Steam Holiday Sale: Cheap Games, Free Games, and Virtual Snow Globes

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Black Friday and Cyber Monday have passed, but Valve is keeping gamers very happy through the holidays with its Steam Holiday Sale.

Christmas Day was the sixth day that Valve continued to offer deeply discounted digital titles via its Steam Store. The sale runs from Dec. 19 to Jan. 3.

Source: Steam.

Here's a small sampling of some great deals that Valve has offered gamers so far:

Source: Steam Store.

In addition, Steam is offering the hit multiplayer zombie shooter, Left 4 Dead 2, as a free download for a single day.

Keeping users stuck to Steam

Valve is keeping gamers glued to its site with some innovative methods.

First and foremost, Valve is offering Daily Deals and Flash Sales, which occur every eight hours. Moreover, it is allowing users to vote for the game that goes on sale next -- similar to how players in some multiplayer games vote on the next map to be played.

Second, Valve is conducting an all-out blitz on social media and for mobile users. Steam's Facebook page, which has 2.1 million followers, offers gamers constant updates. Its Twitter account, which has nearly a million followers, is also constantly tweeting new, time-sensitive deals. Valve is also encouraging users to sign up for email alerts and use its mobile app, which is available for Apple (AAPL 0.21%) iOS and Google Android devices.

Last but not least, Valve is also encouraging gamers to collect Snow Globe trading cards by buying and playing Steam games. These cards can be crafted into custom profile badges, which unlock special virtual items in free-to-play games.

Source: Steam.

That sense of urgency, reminiscent of Black Friday doorbusters, showcases a strength that brick-and-mortar retailers can only dream of constantly having.

Sacrificing margins to attract users to its walled garden

Obviously, selling these titles at such steep discounts isn't a very profitable affair. However, by setting time limits on these sales, Valve is actually accomplishing something much more important -- it its luring more users into its walled garden.

To actually download and play these games, users must install Steam, Valve's front-end software, on their computers and register for an account. This insures that gamers download more games via Steam, instead of competing services like Amazon, Microsoft's (MSFT -3.36%) Windows Store, Electronic Arts' Origin, or Ubisoft's UPlay launcher. It's a tactic very similar to the one that Apple uses for its iTunes store, which now has over 575 million users.

Valve's Steam is the current market leader in digital game downloads. At the end of October, the company reported that it had 65 million users -- representing 30% growth from the previous year. By comparison, Origin and Uplay have over 50 million.

The growth of Origin and Uplay is troubling for Valve, since EA and Ubisoft often require users to install their respective front-end software when one of their titles is not downloaded from Steam.

Therefore, constant, time-limited discounts can help Valve attract more users to its platform at the expense of slimmer profit margins.

Why Valve needs to grow its user base

Valve is evolving as a company. Whereas the company was once known for critically acclaimed games such as Half-Life, Portal, and Team Fortress, it now aspires to become an all-in-one hardware and software solution for the living room as well.

Valve's Steam Box consoles, which will be manufactured by several different hardware manufacturers, will arrive in 2014. Four main factors could decide the console's fate:

• Major publishers will develop games for Steam OS, the Steam Box's Linux-based system, based on the service's growing user base of dedicated gamers.

• Developing a game for Linux would be cheaper than developing one for a Sony (SONY -0.78%) or Microsoft console, since Linux is an open-source system that doesn't require the purchase of a console-specific development kit.

• The Steam Box could convert more PC gamers to the living room, an untapped group of gamers who haven't flocked to the PS4 or Xbox One.

• Valve's new controller, which uses touchpads instead of thumbsticks, could offer more precise control of PC games, on par with mouse and keyboard controls, than PS4 or Xbox One controllers.

However, to make sure that these goals can be achieved, Valve needs to secure its position as the leading online video game store, just as Apple now dominates 41% of all music sales in America.

Valve's evolution benefits consumers

Yet regardless of Valve's business plans for the future, these steep discounts benefit consumers the most. Steam is quickly becoming a force to be reckoned with in e-commerce, and one that threatens to render packaged games purchased from brick-and-mortar retailers obsolete.

Did you pick up any games during the Steam Holiday Sale? Please share your thoughts in the comments section below!

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