I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission. I mean, it's obviously possible because it's reality, but it's nonintuitive. I wonder if it will continue to be that way. For iOS, you don't really have a way to install apps outside the app store without jailbreaking, but you do for macOS, and I've seen a number of high-profile macOS titles decide they're not going to sell on the App Store anymore. That's gotta damage the moat somehow and thereby damage the App Store's ability to maintain its commission margin (eventually?). I wonder what it would take to get that to happen on the iOS side. So long as the iPhone remains a market leader, I guess I don't see anything changing.
Collecting money is an important part of a business, but also not trivial. It therefore makes sense that people would outsource this. If you get big enough, you probably don't want a middleman in the way; this is why companies like Blizzard have their own store/launcher app. For everyone else, whatever they take is cheaper than having their own army of software engineers, lawyers, billing phone support, etc. In a world with Steam, as a game company, you don't have to worry about collecting money (and the associated customer support) and distribution. You can focus on your game. That is valuable, which is why people pay for it.
I work at an ISP. Billing is a constant influx of "interesting" requests that I would love to outsource so our software engineering team could focus on stuff specific to our business. But we never found a service that could do it better than our homegrown system.
Every week there are several one-off issues like "I overpaid because I didn't see the service credit" or "I would like to pay for the next 3 months in advance" or "my accounts payable department sent the wrong check, can you shred it and we'll pay with credit card". These things have to be handled manually. Not to mention people calling to change their payment method because they don't remember their password to the website, or just want to chat. All that is a drain on actually running the business, but unavoidable. You can't just say "nah we won't shred your check", so someone has to go find it and deal with it. While they're doing that, they're not making our product more innovative or reliable. They're running a check through a shredder. Anyone could do that, but unless you have 8 hours of check shredding to do a day, you are spending CFO salary on the task instead of check shredder salary on it. Therein lies the problem.
If this could all be outsourced, I'd pay a lot of money for it. So would any business. Billing is something you have to do if you want to collect money, but it's a time sink. Game developers don't have to worry about this, and generally seem OK with that. I don't blame them. They are lucky Steam exists.
I've sold 7 figures worth of game copies over my career, through Steam, the App store and my websites in roughly equal quantities.
This completely misses the value proposition of Steam. Collecting a million dollars of game sales through Stripe or PayPal is not hard, nor is dealing with payment issues a large overhead, even if you're paying the people replying to the emails programmer salaries.
Supporting the game itself is an order of magnitude greater even if it's decently written. Steam doesn't prevent that support, it just obfuscates the customer's connection to you so if you don't care you can mostly get away with ignoring them (at your peril, as it will invite bad reviews).
Steam puts you in touch with an immense audience. That's the value they're bringing to the table, and it's a big one.
Essentially steam has created an almost walled garden. You already have all of your games on the steam client so if a game is sold on another store its inconvenient. Another part is steam has a lot of eyes looking at their store. Everyone checks steam for new games so if you are not on that store then people wont see you.
Its an unfortunate system because steam isn't actually providing that much value but they have just managed to centralize everything on their platform.
> Its an unfortunate system because steam isn't actually providing that much value
I have to heavily disagree with that.
Other than as you mentioned, the huge amount of eyeballs on all of their library content which you just won't get anywhere near close to. Along with people already having credit on their steam account so they can instantly buy a product without entering payment info.
There's also the distribution and update mechanisms which are such a huge win for the customer as well as developers.
I can also guarantee you, if Steam didn't exist, there would be other 'central store/repo's' that would absolutely be trying to enter this space. Providing an easy location for gamers looking to find new content. It's a win/win/win for all of Valve, Developers & Customers.
>Other than as you mentioned, the huge amount of eyeballs on all of their library content which you just won't get anywhere near close to.
We should have had search engines like google for games.
> Along with people already having credit on their steam account so they can instantly buy a product without entering payment info.
Browsers these days have a payment API and stores the users credit card details which can be used on any website.
>There's also the distribution and update mechanisms which are such a huge win for the customer as well as developers.
This could have been done without centralization similar to how package managers work, the games repo would just be added to your client and downloaded from that.
So I guess I could put it yes valve has added value from what there was before but its totally possible to replicate all the value easily without centralization.
I don't disagree with your gist, but does Steam actually manually solve the examples you gave? It seems like part of the value add of outsourcing comes from the negativity of a policy not directly reflecting on your own business. If you refuse to hunt down a check (or even stop accepting checks altogether), a customer might switch to another ISP. But if your third party mechanically refuses, it's "nobody's fault". Even if the customer expends the effort to escalate and they're a big enough customer for you to listen, you can still salvage it as a positive CS experience.
I'm assuming Steam handles the application of regional sales tax/VAT based on country of purchase (that would apply in the EU I think?) that alone might be worth it? Not to mention they have a really good/fast distribution system.
Why not hire a customer representative whose main qualification would be diligent attention to detail? You shouldn't have specialized engineers spend their time dealing with issues that are not only one-off, but that also don't require any advanced qualifications. There aren't eight hours a day of check shredding to do, but there is a level of capability between "can only shred checks for eight hours a day," and "spent ten years getting a PhD in computer science."
What about those rumored thousands who are graduating with "unemployable degrees?" If the market for capable individuals was the same as the market for specialized knowledge then STEM would not be so much more economically attractive to students.
> If the market for capable individuals was the same as the market for specialized knowledge then STEM would not be so much more economically attractive to students
Most people, including those with advanced qualifications in STEM, could not be described as flexible problem solvers with attention to detail and solid communication skills. This confluence, essential for quality customer support, is exceedingly rare, and tends to describe those whom our societies remunerate most richly.
They aren’t called customer service reps. They’re account executives, investment bankers and CEOs. That skillset—socially-aware problem solvers—is ridiculously rare.
Brick and mortar stores pay about $45 for a $60 dollar game, and have additional bonuses for sales targets.
Some larger publishers operate on a different scheme similar to the large DIY and big box stores in which they “rent” shelf space, pay for promotional services and share a smaller percentage of each sale revenue.
A lot of times there are other restrictions such as game stores need approval for things like unofficial bundles e.g. if they want to bundle a specific game with a console outside of officially branded promotional bundles.
