Thoughts on Steam Trade Holds (Escrow)

Valve’s Steam service is set to roll out an escrow on non-two-factor-authorized trades. They are calling this a “Trade Hold.”

Alice wants Bob’s hat and Bob wants Alice’s key. They agree to trade.

Alice has Steam Guard Mobile Authenticator (SGMA), Bob does not. After the trade, they wait three days to get their items.

At this point, it’s unknown whether Alice could know at the point of trade whether she was risking the trade hold. It seems likely she will, and thus she could avoid it.

Problems with the system include:

  1. People without Android or iOS devices being unable to use SGMA.
  2. Automated trades via bots being unable to deal with escrow without major changes.
  3. People feeling that, generally, they are being disadvantaged due to a minority of users who fall for scams or install malware.

Valve has a scam/malware problem masquerading as a customer service problem. They have looked at improving customer service, but correctly realize that will not really solve the problem. They do need better customer service, but they also need to do more to address the problem of fraudulent trading. The escrow is supposed to be a pressure valve, to relieve some stress by limiting the damage that fraud traders can mete out.

Education of users is important, but simultaneously unrealistic short of Valve creating a trading simulator game that people want to play and it teaching them the hard-learned lessons of what to avoid. Users that would be helped by education either already educate themselves or will be a minority. Forcing education (e.g., through testing prior to granting trade privileges) would deter users from trading altogether.

Previously, Valve has used e-mail confirmations. This failed for hijacked accounts, because the users would simply have their e-mail accounts compromised in the hijacking. SGMA differs in that the likelihood of also compromising a mobile device is much lower.

If machine learning is mature enough, Valve may be able to leverage it to identify fraudulent trading patterns in a bulk of cases, in a manner similar to the credit card industry. It isn’t clear if it is up to this task, nor is it clear how easily Valve could implement such a filter. It seems reasonable to expect that will be a large part of their eventual strategy in fraud prevention.

What does not seem likely is Valve Customer Service becoming a peudo-law-enforcement agency. Investigating claims of fraud and trying to uncover the realities of events after the fact is just not in the cards for a video game services company. They will undoubtedly continue to seek to prevent the fraud.

It seems reasonable to say nobody wants to wait three days for a trade to go through, including Valve who will have to keep track of the trades. But Valve also does not want to have the volume of scammed items and problems sustain their current rates or grow. So they have to keep trying stuff, even if the community feels burdened.

Some minority of users may circumvent the protections of SGMA via emulators and desktop applications implementing the HMAC technology that SGMA uses. It’s a risk, and there doesn’t seem to be a easy way to avoid it, but that user count will likely stay small, sustaining the general integrity of SGMA/trade holds.

The Valve Mod Marketplace Fiasco ARG

So I’d written a piece that painted the paid mod controversy as a new alternate-reality game by Valve. But since the whole thing is on hiatus, I guess it won’t work.

What can be said, instead?

I think Valve is right about the inevitability of paid mods and having a more fluid system for moving works online from free to paid. They just didn’t have a very successful rollout. Part of that was the 75% rake between Valve (30%) and Bethesda (45%), leaving the mod maker with the smallest share (25%). Sure, the money spends for a mod maker that would otherwise get none, but it rubs the buyer the wrong way.

There’s a lesson in that. If other semi-predatory industries like the music industry had a more prominent display of how little the artists get out of your $15 album purchase, it could shake things up a lot. And that goes for other industries like farming, clothing manufacturing, and so on. If people know that workers are getting screwed, they’ll at least make a stink. If they can just ignore it, because it’s not in their face, they’ll tend to ignore it.

There were issues with misappropriation of others’ mods. Valve will have a hard time working out a perfect model for derivatives and dependencies on the legal side of the issue. But they can at least push for better technological integration of mod dependencies in games.

And Valve is right to glimpse a future where games themselves might be seen as a greater-than-the-sum-of-their-parts assemblage of mods. Something like a patchwork quilt that you play on a computer. That future will come to pass in time. It won’t be exclusive, other non-mod-based games will exist. But it will live alongside those games, both feeding off them and feeding into them.

