February 17, 2020

It always starts small. Or, at least, relatively small.

On April 28, 2003, Apple did something revolutionary: They moved into the music business. Previously, the record industry had been reeling from the specter of digital piracy. Steve Jobs negotiated a deal with the major labels, starting with Warner Music and Universal. The rest, of course, is history.

What’s interesting, though, is that Apple didn’t stop with music.

Apple added movies five years later, followed by TV. The most significant addition was applications through the App Store, which Jobs called “the biggest launch of his career” and eventually turned into a $100 billion business. Ironically, the move into selling digital music pushed iTunes towards obsolescence, as streaming became the default mode of music consumption. Apple is now consolidating iTunes with the more popular Apple Music, to go along with separate apps for TV and podcasts.

The initial bet to use iTunes as more than a music organization tool proved to be correct. Whether it’s music or podcasts or visual media, Apple had a monopoly on delivering audio and video content to customers on any number of its Apple devices.

We take this for granted, but iTunes was a gateway to other digital distribution platforms for all kinds of digital content. We stream music and podcasts on Spotify. We watch films and television on Netflix. We buy books from our Kindle.

But when we talk about digital distribution platforms, we typically forget videogame platforms but do so at our peril.

And there’s one, in particular, that is often left off the list: Valve Software’s Steam.

The elephant in the room.

Valve launched Steam the same year that iTunes began selling music and solved some of the same problems that iTunes did. The process of buying digital games was more streamlined, giving game makers a secure place to sell their products without worrying about privacy.

Much like iTunes, Steam became a near-total player in its market, with 75% of digital game sales in 2013.

Much like iTunes, the service became so successful that content owners began launching competitive services to try to pry away Steam’s 1 billion registered accounts and 90 million monthly active users. (For context, Spotify boasts 248 million registered accounts and 113 million monthly active users.)

And much like iTunes, Steam is increasingly becoming more than just games, albeit at a much slower clip. Valve added movies and TV purchases in 2015. And just this month, Steam is introducing a soundtrack function that will let you buy a soundtrack as a standalone product.

The addition of music as a standalone is a big deal. Let me explain why.

Games and music are a powerful combination.

To understand why, let’s zoom out a little. Soundtracks in games have moved way past Pac-Man theme. Cowboy epic Red Dead Redemption featured new music from D’Angelo and Willie Nelson. Hideo Kojima’s Death Stranding released tracks from Major Lazer & Khalid, The Neighborhood, and CHVRCHES. Cyberpunk 2077 will have new work from Grimes, Run the Jewels, Refused, and A$AP Rocky. And of course, the Madden football and NBA 2K basketball series have featured famous artists for over a decade.

On top of the commissioned work, there’s a world of videogame scores which can be incredibly popular. For example, the Super Mario Bros. theme, which once held the record for most consistently charting track on Billboard’s Top 100 Ringtones. The band HEALTH did a custom score for the popular Max Payne series. Composer Austin Wintory was nominated for a Grammy for his work on Journey, a first for the world of games.

The heightened emphasis on game soundtracks and custom scores highlight the major motion-picture aspirations of contemporary big-budget videogames. But more broadly, games are an excellent vehicle for music-driven experiences.

Steam rounds out a broader convergence between game-focused platforms and the music world. Game-streaming service Twitch, for example, pushed the American Idol-esque karaoke challenge “Twitch Sings” program as content last year. There’s a Spotify integration on Twitch that features what song a streamer is playing, and game-focused chat app Discord allows you to display what you’re listening to your friends and the larger chat community. Spotify also features several gaming playlists tailored to your mood and even to what game you’re playing.

Listening to music while playing games is as natural as filling the jukebox with quarters at the pool hall.

A Sleeping Giant

Steam is stepping into a context where games and music are a natural match. While Steam’s creator has not publicly discussed creating a new music service, the move towards selling music as a standalone product is significant.

First, the non-gaming press tends to focus on existing services moving into distributing interactive content. Netflix has doubled down on interactive content, and Apple launched Apple Arcade last year as a subscription service.

But we should pay attention to how gaming distribution services like Steam and Epic Games store can become vehicles for other non-gaming content to their existing base. Remember that gamers aren’t just interested in videogames. They are cultural consumers in their own right, even if the culture they’re consuming (e.g. videogame soundtracks) are tied to their main interest.

Second, music can be a trojan horse for brands looking to intercept gamers in a new way. We often see marketing triangles emerge with a brand using music for a non-music context. BMW, for example, hosted Khalid at one of their dealerships during Coachella. The Super Bowl provides the best model, with a brand like Pepsi sponsoring the NFL championship game while musical artists like Beyonce, The Rolling Stones, and Shakira provide the headline.

In the same way, brands should be thinking about similar three-way partnerships between themselves, musicians, and gaming audiences.

In the meantime, don’t be surprised if Steam becomes a major player in distributed music in the near-future.