I think the big problem with Steam at least as far as big publishers go isn’t that they charge 30% this is about the same as other channels but that the big publishers have their own distribution platforms atm.
If you buy an EA, Activision or Ubisoft game on Steam atm you don’t download it from Steam you’ll download it from the Publisher via their own client.
Granted they caused this problem to themselves by trying to compete with Steam but they still bare the majority of the cost these days.
> you’ll download it from the Publisher via their own client.
And the main reason for pushing their own clients is because all of these publishers would love to a) avoid some of the cost of Steam in the future b) have a sufficiently big customer base to be an attractive platform for third parties to sell their games on, so that EA/Activision/Ubisoft/Blizzard can become the next Steam and squeeze others for 30% of their revenue.
Because 30% of everyone's game sales is a lot more (and more easily earned) than 70% of your game's sales, especially since in the latter case you actually have to develop (and market etc.) a game...
> If you buy an EA, Activision or Ubisoft game on Steam atm you don’t download it from Steam you’ll download it from the Publisher via their own client.
All of my Ubisoft titles have been downloaded via Steam and not the UPlay client.
Back when I was in the retail industry, we saw nowhere near those kinds of gross margins (100% that is) on average (I worked in corporate management with ~4 chains and consulted to a few dozen others of varying size over a little more than a decade).
More typical gross margins were in the ~40% ballpark. Some higher/some lower; the entertainment retailer I worked with was averaging around 35%. That's not to say it couldn't be dramatically higher by business or product line, one of the retailers I worked for had a popular product closer to 95% gross margin (excluding the stupid crazy 50% shrink we were experiencing on that product)... but we were also manufacturing that product and the chain wasn't doing that well across the assortment.
Just to be clear, when you say 35% you mean you bought inventory at 10 dollars and sold at 13.5? And everything covering rent, pay other costs and profit you made off those 35%?
Actually, I didn't read the message I commented on closely enough.
In retail, we think of gross margin: (retail price - cost of goods)/retail price.
So, in your example we'd be just under 26% gross margin, not 35%. Regarding the original message I commented on, I looked at the percentages, ignored the example amounts, and presumed gross margin. So in reality, the gross margin there is 50%. Still higher than the averages I saw while I was in the industry (and I was mostly with B&M retail) and higher than the break even point for reasonably well run and conceived retail businesses. That's not to say those more common margins are comfortable for the retailer... more often than not they are cutting it pretty close to the edge much of the time.
Most retail doesn’t do 100% markup or anything close to that other than maybe parishables and low priced goods that aren’t bought on credit.
Also game stores hope that you’ll buy other items and also sell your older games back to them so they can resell them while giving you back arguable worthless store credit.
Not sure why this is downvoted this is correct, you get store credit and they get another resell at likely a higher markup than the original.
This is why both publishers and console makers have constantly tried to get into this market, which have already been somewhat killed on the PC the moment CD keys were introduced.
> I am surprised that ... are able to command as high a margin as they do for sales commission.
Yep. Me too. I’ve long thought that Steam charges way too much considering the platform. There would seem to be tons of room for a competitor to undercut Steam. I’m excited about Discord’s new store.
Revenue share is a killer for a business, especially as one as volatile as computer games. Any game needs to be 25% better than it otherwise would have been because of Steam’s revenue share. Does it really bring that much to the table? In 2018? Enough to justify their absolutely enormous cost?
The money games can make on steam is infinitely higher than other platforms - what you're paying for is to get your game on the platform with the most users.
A local game company I knew had a game on the humble bundle, their website, and a few other platform for months - they made a few thousand. Then it got greenlight on steam and they pulled 1m over 4 months.
Steam is not merely a payment processing system, it's an audience.
Steam used to be the best way to make your game visible .. but now haha, not really.
Not that I am against Steam opening its doors .. the curation was very subjective which was problematic since it could mean life or death for a studio.
Right now .. I guess it is still better than nothing if you have an unknown game to sell .. but I would not have my game only sold on steam.
There's a GDC talk about this (up on YouTube, can't remember the title) about the cost/difficulty going alone vs going through steam.
The tldr is that valve apparently knows exactly how much it costs you to run this apparatus yourself, and the rev share reflects that reality. The numbers are apparently really close.
The catch is that as you sell more units, the cost of the apparatus starts to diminish as a percentage of revenue, so running your own marketplace starrs to make sense when you get into the blockbuster territory.
This pricing update apparently takes that fact into account, which means that when companies start running the numbers on their new game launch, the justification for building their own marketplace starts to go away.
I'm pretty sure it's not the talk you're thinking of, but Jeff Vogel (who has been mostly-successfully making indie games consistently since 1995) mentions it in this GDC vault talk: https://www.youtube.com/watch?v=stxVBJem3Rs
They were able to stop paying a third employee when they went to Steam. That's a lot of value to the business.
For sure, a service like Steam offers tons of value for a game developer. And I’m sure you’re right that the price of Steam matches the cost of an individual developer developing a launcher and hosting service. That’s all true.
But I feel like the margins for Steam are so wide that it’s wide open for undercutting; for others to offer a cheaper, probably better product. I’d hope that game hosting quickly becomes commoditized due to lots of competitors vying for the cheapest possible price.
That’s good for developers, and really good for gamers.
Then you have the privilege of having not been in independent game development before Steam then! Steam takes about 30% and that comes with little to no stipulations. You can go put your product on other platforms, you can generate steam keys and then sell those keys off platform (and take 100% of the revenue), and from the very first sale you get ~70% of the revenue.
In the age before Steam you had to approach a publisher to get your product out there. And in those days getting a 70% deal would have been amazing. Except back then 70% meant something rather different. The publisher was getting 70% and you received 30% in "royalties" (and generally substantially less than 30%). Oh and you received $0 in "royalties" until the publisher cleared 100% of their costs. And finally of course you had to relinquish nearly every right to your IP as well.
I wouldn't underestimate the value that Steam adds. They take care of all financial related issues including trust, facilitate 'advertising', provide a captive audience upwards of 125 million, take care of data hosting (which can be a very significant issue in large-size products), and more. I'm sure they could get by with a smaller margin, but at the same time I think 30% is a pretty reasonable rate for the value they add.