In the meantime, it appears that the factions I’d described in the hypothetical ARG seem to be here to stay. We will probably see mods that will license themselves only for use with free mods, for example. While others will say they’re happy to be used by paid mods.

But paid mods do give modders an incentive to work and a mechanism to buy work from others to make their own mods better. If you’re doing free mods exclusively, you might want to get some better textures or models, but have to take what’s free. If you sell the mod, however, you can afford to hire professionals to augment your abilities (e.g., if you’re writing code, you can pay other professionals can do the art) make that mod a bit better for customers.

The other thing this whole incident reminds us of is that we will undoubtedly see other monetizations come forward. You might earn gametime or rewards in future games by helping new players out (as a guide would through a dangerous environment in the real world), for example. Or you might earn real money for doing so, as some already do by streaming their gameplay.

The nature of gaming is so digital that it provides a key ground to try things that might not fly in other industries, and although Valve didn’t get it right the first time, I hope they keep working on it.

Half-Life 3 Speculation

Gabe Newell, head of Valve, recently gave an interview (SoundCloud: GameSlice: “#1: Gabe Newell and Erik Johnson from Valve”) where he spoke briefly about the possibility (or lack thereof) of Half-Life 3. This isn’t the first time he’s said things along the lines of, ‘we want to do it, but we don’t know how to do it with what we know now.’

Valve started out in the single-player world of games. The first Half-Life had multiplayer, but it was deathmatch only. Where the multiplayer code shined was in mods like Counter-Strike. Since then Valve has gone on to do more and more multiplayer and a lot of different market strategies with that.

It’s like seeing what you can do with the tools in a buddy’s woodshop with fancy powertools and then going back to a pocket knife and a stick. They don’t want to make another single-player linear game like Half-Life was, and they don’t know how to build into that universe in a multiplayer way (or if they do, they’ve not said so).

But they have a lot of data:

Team Fortress 2’s Mann versus Machine mode

They have some idea of how cooperative gameplay against an AI opponent can work. That’s not to say a potential multiplayer HL3 would look anything like MvM, but it is data they’d consider in building it.

Dota 2

They have some idea how cooperative and competitive go together, including AI friends and foes. All of these are present in Dota 2. It’s not clear if people would want to play as the Combine in a new HL3 game, but the possibility exists they would and could.

Others’ games

Valve also learns a lot from other games. Games like Borderlands 2 that feature cooperative play might give one possibility for a HL3 that isn’t all player characters, but where the core of heroes are people. Whether Valve would attempt a mission-driven game with maps like Borderlands 2 is an open question.

Valve also has content that never saw the light of day. Things like the commander class for earlier iterations of Team Fortress 2, which would have made it a partial RTS game might be something they look at and revamp for HL3 or it might not.


Ultimately, what HL3 will be isn’t as important as what it will contain:

  1. Freeman
  2. Scientists and allies
  3. Hostile aliens (headcrabs and zombies, plus others) and hostile humanoids (Combine or military)
  4. Gman

That’s the essence of Half-Life. The main challenge for multiplayer HL3 is that everyone wants to be Freeman. That was part of the appeal of the series, that you’re this lowly scientist that’s saving the world (and yourself). To suddenly break away from that and say “We’re all Robert Paulson” is a little cheap, but probably a necessity of a multiplayer Half-Life game.

It can be done, and done successfully. The message of mass movements is that everyone can carry part of the load, and that’s a very powerful message. But you still have the hanging string of Freeman to deal with. Is he dead? Moved up to management? Missing? Selling vacuums door-to-door?

Rise and shine, Mister Freeman. Your vacuum route awaits.

Why Valve is Doing SteamOS

Lots of people question why Valve wants to make SteamOS, Steam Machines, Steam Link, Steam Controllers. But Valve has been pretty open about their reasons. They are in several businesses:

  1. Making games
  2. Making game engines
  3. Selling games

They probably make the most off the third, but they still do the first two. But the third is a driver of decisions for them. They surely ask, as any business, “how do we expand?” To sell more games requires more people buying games. And as the PC declines a bit, that means other platforms.

