphics in mind, versus games on PlayStation 5 or Xbox Series X, where state-of-the-art graphics are expected.

Ports of big, graphically intense games popular among PC and console gamers like “The Witcher 3: Wild Hunt” generally exhibit poorer performance on the Switch, so Nintendo’s new OLED model with better graphics, a wider screen and expanded storage set for October is a nod to handheld gamers seeking a more hi-fi experience.

But in comes Valve’s Steam Deck. For only $50 more than the $350 OLED Switch, handheld heads get a console with superior, more adept specifications geared toward expectations of the PC crowd as well as multiple control schemes and ways to connect the console to TV displays.

Since potential Steam Deck buyers already own the games they would play on it via their Steam accounts, it’s clearly the better deal and improves upon Valve’s last attempt at high-end hardware, a VR headset that initially cost $999 and has since been eclipsed, alongside PlayStation VR, by sales for Facebook’s newer Oculus Quest model.

Going with a more consumer-friendly price point for the Steam Deck is the right move. Plus, Valve’s one-and-done reveal of its console has been far smoother than Nintendo’s multiple clarifications of misreported rumors regarding the OLED Switch’s capabilities and other potential upgrades that preceded the company’s July announcement as early as March.

Epic Games has proven itself a worthy, multifaceted competitor to Valve.

On the back of exceptional income from “Fortnite,” Epic Games launched its own online storefront by way of the Epic Games Store at the end of 2018. While forming exclusive deals with publishers that saw new titles release on Epic’s store first instead of Steam, Epic has also maintained a policy of revenue splits with publishers more generous than the 30% cut Valve takes for games released through Steam.

Within two years, Epic is already seeing roughly half the activity of Steam. In 2019, Epic’s monthly active user count for December was 32 million compared with Steam’s 2019 average of nearly 95 million, showing how the ratio in activity is tightening.

Valve has already had to adjust its live-service strategy around the reality of “Fortnite,” making its popular competitive shooter “Counter-Strike: Global Offensive” a free-to-play game in 2018 with a battle royale mode resembling Epic’s crown jewel as it kept a paid tier with more features.

But it hasn’t been an easy transition. In June, Valve adjusted its tiers to remove game-enhancing features for free players, citing matchmaking purposes. It’s a stark contrast to “Fortnite,” which still only earns revenue from player purchases of cosmetic items.

With Epic venturing into publishing in 2020, shifting focus to the launch of new consumer hardware accessible to Steam’s 120 million MAUs is a good way for Valve to lean on one gaming sector Epic has so far stayed out of.

Such competition between two gaming mammoths is worth paying attention to as Big Tech looks to get in on the action. Amazon and Google have already done so via cloud gaming, but now Netflix has stated its intent to work mobile gaming into its subscriptions.

Details of how Netflix plans to do this remain unclear, but in its Q2 earnings statement the company did deem Epic Games a competitor in grabbing user attention. If that’s the case, Netflix ought to follow this Valve-Epic battle closely ⁠— and consider the value of additional revenue streams.