> you can generate steam keys and then sell those keys off platform (and take 100% of the revenue)
Which is significant, and missing from most of the discussions about Steam's revenue share. Game creators can generate as many keys to activate their game on Steam as they want at no cost, and sell them however they want. If you buy a game from Humble, Amazon, or any other website and receive a Steam game key, Valve doesn't receive any money from that purchase.
> are able to command as high a margin as they do for sales commission.
People are surprised that the entity that controls distribution and maintains the relationship with the customer can command whatever premium they want?
I don't know how to say this any in any non-snarky way, but this is business 101. Control distribution = control the market.
>>> I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission.
What makes you think that they have high margin? It's not like each game creators could run a worldwide distribution and payment operation with just a few percent more of revenues.
"It's not like each game creators could run a worldwide distribution and payment operation"
You mean like a website? I think it's more fruitful to imagine multiple merchants competing to sell devs wares and lessor commissions as a result of competition.
Payment processing is a big part of it, but it's not just that. The deployment framework, testing branches, the workshop/user content/mods support, etc. That stuff could certainly be replicated, but the exposure to the existing user base of active customers is the tough one.
Admittedly it is supposedly lower value now, with Steam Direct replacing Greenlight, but it shouldn't be overlooked -- it's the same reason that tons of products are sold on Amazon even though you can also purchase the same product directly via the brand's website...
FWIW, I'm lead dev of SimAirport[0] which is in Steam's Early Access program. The 30% has been tough to swallow, but without Steam (and given our lack of internal marketing/spend) we probably wouldn't have sold a quarter of what we have thus far. And while we wouldn't qualify for any of these tiers had they been in place previously, it's still a solid upside "just in case" your game blows expectations out of the water.
I'd love to see them add a tier around $2-5M at 27-29%, even if just as a "bone" to indie developers; it'd make developing a 'game as a service' (ie long & consistent feedback-driven dev cycle) more palatable and likely result in demonstrably better games.
Tangentially related at best, but sometimes I wonder what Steam _actually_ optimizes for -- if their algorithms always show the "best" games (ie ones that players spend hundreds++ hours playing) then I'd expect that to actually hurt their revenues short term. In theory they'd be better off marketing/optimizing to push games that satisfy users but that have low play-time/hours on average, so that they can sell the player a different game that much sooner. It's a strange set of incentives & it's hard to tell how aligned they really are (with either players or developers).
I probably wouldn't have bought SimAirport if it didn't show up in my Discovery Queue or whatever on Steam, and I'm glad I did because it's filling a void in my soul left behind by Air Mogul. (And by the way: awesome job!)
Valve's rather enthusiastic and concrete support for Linux gaming certainly doesn't hurt, either. Coupled with the discovery features above, it makes it a lot easier to figure out which developers I'd like to keep supporting.
I just created an account to thank you for making this game. I have been looking for a game just like this after reaching all the limits in Airport Tycoon ages ago.
And I mean literal limits. That game had a bug where flights were limited by an internal variable that was smaller than the capacity you could build so after a while the game would just stop and you would be unable to get any more use out of your airport. You could easily test this by cancelling one contract which would immediately make a new offer pop up.
Anyway your game looks just the thing I've been looking for since that old early 2000s game. I'll be throwing some money your way for sure.
You realize that it takes a lot of work to make a website to accept payment from a hundred countries in dozens of currencies and handle customer support and chargeback and fight fraud?
You can try to run your own website, to save 10% fees on a minuscule userbase, it simply doesn't cover the costs.
What about billing support? You need people on the phone to handle complaints and issues from customers, deal with chargebacks, refunds and thousands of various weird requests from people that will keep coming. Also you need a software engineer team to work on the payment processing system / website. It's not "build it once and leave on autopilot". These things need continuous maintenance, bug fixes and improvements. All of that costs a lot of money and you have to have a really large revenue to be able to handle this yourself.
Paypal only handles payment. You still gotta do customer support, CDN infra (with games running at over 60GB each, that's not easy!), fraud detection, client dev and technical support for over three platforms (Win with 3 major versions, OS X with probably the same, and a myriad of Linux distros/kernel versions/GPU drivers), social networking/messaging stuff and a whole lot of small-ish stuff to get at half the functionality Steam offers.
What handling refunds? Some are legit, some will be fraudulent. What a out dealing with foreign currency? What if your game becomes popular in a country where PayPal isn't prevalent?
Stripe gives you a basic solution to accept payments in some locations and under some circumstances. Once a company reaches in the tens of millions in yearly turnaround or expand internationally, it has to move on and run multiple payment providers.
You are making assumptions. 30% is not a few percent. You are also assuming that merely being on steam and having users encounter your game while browsing will be the primary method people encounter your game and decide to buy it thus the "on a lot less sales" People encounter games via many means. If you only sell it via steam or steam is merely the most convenient means of acquisition then the fact that the buyer bought it on steam isn't proof that they found it via steam or further that they wont buy again if you aren't available via steam.
It is a few percents. All online marketplaces, steam, apple store, airbnb, booking are 20 to 30% commission.
It takes at least 10% commission to be able to run a company of this type. It's possible to run with as low as 5% in some niches, given a very lean operation and a billion dollar scale to amortize fixed costs. Eventually most of the company will be devoted to customer support and billing related tasks.
There is really not that much that can be shaved off. Small studios could never make a platform any efficient. A small group could spend all their time working on distribution and billing, never shipping an actual game. It's a really good deal to just use steam instead.
For AAA games it's annoying to pay 30% and they're rather make their own platform, that's why steam is dropping commission to 20% for top selling hits.
Steam is translated and comes with support for many languages. It takes all currency and it has region settings for pricing, currency and release dates. For the anecdote, it's maybe the only US service that sells well in Russia.
It certainly won't translate the game for you, not that translating a bunch of text files is the hardest part, but it will help with everything else.
Ask international users what they think of other platforms. Like the one they couldn't use because it didn't accept their names with an accent or couldn't enter a billing address without a state.
