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Business, Management, and Economics
The high-quality academic books, upper-level student texts and journal articles on our Business, Management and Economics list offer fresh perspectives on the economy, the future of work and organisations, and the relationship between business and addressing global social challenges.
In Chapter 4, I define markets as fields of strategic action based on Fligstein’s theoretical framework (2001). I point out that Fligstein offers a relevant approach to analysing the interplay between diverse actors in a market context. While Granovetter points out that economic actors are also social actors enmeshed in social networks (1985), Fligstein describes the ‘politics’ that are played out within and between firms on markets as fields of strategic action. These politics concern ‘intra-firm’ negotiations to settle on specific ‘conceptions of control’ that set the direction for said firms’ strategies in the market (2001: 35). They also concern the specific ‘market orders’ that emerge between companies in market contexts as a way of handling competition between them (2001: 16). Thus, Fligstein, along with Beckert, points out that competition does not represent an ideal state of affairs but rather a problem to be handled through various kinds of coordination. Indeed, the state of competition often heralded as the ideal in classic economics is a characteristic of emerging markets and is typically replaced with more stable orders where ‘incumbents’ divide the world between them to keep ‘challengers’ out as a market matures. In this chapter, I will analyse the way game titles and publishers are distributed across the different contexts of economic exchange offered on the Steam platform from this perspective.
In the previous chapter, I observed how the notion of platforms has changed throughout recent decades from signifying a computational system (Bogost and Montfort, 2009) or a programmable architecture (Van Dijck et al, 2018) to a more general principle of organization (Kenney and Zysman, 2020; Stark and Pais, 2020) and a business model aimed at cornering markets and reaching monopoly status (Langley and Leyshon, 2017; Srnicek, 2017; Peck and Phillips, 2020). This can be related somewhat to the general transformation of platform companies and market orders during this time span, such as the change in the game industry from a market order dominated by a few console owners to one dominated by large tech companies from outside the gaming industry. While the platform as a computational system or programmable architecture is easily identified as the key principle of power in a market order controlled by console owners, the large tech companies control the market through their storefronts or extended market places (Doyle, 2013) and through their financial power to dominate the entire market field. One significant theme that runs through this course of development is the integration of retail into platform architectures, and the increasing focus on platforms as markets. Thus, another aspect of platforms which is often foregrounded is that they constitute multi-sided markets (Rochet and Tirole, 2003; Evans and Schmalensee, 2016; Van Dijck et al, 2018) that let different groups of customers meet on attractive terms.
This book examines the evolution of digital platform economies through the lens of online gaming.
Offering valuable empirical work on Valve’s ‘Steam’ platform, Thorhauge examines the architecture of this global online videogame marketplace and the way it enables new markets and economic transactions. Drawing on infrastructure, software, platform and game studies, the book interrogates the implications of these transactions, both in terms of their legality, but also in how they create new forms of immaterial labour.
Shedding new light on a previously under-explored branch of the study of digital platforms, this book brings a unique economic sociology perspective into the growing literature on videogame studies.
In 2018, Valve Corporation, the owner of the Steam gaming platform, made a seemingly minor feature change. It involved that game items obtained in Steam-based games could only be traded between players after a waiting period of seven days after acquisition. This feature change, often referred to as ‘the cooldown’, cost the most active Steam traders several thousands of euros due to the subsequent plunge in market prices. It was implemented as a response to rising public concern regarding the proliferation of so-called skin trading and skin gambling on shady websites. In the time leading up to the event, several critical voices had accused Valve of profiting from illegal gambling with items from the Steam platform. ESPN.com stated that Counter-Strike, one of Steam’s most lucrative game titles, had ‘spawned a wild multibillion-dollar world of online casino gambling; it’s barely regulated and open to any kid who wants in’, and the Washington State Gambling Commission stated that Valve was ‘responsible for the unregulated Counter-Strike: Global Offensive gambling that’s gone on through steam’ and ordered Valve to take immediate action. In the wake of these critiques, Valve was facing several lawsuits.
In this chapter, I will address the way platforms have developed in the field of digital gaming and use this historical backdrop for interrogating critically the notion of platforms. The historical development of gaming platforms can help us to question what should indeed be attributed to the platform as a computational system and what should rather be explained by the platform owner’s financial status and position within the wider market context. Traditional game consoles are, in practice, proprietary innovation platforms, in Gawer’s (2011) and Cusumano’s (2010) sense, a set of development and publishing tools and a key contact point to the gaming audience made available to complementors on certain conditions. As developer and publisher, you must contract with the platform owner to get your game title on the console, and as a gamer, you must purchase the console to be able to play your games. In this way, the gaming consoles of the 1980s and 1990s effectively inserted themselves between game publishers and the gaming audience in the same manner as contemporary platforms are said to do, and their specific design and forms of governance indicate a certain market order, that is, a particular field of incumbent and challenger (see Chapter 3). Their power is that of the traditional book publisher owning the key to a particular version of the book format, which happens to be the market standard.
