This model may work really well. If you think about it, it's sort of like buying a car;
Either you pay a large amount of money up front.
Or you pay for it overtime and end up paying more in the end.
I think there could be a serious reward for developers that get into this. If GameFly has a system where developers get a flat monthly fee to put up their games, and GameFly makes more money than the fees they pay out, both Gamefly and the developers get paid continuously, and we end up paying less for more games.
If this works, this system will change the way games are distributed. Mark my words.
Gabe Newell himself said that the gaming industry is transitioning from entertainment as a product to entertainment as a service. (Start @ 1:08)
This is that idea incarnated. If this is successful, Gabe Newell will jump all over this. Steam will become a pay-per-month service as opposed to pay-per-game. As it stands, it would have to work that way anyway. As time goes on, more and more games are added to Steam's library. People are continuously updating/wiping their systems and re-downloading games from Steam's servers. Eventually, the cost of people downloading games continuously will outweigh the income that powers these servers. If that happens, Valve begins losing money. By switching to a pay-per-month service with only "Premium" games being sold (and at very discounted prices for early access), this would eliminate any issues down the road, and it would probably lead to higher profits too.
Mark my words. The industry is going to change over the next few years. Either the next generation or the generation after that of consoles will adopt a system very similar to Steam and will eliminate physical media, while PC gaming will become service based. The days of physical media is coming to an end, and in its place will be service and download-based gaming. Even Steam is going to evolve. Haven't you ever wondered why there are quite a few Free to Play games on Steam now? Gaming as a service: You have the free game, and then you have the premium game that you pay for.
It's coming. For avid gamers like me, this system will save me money and make me more active. For the casual gamer, it will probably cost them more. In the end, developers stand to make a lot more money from a service based system. Instead of having big chunks of money for each game release, they will continuously get money. Hopefully, this will revive the market even more.
If you're still skeptical, just look at Netflix. Same idea, different industry. Netflix is doing very well too.Edited by Mad Pistol - 8/25/11 at 12:44am