How will that give your game an international user base? Woudn't the first step being making the game actually playable by users in a given language before worrying about being able to sell to them.
Not at all. For starter Stripe is only usable if you are a small US company selling to a US user base. It also restricts your audience to customers with a card and willing to enter it on your website.
It's better than nothing but it's in no way comparable to what steam offers.
Does itch.io have a world wide CDN delivering high enough speeds to handle 50GB games? Do they provide match making, voice communication, game hub, cloud saves, workshop, achievements, stats, and so on? Steam provides a huge amount of services behind the scenes.
This is the whole point. Indie devs don't need a CDN that can handle 50gb games, or most of those other services you listed... Yet we're stuck paying the full 30% that those mega studios that actually use those features are paying.
Steam still brings a lot more traffic that they would get if they sold directly. Most people who do both Steam and direct report that Steam consists of more than 95% of their revenue.
25% is a steal. They handle all the financial transactions and host and distribute the game files on the most popular client on the planet. They also handle the security.
Handling your own billing is expensive and time consuming. Setting up your own distribution and hosting is also expensive and time consuming, and then there's the bandwidth cost.
All this adds up rather quickly. Having someone else do the business end of selling games, and only for 25% is a bargain.
It's not a steal at all. Those things (especially stuff like hosting and bandwidth) cost a small fraction of the price. You can argue that it's worth it because of how popular Steam is, but it's getting harder and harder for smaller devs to even get seen by that large audience in the first place.
As a layman gamer who has only used steam as a consumer - This comment ignores the ground realities of Steam having a seemingly endless amount of trash. i logged on and wanted to play a game with wallrunning and a cyberpunk aesthetic and i only found ONE that was worth playing out of the seemingly thousands of options.
Game developers on steam seem to release what they want to not what the audience wants in the vast majority of cases. Couple that with amateurish quality and it's actually easy to be seen if you choose to cater to the non oversaturated categories imo.
Steam provides many other things too, past CDN and billing. They provide a game hub, steamworks (match making, voice communication, friends list), workshop, cloud saves, advertising for your game, and much more too.
The reason Google and Apple are able to command such high commissions, it's because they are monopolies in their own markets. Most people who want iOS can only buy iPhones and use the app store. Most people who want to use Android, tend to buy Android phones and don't switch to iPhones.
As such, Google and Apple's app store's don't really have strong competition against each other. Plus, most developers pretty much have to build apps for both anyway. Their respective markets are huge enough.
Steam, on the other hand, although it had its own monopoly of sorts in terms of "central gaming repository", it's always had high competition from game developers releasing their games outside of Steam, and more recently GOG has become a direct competitor, and EA and a few other huge gaming companies started their own central repositories and keep their games off of Steam.
This is what forced Valve to make this move now. Competition virtually always favors the consumer (the companies, too, in the long term, as they are forced to improve their products, but that's another issue and most companies are too short-sighted to see that by themselves), and we're seeing yet another example of that.
This. Indie developers opt-in to Steam's 30% cut because they've done the math and found thay it's better than going at it alone.
If iOS developers had a choice, many would find that Apple simoly does not do enough for them to justify their cut.
The same thing is happening with Google, except you DO have the option to bypass Google play if you have enough muscle, which is exactly what Fortnite did.
One argument I often hear is that "Becsuse they created the platform! They deserve to tax it!". This presumes that platform is doing software a great service. Funnily, just a generation ago, Mac was widely considered the losing horse because "all the software is on Windows." So the question of "who needs who more badly" was reversed.
I tried to look up what Steam's profit margins are, but I can't find any good information on it, just a lot of confused people pretending as if they're an authority on Steam's finances, but who don't even know the difference between revenues, profits, and commissions. Does Steam have a high margin? I don't know. It could cost more than you think to run Steam. Or maybe it costs a lot less - I really don't know.
Epic haven't put Fortnite on Play store, they distribute it themselves instead. It's probably easier on Android than iOS.
30% is ok for small to medium developers to not have to deal with payment and distribution, but large companies like Epic, Blizzard, EA, and so on doesn't need that. 30% is way too much, Google and Apple doesn't add 30% of the value to a AAA game.
Think of it like having your food brand be in the supermarket. Sure you can open your own stand alone stores but then you have to build and manage that infrastructure yourself, and your audience is a very small fraction of the traffic the supermarket gets. Practically no one sees your product without even more overhead in advertising and marketing.
It's not surprising. Users want convenience, specially on mobile. Even on Android very few users would buy outside the Play Store.
On desktop it's different, at least for a portion of users. I prefer buying outside the Mac App Store, but I know users that were first introduced to the ecosystem in iOS and had never considered you can but software outside the MAS.
> I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission. I mean, it's obviously possible because it's reality, but it's nonintuitive.
Many larger studios are working on self publishing and have projects in the works. The percent that Valve takes even at 20% is still too high, but the bigger issues is that Valve locks up your users so when you make your next game you have to reacquire them, ownership of ones users is the key due to this issue. We’ll see how they fair over the coming years but this does look like they’re starting to wake up a bit to how unhappy execs have been with Steam stagnating and reaping 30% still.
As an entrepreneur in this space, I'd be okay with 20%. The issue is the current thresholds. I'd want it to be 20% over $1M not $50M. Around a million it starts being worth it to handle credit card processing, chargebacks etc.
As there’s more competition from studios entering the publishing space you should be able to get a better deal, with better and more current tech. The up side is Steam gives you visibility to a large player base with new publishers won’t have on day one, but it’s coming.
This makes sense. the share drops to 25% after 10 million in sales. and more after. One would imagine that there is some fixed cost for adding new titles and maintaining steam store. After a certain amount of sales the cost per title is just bandwidth so steam is making more per game anyway.
Its also a hedge to prevent every large game seller from setting up their own store. Even if you are large its cheaper to use steam.
> Its also a hedge to prevent every large game seller from setting up their own store.
That ship has already sailed - EA has Origin, Ubisoft has Uplay, Activision/Blizzard has Battle.net, Microsoft has the Windows store, and Bethesda and Epic have their own launchers.
Nearly every major publisher has already made the investment to develop their own store and digital distribution infrastructure, so they have little reason to pay the Steam tax now.
