Why Google might buy Valve?

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Ok, so I’ve been slow to blog on the biggest story to hit the games world this year*, but I’ve been thinking about it. Thinking long and hard.

On the face of it, this deal looks unlikely. Valve is famous for making the Half-Life range of games. Google, whose objective is to organise the world’s information, is not seen as a content player: even when it has launched or bought content sites like Youtube or Picasa, it’s all been about a platform for users to share content, not about Google owning its own copyrighted material.

And Google’s recent activities, particularly Chrome, have been about moving applications away from the desktop and onto the web. How does that fit with Valve’s Steam distribution platform, which is about distributing content to local machines securely.

So here are my initial thoughts:

1. It’s all about Steam (doh!) – 15 million users, a digital download channel that is proven, and the opportunity for secure distribution of any executable file. Steam is huge in games, and has vast potential outside that narrow sphere too
2. It’s all about Microsoft – Google seems to be going after Microsoft’s turf. Microsoft is big in games, and has billions of dollars sunk in the Xbox. If Google wants to dominate, does it have to have games too? And if does, then Valve, with the Steam distribution technology and a handful of top IPs is a great start
3. It’s all about diversification – Google’s success to date is based, essentially, on one product: search-related advertising. Eventually, that’s going to peak. Some people I’ve talked to suggest that Google is on a scattergun spree, buying whatever takes its fancy and hoping that something will work out. Some deals will look really stupid in years to come; hopefully a few will look brilliant. Valve could just be the next in line.
4. It’s all about Steamworks – In 2005, Google acquired Urchin, an analytics company that charged websites a substantial price for tools to track their website usage (I can’t find a reference to it now, but I recollect a price of $10,000 per annum – but don’t quote me). Google rebranded the service Google Analytics and offered it for free. It is now one of the most popular (possibly the most popular) web analytics software on the web. Valve’s Steamworks follows a similar model, offering publishers the chance to distribute their software securely. It shows a similarity of ethos and approach between the two companies, and may bridge the gap (in the short-term at least) between Google’s desire for everything to be server-side and the technological reality that certain products (like games) run better on a local client.

So having mused on it for a while, my feeling is that Half-Life is irrelevant to a deal that is nevertheless�conceptually logical. Whether Valve is ready to sell is another question. And if it does, it will have a thumping great price tag.

* The original story, Google to by Valve, was published by website The Inquirer, and has been categorically refuted by Valve.

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