Facebook is about to take on Steam, gaming's 800-pound gorilla

Around 125 million people are actively using the world’s largest video game service: Steam. It’s not made by Nintendo, Sony’s PlayStation, or Microsoft’s Xbox. It’s not from Apple or Google.

SteamValve SoftwareThis is my front page for Steam, on a MacBook. Steam is on Mac, PC, and Linux.

Steam is operated by a small, private company in Bellevue, Washington that prides itself on having a “flat” employee structure. No bosses, no assigned teams. All the desks are on wheels, so that employees can easily move their work area to other departments.

The company is Valve Software, and it’s a juggernaut in the world of computer gaming.

Beyond operating Steam:

  • Valve makes a high-end VR headset. It’s called the Vive, and it was made in partnership with electronics maker HTC. When you put on the Vive, you can directly interact with SteamVR — a virtual reality version of the already enormously popular Steam service.
  • The company makes several of the world’s most popular games. Two major eSports games — “DOTA 2” and “Counter-Strike: Global Offensive” — lead the charge, with “Team Fortress 2” not far behind, to say nothing of classics like the “Portal” and “Half-Life” series’. Some of these games are free, with elaborate in-game purchase storefronts.
  • For every game sold on Steam, Valve takes a cut. The industry average is 30%. With 125 million-plus active users and the world’s largest gaming library, that’s a serious source of revenue.

That’s before we talk about the eSports championship that Valve runs for “DOTA 2” — the winning team took home over $9 million from the over $20 million prize pool — or the games it sells on consoles like the Xbox One and PlayStation 4.

It’s hard to imagine a competitor to Steam — to Valve, really. Many worthy opponents have tried, none have succeeded.

And now, a new contender is entering the ring: Facebook.

The company announced on August 18 that it’s making an “all-new PC gaming platform.” A Facebook rep confirmed to Business Insider that the “platform” in question is a standalone PC application — like Steam — for accessing PC games.

Presumably that will include a storefront, some form of chat/friends list, and maybe even game broadcasting. Not only is this stuff standard at this point (even on game consoles), but it’s all stuff that Facebook already has: Messenger and Live solve the latter two needs, and Facebook continues to operate a digital storefront on the web.

It makes a lot of sense for Facebook to create something like Steam. Consider this:

With 1.65 billion users around the globe and many more billions of dollars to spend, Facebook brings considerable heft to the fight. Of that user number, Facebook says 650 million are “either playing games on Facebook or with Facebook.” If Facebook can convert even a quarter of that number, it will be in good shape against Steam.

That’s a big “if.” We currently know next-to-nothing about what Facebook’s “all-new PC gaming platform” looks like.

Oculus HomeFacebookThis is Oculus Home, the main menu you encounter in Facebook’s virtual reality storefront.

Between Facebook Messenger, Facebook Live, and Facebook’s social network itself, the foundation is there for a strong gaming platform. But that foundation won’t be enough. Facebook needs a major line-up of games, an intuitive-to-use service, and some serious stamina to break Steam’s iron grip on the PC gaming world. Even with all that, many Steam users won’t want to use a service that doesn’t include their existing Steam game library.

So, what’s Facebook got to convert those folks?

Facebook director of games partnerships Leo Olebe offered a tease at what could be the answer: “The idea that Facebook can be a place where people share the games that they love is, in my mind, a pretty compelling thing.”

NOW WATCH: How to stop videos from auto-playing on your Facebook feed

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.