Most stores keep their numbers private, but I'd wager that Steam has most (if not all of them) beat by a large margin.
Presumably these companies believe that the higher margins and control they get from running their own stores are worth the customers they lose by not being in Steam.
As the Steam Tax lightens however, the results of that equation could change.
> they're just trying to release their games without paying the Steam Tax.
By not paying the Steam Tax, publishers are paying Engineering Tax and risks for fails in their distribution platforms.
I have Vietnam flashbacks from Origin and Uplay. EA fixed their's in 2015, but latter is still a bughole and the reason I don't even look at Ubi's games. Latest Bethesda release is a clear example of that problem.
RDR2 sold ~800MM. 25% of that is 200MM, which is far more than it takes to set up a basic digital storefront. I doubt Valve bothers with a fraction of that for ongoing operations given how terrible the steam UX really is.
Fortnite alone has more concurrent players than every game on Steam combined at around 8 million. Steam has between 10-20 million concurrent people with the client open, but not actually nearly that many playing games.
I don't know about them all but the games I have bought that use other platforms than Steam I bought on Steam and they got installed with the game (like uplay). I'd say the ship is full of water and being pulled along by Valve's tug.
The main between a launcher and a store is how many people have transacted on your platform once and have a credit card saved on file. Epic has secured "1st time payment" from a huge swath of players. This is such a huge and rare opportunity, I'd be surprised if they're not making moves towards becoming a Steam competitor, especially given Tim Sweeny's historically bitter conflict with gatekeepers such as the Windows Store.
Battle.net is very popular. There are tens of millions of players that play Hearthstone, Overwatch, WoW, SC2, Diablo 2. All of them launch the games by opening the Battle.net launcher. You can buy and pre order games and game content through the launcher also. Plus it also acts as a social network, you can add friends via their Battle.net tags and chat with them, spectate their games, challenge them to a duel etc. I agree Steam is probably number one but Battle.net and Origin are not small either. They each have millions of not 10s of millions of users I would imagine.
It's pretty common for AAA games to not be available on Steam now. Blizzard never used it, and EA, Activision, Microsoft and Epic have pivoted to releasing exclusively on their own platforms.
Ubisoft still releases on Steam but requires Steam buyers to install and log into Uplay regardless, which feels like preparation for abandoning Steam once enough users have Uplay installed.
Which makes the experience frankly painful in my experience. You have launchers launching launchers etc... I bought some Ubisoft games on steam but now I can't play them because when I launch them they ask for my uplay login and for some reason it doesn't work anymore (I could reset it but I couldn't be bothered).
It also generally doesn't play well with Steam "family sharing" that lets you share your games with family members without having to share the same steam session.
I don't like DRM very much but I do use Steam and Spotify because they mostly just work and don't usually get in the way. Cloud saves are pretty convenient too. I haven't bought a Ubisoft or EA game in a long time, mostly because I know it's going to be a pain to deal with their launchers.
If only I could buy a boxed game and not have to deal with any of that nonsense like back in the days... Some days I long for CD keys.
I'd say it is almost 100% the latter and the former barely plays into it. Their announcement even essentially says they are compensating the big players for the "network effect" their games provide to Steam.
Big publishers and games have been going on their own and doing ok. This is a move to keep them around, while using the players that they bring to sell other games at the old Steam margin.
Some of the big publishers have been requiring user accounts on all their AAA games sold through steam, so I think Valve knows it won't take much for these guys to switch to exclusive sales through their own platforms if Steam becomes too costly.
Yes, it’s also because platforms control what you can expirence, and if they feel it competes with their platform in someway they disallow it. So studios aren’t going to tolerate that going forward.
I feel uncomfortable that smaller developers will be less profitable because they... don't have as much negotiating power?
Valve is being very Walmart-esque with this move.
Already game developers are the lowest paid workers in the IT industry - and a lot of it has to do with the huge revenue shares ('platform taxes') charged by the monopoly platform holders.
I'm not arguing against any change, it just seems spiteful that Valve are sticking it to the little guys who can't go anywhere else. If those tiers ($10m and $50m to reach 25% and 20% respectively) had a zero removed from them, I would be more understanding.
This could have been a great chance to improve Steam overall, by reducing the commissions for all developers (in order to fend off a future Epic store - one undoubtedly tied into UE4, and probably with a 12% commission, based on statements from Tim Sweeney), and increasing the quality on the low-end slightly with a Steam Direct fee increase from $100 to $500.
On the other hand - the big publishers need Valve less, so from a purely business perspective it makes a ton of sense to keep them on the platform, which is the biggest storefront for purchasing games.
Yes, smaller developers have to pay more, but they're getting a heck of a lot of exposure for that take, without having to spend big on traditional advertising like the large publishers have to.
That is unfortunately not correct. A large amount of advertising and PR is very necessary to receive any attention for a launch on Steam.
Unfortunately a mere 'launch' on Steam has been devalued, by Valve allowing anyone with $100 to launch on the platform (and the majority of the launches on Steam are very low quality as a result).
If you want to make a middle class income from launching games on Steam, you will need to become very familiar with online advertising. Have a look at the Positech blog for details.
Indie devs are now realising why the big studios spend 30% of their budgets on marketing...
Of course, it all gets a bit easier once you have an existing profile, an existing fan base, etc.
It's not just lack of marketing, it's the fact that there are now far more games, but gamers have neither more money nor time to compensate.
There are too many game developers, it's as simple as that. Too many millennials don't want the regular old "grown up" jobs anymore, they want to be creatives or artists and the market just can't soak them all up.
If you think it's hard as a game developer, try living off painting or sculpture or music or literature. The vast majority never get there. Meanwhile, a game programmer at least has ordinary programming jobs to fall back on - if they can stomach it.
I don't know how they do it, honestly. Back in the day, when things were simpler, being a game dev sounded pretty cool. Now? No thank you. Lower wages, longer hours, much more difficult work, and 'fans' who continuously insult you in the worst possible ways no matter what you do... sounds like a nightmare. If I'm going to go the creative route I think I'd be happier on the sidewalk with a guitar.
