How often do you hear of technology companies finding the good in their consumer base instead of focusing on how they are being cheated by pirates/thieves/IP infringement?  You sometimes see miracles such as the RIAA dropping suits and UbiSoft releasing Prince of Persia without DRM, but Valve takes the cake with their pro-consumer comments last week.

In a public address during the Game Business Law summit in Dallas, Texas last week, Valve's director of business development and legal affairs, Jason Holtman made headlines with one phrase: "There's a big business feeling that there's piracy...but the truth is, Pirates are under-served customers."

That's quite the bold statement coming from the largest digital distribution platform for PC Gaming.  He goes on to address some of the myths of gaming.  What he believes as myths for PC gaming can be broken down into four points:

1. Online sales are replacing retail sales.

This is false and Holtman says that it's a "rising of the tide" where everyone is rising with increased sales and online retail is just moving faster than traditional retail.  And the fact that people are just now seeing the sales numbers for online retail makes it seem that much more important.

2. Online sales are cannibalizing traditional retail.

Coming from the leader in online distribution that is also a traditional publisher, Holtman would be the right person to answer this.  He illustrates his point that online actually servers to increase traditional retail by the example of giving Day of Defeat free to play offers for a weekend.  After DoD was offered to be free to play for a whole weekend, retail sales of the title beat online sales by 28% after the trial.

3. You must monetize investments by charging for them.

Valve reveals that by giving away content, users actually buy more retail products.  This has been recently illustrated by Monty Python giving away free content on youtube while seeing their DVD sales increased by 230%!  Certainly valve charges for the initial software but looking at Team Fortress 2, the additional content has been given away for free while they continue to see modest sales a year after the game launched.

Perhaps Blizzard could take a chapter from Valve's playbook and start giving content away (more substantial than regular patches) where they could potentially see an increase in subscriptions and returning customers.  Just a thought.

4. Pirates are bad for business.

Valve finds that piracy is mainly due to users not having proper access to the content.  In the case of Valve games, they find that if they have simultaneous launches in Russia and China, piracy rates actually drops significantly.  This makes perfect sense.  As we all know, using pirated software is risky and a sure way to get infected with spyware.  And if indeed that piracy is a result of consumers wanting your product but unable to obtain it, then Valve is right, pirates are under-served.  Because lets face it, how much money do you make pirating games (not Windows or other overpriced software) if the real thing can be obtained over the web for a fraction more and be guaranteed safe?

Valve is certainly at the opposite end of the spectrum when it comes to video game economics.  While EA is busy DRM'ing up their games, Valve is sitting with a successful online gaming platform, distribution system, and steady sales without the need for micro-transactions.

I'm not a Valve/Steam fanboy and I'll be the first to admit that Steam in and of itself is also a form of DRM.  But I will argue that Steam's DRM actually works and is no different than requiring you to have the CD in your drive to play the game (which I feel is fair).  And don't give me that bullshit about you needing to keep your disks in mint condition.  I've used CD's since they were first spinning in a 4X drive and I've never had one scratched so it was unplayable because I was using it often.

I'm glad that there's a service such as Steam.  It's very simplistic in its current iterations (MUCH better than the early days) and it's a platform that makes sense with today's technological state.  I honestly hope that this will be the bright new future for PC gaming.  With an install base the size of PC's, it's hard to image PC gaming truly dying.