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It's by far the most popular method for delivering programs and games on Windows, and that isn't going to change anytime soon. Microsoft isn't going to stop supporting Win32 ".exe" games in the near term, or even the long term.
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Most core PC gamers will always want Windows 10 Pro for Steam, but that lifestyle isn't desired by all gamers. Blocking the execution of unverified code will generally make Windows 10 S far more secure, and, of course, it has the side benefit of giving Microsoft a cut of app sales, similar to iOS, Android, and indeed, Steam. Windows 10 S represents Microsoft's desire to get more apps into the Windows 10 Store, which is checked, controlled, and secure. It's not so much the operating system itself that is relevant to this discussion, but the sentiment. Competing head on isn't going to do Microsoft any favors. The thing is, I'm not sure the Windows 10 Store can ever hope to compete with the goodwill, feature set, and the huge catalogue of games Valve has built up over the years for Steam. There are still improvements to make, but Microsoft is listening and iterating, and it's clear that Redmond wants the Windows 10 Store to be seen as a viable store not just for serious PC game developers, but also serious PC gamers as well.
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And Redmond has also created a new "New PC games" row, focusing specifically on games designed for mouse and keyboard first. The "Best Rated" section has been moved to the bottom, owing, once again, to the way legacy ratings and mobile games have impacted the overall metrics. Microsoft has removed the "Recommended" section, which usually ended up surfacing Windows 8-era mobile games alongside AAA PC titles. Recently, I looked at how Microsoft has been making steady changes to the way the Windows 10 Store on PC handles its "Games" section.