Career-wise, I would much rather help a middle manager figure out how to best crunch the data on their quarterly reports. It can actually be more interesting than it sounds on the surface, and if you're competent everyone's happy at the end.
An advantage the Gaming Industry holds is that it is completely global.
The salaries for game artists and programmers in Eastern Europe are actually quite high, by local standards. And when you consider the very low cost of living in those countries, they are even appealing at a global level.
Working for a games studio in those countries, particularly if key management are Westerners or the local studio is a branch of a Western company, also gives a professional and modern work environment, whereas many older (non-Gaming) companies in Eastern Europe still have old-fashioned work styles (managers holding less respect for workers, for example) which are somewhat a legacy of the Communist era.
Typical Unity Developer salaries in these mid-sized Polish cities are about $35,000 annually, which enables an excellent upper-middle-class lifestyle. Plus, because the cost base in Eastern Europe is so low, if the game your company makes is very successful, you stand to receive a very large bonus.
I have never seen any of these on "my" Steam. It's not part of my shopping experience in any way.
I know they exist because Jim Sterling sometimes makes funny videos about them, but I can't fathom how they make a significant impact on "genuine" developers.
You only need to read their blogs to see how it’s hurting the “good” indie developers. Heck just use steam - the discoverability of good indie software has suffered hugely as Steam dramatically lowered the cost of entry to the platform. It’s now incredibly hard to stand out. The numbers speak for themselves, with steam going from adding several hundred games a year to their catalogue to nearly 8000 last year. The growth curve is accelerating too - there was “only” 4000 or so games added in 2016.
Having some small but achievable degree of barrier to entry was a huge help in keeping the store free of trash software.
> You only need to read their blogs to see how it’s hurting the “good” indie developers.
I don't think so. The odds are that if they failed with sales on their indie game, instead of admitting that there a thousand developers just as good as them who are fighting for a slice of the pie, they'd rather blame the platform.
Again, I have never been presented any of these asset flips on Steam. I do see hundreds of games that appear to be well-made every week and I don't even have the time to take a closer look at even a fraction of them, much less buy and play them.
To add some statistics to this, there were 7600 games released on steam in 2017, almost double the 4200 the year before, and 13 times more than the 500 released in 2013. It used to be the case that getting on steam was "guaranteed exposure", but no longer.
Economically this is true, but I'm deeply uncomfortable with it. The whole reason I got into computers in the first place is because it put everyone on equal footing.
As a kid I could write a program on my C=64 that was equal in every way to a commercial program that my parents bought. Personal computers were the great equalizer. (You don't even need a company! Magazines published amateur submissions all the time.) There's no other field I can think of where a kid could use a standard piece of equipment that they find around the house, and use it to build something on par with the top professionals in the world. Maybe a piano.
Valve and Steam (and all the other "app stores") were surely built by a lot of the people who grew up on personal computers in the same the way I did. I'm saddened to see that they're using their business success to help big companies get bigger. The economic value of the personal computer has changed from "equality for the little guy" to "leverage for the big guy".
This is what Bret Victor meant by "When I see a violation of [my] principle, I don't think of that as an opportunity. [...] I see a tragedy. To me it feels like a moral wrong, it feels like an injustice."
I don't get your historic analogy. Yes, you could make a game that rivaled the games of the big guys, all on your own. However, there's no way you could've gotten your game into the major sales outlets without a publisher. That publisher would've never given you a 70% cut. In that regard, you're far better off now.
developers can get more exposure on Twitch by paying a decently sized streamer to play their game. Showing people your game in play is far more important than placement on a shopping platform
>Already game developers are the lowest paid workers in the IT industry - and a lot of it has to do with the huge revenue shares ('platform taxes') charged by the monopoly platform holders.
I'm not convinced. IMO game developers are lowest paid because it's one of the rare segments of software development where there are no shortage of applicants. It's glamorous, all the kids want to make video games when they grow up, it's more rewarding to tell people that you've been working on the latest Red Red Redemption than that you've been debugging an SPI driver all week.
So you end up with an industry with a lot of turnover because they mostly hire hopeful young devs, underpay and overwork them until they burn out. And then you have 10 new freshly graduated folks waiting to take their place.
I seriously doubt that things would be massively different if platforms where cheaper or more open. I mean, AAA studio like Rockstar are known for their terrible working conditions, I don't think that's because of "monopoly platform holders".
That will be sad since most of the games I buy are from indie developers. They put good amount of work in their games and don't charge much too. If Valve keeps doing this kind of stuff and forces them to move to other marketplaces, I will move too.
Just move already! Indie games are much easier to obtain from rival storefronts than big budget releases, and can usually be had with better terms (DRM free etc, like gog.com).
It’s relatively rare for an indie developer to distribute exclusively via Steam.
> Already game developers are the lowest paid workers in the IT industry
That is not true if you factor out all the people developing games independently on their own dime, against better financial advice. To counteract that, there just aren't enough developers working on enterprise Java architecture for no money, out of passion.
It's also only fair that people who get to work on "fun" things like games are paid less. If they don't think it's fun, they can switch industries and earn more. Nobody is doomed to be a game developer.
> I'm not arguing against any change, it just seems spiteful that Valve are sticking it to the little guys who can't go anywhere else.
The little guys can go to itch.io, which charges as low as 0% commission. They may even have more visibility on there than on Steam, given that it's a smaller pond. There's also the Humble Store, which leaves commission up to the buyer.
> This could have been a great chance to improve Steam overall, by reducing the commissions for all developers...
They did reduce commissions for everyone by 5%. The extra 5% is for those who are at risk of moving off the platform because they can create their own visibility.
> The little guys can go to itch.io, which charges as low as 0% commission. They may even have more visibility on there than on Steam, given that it's a smaller pond. There's also the Humble Store, which leaves commission up to the buyer.
Steam has a monopoly. There is no alternative for anyone with revenue below $10 million (hence this change). Itch.io yields about 1% of the revenue of Steam.
The best you can do is sell Steam keys direct from your website, using the Humble Widget which charges 5%. However you will suffer from reduced visibility on the Steam store (since visibility is based on sales).
> They did reduce commissions for everyone by 5%.