Mobile, although increasing in power and certainly ubiquitous, is not currently a prime target. The living room is. The living room is a proven gaming environment. The living room has the big screen and the comfy couch. It makes a lot of sense for a gaming company to want to be there.

This same logic is driving decisions about engine design, not just for Valve but across the industry. Making content easier to create means a larger market with more lottery tickets to win consumer dollars. It makes the platform broader and expands what gaming means. So does game streaming, which is becoming more popular.

Other businesses could learn a lot from Valve and the gaming industry in this regard. Building out transport and lowering the friction to relocate to new opportunities would do wonders for the economy. Valve is doing both of those, in their own way, in their own market, with SteamOS.

By making a living room PC platform, they’re bridging a divide between two long-isolated groups: console gamers and PC gamers. With SteamOS in the living room, people will actually be able to play against mouse-and-keyboard gamers (either with a Steam Controller or with a mouse and keyboard).

At the same time, the console makers are pushing their own initiatives to do the same. But at present it’s not clear if you will be able to buy a game for a console and play it on a PC. And even if you can, how widespread will that option be?

Valve has some challenges. They have to make sure the SteamOS platform has feature parity with consoles. That means video streaming and music. It means actively courting games to be on Linux and making sure drivers are up to the job. It even means working on better APIs like Vulkan to ensure a cleaner development-to-market process.

But they have advantages as well. The Steam Machine market is a market, not a single offering from one company. Consumers can decide when to upgrade, how much to spend, and so on. They’re delivering competition and choice to consumers and betting the consumers will make the right choices for them.

At the end of the day, Valve is working to expand their market. They are doing that to make more money, but they seem to be doing it in a way that is smart enough to mean more money for others too. And that’s what good capitalism should focus on.

Source 2 and Valve’s History of Ports

Over a decade ago, Source, the successor to Valve’s original engine (GoldSrc) debuted with titles like Half-Life 2 and Counter-Strike: Source. Now that Valve has officially announced Source 2, it looks like it will see the light of day this year.

What will that mean for their existing catalog of games?

If we look back to the release of Source, they drew some lines for porting. They ported the original Half-Life, mostly as an example of portability between the engines. It was a loyal port, without taking advantage of anything new to the Source engine.

They did a less direct port of Counter-Strike. Counter-Strike: Source was a mild evolution from the original mod-turned-product version of Counter-Strike. They also ported Day of Defeat as Day of Defeat: Source. Although I never played the original Day of Defeat, my impression is this was another mild evolution.

They did not port Team Fortress Classic. They did not port Ricochet, either. They waited to make Team Fortress 2, which was a reimagining.

What has changed since the Source release is mainly the addition of economies to games. Team Fortress 2, Counter-Strike: Global Offensive, and Dota 2 all have economies.

Economies create a fresh challenge for porting of games. Previously, a port was a way to revitalize an aging game, to improve on its graphical quality, and so on. But with players having a set of game items, how do you move them to a new version without either entrenching game-wealth by porting their items (thus alienating new players), angering players that have game-wealth (by not letting them carry items over), and make adjustments to gameplay (by eliminating or modifying old items to fit the new game)?

Not all those challenges apply equally to each of the games. In CS:GO, for example, the items are skins only. They do not have gameplay implications in the same way that TF2 items have.

Other challenges exist because of the economies that exist. If the new game is more popular (as is expected), the old version’s items suddenly become less valuable. This means that players will seek to cash out rapidly, which crashes the old economy further, while the scramble for the new items creates a bubble in the new game.

How to handle the economy problem for new versions of existing games seems very difficult. But the incentive to create new versions of games for new engines is likely too great to continue to adding content to existing games while also creating new titles in those traditions.

I suspect the solution will be some mix. Players can carry some value from their existing items, but not the whole value. That may be done through crafting or similar mechanisms. It will likely involve PRNGs (Pseudo-Random Number Generators) so that some level of risk is involved.

But Valve is very creative, so time will tell what solutions they find and how they are received.