In the former chapters, I have analysed and discussed the ways in which the Steam platform has historically expanded the scope of economic transactions (Chapter 5), how this is enabled by the platform features (Chapter 6), and how different actors on the platform turn these affordances into ways of making business (Chapter 7). In this chapter, I will dive deeper into the way these economic transactions extend beyond the Steam platform on to the wider internet. My key point will be that the existence of extra-platform contexts of economic exchange not only serves to expand the number of economic transactions and grow the market, but potentially turns the Steam platform into a payment instrument and skins into a unit of transaction independent of the games from which they originate. Indeed, it can be interpreted as an attempt to create ‘money at the margins’ (Hütten and Thiemann, 2017) by transforming Steam and its extra-platform transactions into a ‘monetary network’ (Dodd, 1994). Firstly, I will characterize some of the extra-platform contexts of economic exchange and explain in what way they seem to be ‘powered by Steam’. As an extension of this, I will discuss Valve’s possible motives for enabling, or at least not policing, these economic practices. These motives can to some degree be tied to the business emphases addressed in Chapter 5, that is, expanding the scope of economic transactions by enabling microtransactions on third-party websites and allowing the secondary market of game items to expand beyond the platform.
In Chapter 2, I introduced the notion of ‘platform configurations’ to cover the development of game platforms across the previous four decades. I observe that it is not just the game platforms themselves that have changed but also the very concept of ‘platform’, which has altered its meaning from signifying a computational system to signifying large market actors in Big Tech. Thus, the notion of ‘platform configurations’ includes the platform as a standardized computing system along with another range of factors that constitute contemporary platforms, such as market orders, ownership structures, and value chains. The specific role of the platform as a standardized computing system varies across these configurations from being primarily development and publishing devices to including storefronts and shaping multi-sided markets. The latter involves that platforms are strategically designed to shape market interactions (Srnicek, 2017) in ways that serve the economic interest of the platform owner. In the current chapter, I will analyse in more detail how this is specifically done by the Steam platform, that is, I will analyse the way the platform’s API allows third-party actors to operate on the platform through a critical reading of the documentation. The aim is to map and discuss the ways in which the different contexts of economic exchange are made available as sets of strategic design choices by the platform design, more specifically, through the Steamworks API.
In this chapter, I will describe and discuss the gradual development of the Steam platform’s business model from a classic retail or multi-sided market to distinct ways of monetizing user participation that set it apart from other platforms. Gaming platforms such as PlayStation Store, Xbox Market, and Epic Games Store rely primarily on retail, and major media platforms such as YouTube rest on a relatively classic advertisement-based business model, where content is offered to users and advertising space is sold to advertisers (Caraway, 2011). The primary difference between these platforms and traditional commercial media is the extensive collection of user data that enables a more granulated analysis and classification of user segments (Fourcade and Healy, 2017; Van Dijck et al, 2018) and scope of commodification (Ørmen and Gregersen 2022). Steam, on the contrary, denounces advertising as a way of monetizing games on the platform. That is, the platform does not offer a system for integrating ads with content as a way of monetizing users like the one featured by YouTube (see Ørmen and Gregersen, 2022) or the App Store, and the active participation of players on the platform is monetized in ways that differ considerably from the advertising business model. On the one hand, passive and active player contributions are used to augment and further the effectiveness of the Steam store, that is, to offer ‘value-added services’ (Jöckel et al, 2008) on the platform. On the other hand, the scope of economic transactions is extended to turn players’ economic action into a source of revenue in addition to retail.
In this concluding chapter, I will discuss how user commodification is expanded and intensified in tangled markets and how this development challenges current approaches to the regulation of platforms. Since Smythe’s seminal work on the ‘audience commodity’ (1981), the role of advertising has been a key focus in the conceptualization of commodification processes in commercial media, and it remains an important backdrop to widely used concepts, such as ‘the attention economy’ (Goldhaber, 1997) and ‘the marketplace of attention’ (Webster, 2014). Of course, advertising as a business model has been expanded throughout this history and commodification has been intensified through mechanisms of datafication (Van Dijck et al, 2018: 37) and a gradual shift from attention to engagement as a key focus of this commodification (Ørmen and Gregersen, 2022). As the previous chapters indicate, advertising is by no means the only way in which users are monetized and commodified on digital platforms, and the specific approach employed by Valve on the Steam platform allows us to consider in more detail alternatives beyond advertising. On Steam, users are also addressed as traders that create value for the platform by way of their economic action. This business model, more specifically, consists in converting the value players attach to their game worlds into market value through the integration of transactional affordances into a range of contexts on the platform (see Chapter 5). In this way, the core of Steam’s business model is not the audience commodity but rather the commodification of player-driven economies.
In the next four chapters, I will provide an empirically grounded analysis of the Steam platform as a particular type of game platform. I will do this because the Steam platform exhibits a distinct platform business model rooted in the economic features of games. Steam is, on one hand, comparable to other market platforms, with its focus on attracting game publishers and gamer communities into a multi-sided market controlled by the platform owner. On the other hand, it differs from other platforms in its active integration of player-driven economies at different levels of its platform design. This turns Steam into a direct illustration of the way platforms can be defined and analysed as ‘tangled markets’, extracting value at the intersection between different market contexts. In the following sections, I will firstly provide some historical context of Valve, the owner of Steam, and situate the Steam platform within the wider game market. After this, I will address how the platform differs from other platforms and why this makes it an interesting case of ‘tangled markets’. I will use the key differences between Counter-Strike: Global Offensive (Valve, 2012) and Fortnite (2018) to exemplify how this specific business model cuts across the game design, the platform, and economic practices beyond the platform (Thorhauge and Nielsen, 2021).