No, only once a game reaches $10 million of total sales revenue.
Like I said, you need to factor out those unsuccessful developers that don't make any money. This is self-reported data is of questionable merit, but if you switch to US, game developers aren't at the bottom anymore and none of the salaries listed are bad in any way.
Again, if you do what you love, you should be able to stomach a pay hit. If you don't love it after all, don't wait for the industry to change, change industries yourself.
> Itch.io yields about 1% of the revenue of Steam.
That doesn't generalize across different titles. Maybe some title has zero visibility on Steam, but some visibility on itch.io. Then you're better off with itch.io.
Either way, it's just a guess.
> No, only once a game reaches $10 million of total sales revenue.
> That doesn't generalize across different titles. Maybe some title has zero visibility on Steam, but some visibility on itch.io. Then you're better off with itch.io.
as the person who runs itch.io, I can say that this is true
This is a point I don't see mentioned often enough. I've wondered in the past if it's actually better to forego every other platform in order to increase visibility through Steam. Higher sales means that Valve will promote you more, which may offset whatever revenue you'd be generating from sources like itch.io. Would be interested to hear if anyone has any opinions or idea about this.
It seems obvious to me that Valve should have a micro tier for the small indie space, by effectively making everyone else subsidize them. Something like 5% until crossing $30,000 in revenue.
This can be a life-changing difference for individuals couchsurf-hacking while trying to break into the game industry on their own; 28.5k vs. 21k. I highly doubt this would move the needle at all on Valve's end.
Do they already have anything like this or are the little guys paying the ~30% I see being thrown around?
So what exactly is "Valve" now without Steam? They don't have new games any more ( And none of the the "newer" ones were anywhere as good as CS ). They don't improve or compete in Game Engine any more, which they did in the Golden Era between Unreal, DOOM, and Source.
What have they got left? Steam OS and Gaming Machine got no where. HTC Vive doesn't look like they can compete with Sony or Oculus.
Valve is still a quite an admirable game studio. Not only do their top games CS:GO and Dota 2 have large and healthy player bases, but they also have large and vibrant competitive scenes.
I don’t compare Valve to the likes of Nintendo or Bethesda anymore wrt game development, but instead to companies like Riot and Blizzard. These studios revolve around franchises-as-services and don’t release new IP often. Their core games are pillars of the competitive, casual, and streaming games scenes.
I do miss the days of more frequent releases, though. Hooray for Artifact!
> but instead to companies like Riot and Blizzard.
But both Riot and Blizzard is like 10 times larger than Valve. And has games and franchise that is sustainable business if the worst happens in the next 10 years. Does having CS:Go and DOTA only enough to feed them? I mean even DOTA 2 is like 5 years ago already. And Artifact doesn't seems like a hit at all.
Haha Valve comes nowhere close to Blizzard or other developers. Blizzard at least updates their most popular games more than once every 6 months and doesn't leave them to die.
They have 2 upcoming games listed on their website (https://www.valvesoftware.com/en/about) and 3 'ongoing' games. They have also stated they are working on 3 full-length VR titles.
As an indie dev this is great news for me. Hoping Valve may come around and just drop the share to 20% for everyone eventually and then I won't have to forgo a salary to keep my 4 person studio alive.
I'd like to see stats, but historically, a game being on Steam brings enough extra sales to make up the steam cut. Now that Steam is overloaded with small games, that may no longer be true, but it's still worth doing a fair comparison.
Valve and the other large platform holders know that if they abandon 30%, there is no going back. Over time that 'platform tax' will get pushed lower and lower, until it basically reaches the marginal cost of transacting the sale and bandwidth. They are trying to hold that off as long, long as possible. At this rate it could be 100 years though.
If we stick to software and not tangent to movies/tv (itunes), Apple have absolutely moved some on this issue, since 2016 the App Store now offers 15-85 revenue shares for subscriptions once the user has subscribed for over a year.
Maybe not 100 years but substantial time. More likely, we need a platform transition as an inflection point that creates oppty for new market entrants. Part of new entrant's disruptive value prop may be better rev share terms.
This is definitely going for big AAA publishers. As Activision moved their latest Call of Duty from Steam to Battle.net, there are only Take-Two and Square Enix who haven't rolled their PC store.
Take-Two do have their own store iirc or at least rockstar does. What they don’t have is an app where you can easily and simply download and install any game tied to your account.
I have GTAV from them directly and it can be a chore remembering where the actual download button is for the installer on their site.
EDIT: For the shits and giggles of it I tried to stumble across the installer for gtav on rockstargames.com - This isn't my first time But I always forget because I don't actually install the game that often (once its installed it normally stays installed until I nuke my system).
First I thought, I'll make sure I'm logged in so I did that, There is a hover menu over my avatar now So I check that and follow profile and settings as none of the others seem to be linked to "let me download my game". But nothing in there links to to downloads.
OK return to rockstargames.com because there was a downloads button on the header banner. Click... click on gtav and it prompts me for who I want to by the game from. so I select rockstar warehouse because that's who I brought the game from.
It now prompts me to buy the game. Oh but I am no longer signed in. Arrr differnt domain name, that will be why. So I sign in, atleast this time I don't have to do a recaptcha to sign in as it did manage to figure out i'm signed in from rockstargames.com. Ok, it bounces me back to the warehouse home page instead of the page I was just at.
I can not click on my username, So I try clicking Digital Downloads, Select "Grand Theft Auto V" as I'm sure that the one of the 6 SKU's they have for the digital copy of the game. And its prompting me to purchase the same.
So I scroll all the way to the bottom and select "Digital Downloads" under shopping support.
> How do I download my purchase?
> You can download by either clicking the Download button on the Order Details page or by right-clicking on the Download button and clicking Save Target As in Microsoft Internet Explorer or Save Link As in Mozilla Firefox. Do not rename the download file as this can cause installation problems.
Ok so I do that, There is my order but no download buitton. Ok... Lets check that support doc again.
>I want to re-download my purchase, but the Download button is gone.
>There are a couple reasons why you wouldn't see a button (where there previously was one) to download your purchase. If the order is older than 30 days, then the download period has expired.
Well that's frustrating, BUT I know it can be done but I've done it a few times in the past.
