The Inquirer is reporting that the Internet giant is on the verge of buying Valve, the company behind the Steam digital-delivery platform. I'm as skeptical of the "well-placed sources tell us" rumor root as the next jaded watcher, but the purchase would make perfect sense.
Google has been taking baby steps into online gaming since last year. It launched Lively, an avatar-driven social community, this summer, and is now opening up the platform to select game developers. This follows last year's purchase of in-game advertising network Adscape. With the upcoming rollout of Google's Android mobile platform, game apps are likely to play a part there as well.
I've joked about the Gbox as a way for Google to really make the folks at Microsoft
The stakes keep getting higher in cyberspace. The only reason that Activision acquired Blizzard to become Activision Blizzard
In China, the Web-based gaming trend is so strong that there are now five publicly traded companies -- including Giant Interactive
If the world has taken to online gaming, that's a dinner bell for Google. It needs to make sure that it's there to give the developers the tools to monetize their virtual worlds through targeted online advertising.
Blowing off some Steam
What's the allure of Valve's flagship Steam? If you're not familiar with the site, ask a diehard gamer. It sure knows how to draw a crowd, having passed the 15-million-active-user mark earlier this year.
Steam offers hundreds of commercial games -- like Take-Two Interactive's
Freeing up users to continue their games on any machine makes Steam a kissing cousin to the cloud-computing concept that is powering things like Google Docs these days.
However, make no mistake: The ultimate draw for Steam -- if "well-placed sources" are placed correctly -- has to do with Google expanding its reach for in-game advertising.
Microsoft beat Google to the punch by snapping up leader Massive two years ago. The beauty of in-game advertising in these broadband-enabled times is that ads can be updated on the fly. If you walk past a multiplex marquee in a game, it can promote new releases. A roadside billboard in a racing game can pitch new releases, too. The ad model here is more brand-advertising-based than Google's undisputed supremacy in serving up text-based clickable ads, but it's an area where Google will need to improve if it wants to be a one-stop shop for sponsors looking to get noticed.
The future of online gaming couldn't be brighter. Developers are flocking to the margin-fattening benefits of delivering games directly to consumers without any manufacturing or inventory hang-ups. Gamers are coming across sites like Valve's SteamPowered.com, which deliver both games and communities. Google can't ignore this. It won't.
No matter where this rumor ends, Google is here to stay, and to play.
More ways to play like you invest:
Microsoft is a Motley Fool Inside Value pick. Shanda Interactive, Google, and Take-Two are Motley Fool Rule Breakers picks. Activision Blizzard and Apple are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.
Longtime Fool contributor Rick Munarriz is a fan of all three consoles but finds himself spending way too much time with the family on the Wii at the moment. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy, always there to make sure that Fools don't overheat.