1st link is quora, 2nd is rockstar support, Well I'll give rockstar a final chance before relying on 3rd parties to help me and click the support.rockstargames.com link.
>...or download from the GTAV PC Social Club Activation page.
Clicks the link, BOOM there is my download. But wait, I thought I clicked the social club before. Clicks my avatar, OH NOW THERES A BIG BUTTON SAYING "Game Downloads" which isn't present when you click on your avatar from rockstargames.com
Part of the reason why this is happening is because Twitch and Discord are going to compete for this market. This is good news for game developers and I am glad Steam is doing it.
People who bring in more sales are worth more money it's not shocking that they get a better deal. It's like saying capital one gives air miles to people who don't even need them. Well ya. It's not a gift it's purely mercenary.
Then they should lower rates across the board. There used to be a time when "just being on Steam" justified the high cost to smaller developers, but the market is over saturated now because they don't curate anymore that it isn't the case.
So where would a small developer launch nowadays? As far as I can tell, they're still on Steam, so they disagree with you that the cost is not justified.
Sony has been friendly to indies during the PS4 generation. Nintendo was especially good for indies in 2017 and is practically giving away development kits. Even EA is becoming increasingly friendlier to indies on their Origin platform.
Steam has brand recognition for developers, but that is changing with competition.
I don't know if anyone's noticed the unprecedented price-slashing that's been happening in AAA games this year but I think we may be in for another AAA game crash. For indies I don't think it's much better unless you're one of the Big Names in that space.
(Incidentally, getting into making games professionally through any means other than self-funding seems basically impossible at the moment.)
It's not across the board. Red dead redemption 2 is a huge hit. The big launches which are failing and getting lots of press (fallout 76, and battlefield V) are doing so because of anticonsumer practices.
In the case of fallout 76, the game is so buggy nobody wants to play it. Plus, launching fallout 4 after people were wrapping up Witcher 3 really put things into perspective as to how far behind Bethesda is compared to CD project red. Side by side fallout 4 was garbage.
As for Battlefield V. I've been a die-hard battlefield fan since BF 1942, I played the BFV demo and it proved to me that they are continuing to move backwards. Pay to win microtransactions and even less destructible environments show that they are dead set on destroying the mechanics which make battlefield fun and alienating their core customers. Perhaps they are doing this in a misguided attempt to capture some of the fortnite/call of duty market but instead they have sacrificed their core customers in an attempt to entice people away from games they are perfectly happy with. Then they top it off by sanctimoniously insulting their customers and telling us not to buy it if we don't like their changes.
Despite how the industry likes to try to pitch it games aren't as disposable as developers want you to think they are.
At least for me, I'm spending more time playing titles I've owned for years today than on new releases. And every year adds more games to that backlog / history of games to get around to. And some games never get old - I still revisit probably twice a year Quake and Doom (the original) to play all the new community map packs and mods for a week.
There really needs to be some sea change in the industry away from disposable properties and towards ongoing refinement and iteration on proven titles. I'm sure publishers would love it - there is a lot less investment risk if you can establish regular revenue from game updates like how MMOs work - but the consumers have for the longest time seen value in gambling how good a new title in a series will be over seeing the last one just made better over time.
There are more games than ever. New games are competing against other new games while also competing against every old release of every game, on sale at a huge discount. There is no time and no money for all.
Much worse than that, there is no more groundbreaking innovation in technology. 20 years ago there was the move from 2D to 3D. 10 years ago came realistic 3D with facial expressions and destructible environments. Today call of duty cannot be distinguished from last decade call of duty.
Valve's cuts are fine. I remember the times when developers were glad if they got 20-30% of the profits in general, with publisher deals starting at 70% cuts for IP-first game releases, and way higher if it was your first game. This after you pitched the game with a tech demo running, of course.
Steam is a blessing on digital distribution, and the most competent platform to date, albeit it has its problems.
A friend of mine released a game that sold around a million copies in the late 90s or early 2000s sometime and had a deal like that. Except the publisher claimed that after all the distribution and physical costs the profit of the game was 0 and so he never got any money from his profit sharing agreement. Steam and online distribution in general is a godsend.
But didn't those publishers pay development costs? I've seen a lot of people comparing publishers and retailers (which is what app stores are) without understanding the differences.
publishers funded development, did advertising, provided QA and often localization services, and manufactured physical products.
Valve runs a CDN and forces you to have a forum for your game that you moderate yourself, and runs a support service that issues no-questions-asked refunds of your title after players played it for upwards of 2 hours, which come out of your profits.
They do offer some useful APIs like Steamworks but those break randomly and have no devrel or customer service because Valve hates developers. So in practice, you're not getting much useful for your 30% - CDN, launcher, updater, payment processing, achievements. everything else they offer is buggy or actively unwanted.
Valve clearly recognizes at this point that developers don't like the service they offer for the 30% and that more importantly, big publishers can easily just go their own way. When that Valve cut is millions of dollars it's very easy to justify running your own storefront even if you sell fewer copies, because those Steam units sold come with huge negative effects - forums toxicity, buggy platform APIs, no-questions-asked refunds, review brigading, etc.
Context: Shipped a couple titles on Steam, one 500k+ sales. In one case we did extensive Steamworks integration (weeks of dev time) and actively regretted it. If I had a solution for the exposure problem (Steam still gives you way more potential sales even though it sucks now) I would go my own way in a heartbeat. Steam isn't worth 30%.
Assuming your game is expected to generate $50M in revenue, is giving up $13M (26% of revenue) for bandwidth + servers + store handling credit card info + credit card fees + technicians + support staff worth it over rolling your own? Or $23M if it's expected to make $100M?
Not so much for the games that are hitting those revenue levels, as they already have mind share far greater than you get from being on Steam.
It's a game changer for smaller and unknown developers to be findable on the steam store. Once you're a battlefield/witcher/fallout etc, you just don't need it.
Exposure is key, I know I don't buy games that aren't on Steam. So many games I wouldn't know about at all if they weren't on steams recommendations page.
They should have given even a bigger cut to those developers who release Linux versions. It would be a good incentive to push more of them releasing for Linux.
