Decisions made by major developers have made this year have indicated Steam’s uncontested reign as the dominant PC gaming storefront may be coming to an end. This week, a conversation has sprung up around the Epic Games Store and the value it offers developers when selling their games. Does Valve finally have direct competition?
To call Steam a runaway success for Valve would be to undersell just how lucrative the platform has been for the compnay. Steam has dominated the PC gaming market for for fifteen years, with competing platforms GoG struggling to gain a foothold. A wave of publisher-based attempts like EA’s Origin yearned for a better deal but found mixed success. EA actually present a great example of how to break away from Steam and keep your audience. We’ll get deeper into their situation a little later in this piece.
Valve’s stronghold on the marketplace has given the company something of a free pass for many years, and a specific term listed in their partnerships agreement — that Valve takes a whopping 30% cut of all sales conducted on the platform — has brought in a staggering amount of money, all for being the PC gaming platform of note.
Perhaps catching wind of Epic’s forthcoming storefront, Valve recently made a change to their income splitting system, allowing more successful games to yield greater rewards for developers and publishers. Valve brought its cut down to 25% and 20% depending on the number of units sold. To cut Valve’s take down, a game must hit particular income milestones — $10 Million and $50 Million respectively.
While any progress is good, and Valve’s willingness to move at all paves the way for greater developer remuneration, it’s still not exactly terrific. Valve still get a major cut simply for existing, and needing to surpass $10 Million just to get a look in the door is no mean feat. It’s easy to see independent developers giving up hope of ever reaching those milestones without accidentally creating a viral miracle.
The cynical reader might at this point think “they’ll become more successful the more games they develop”, it’s worth bearing in mind this is the same company that once hosted Steam Greenlight, an initiative dedicated to helping independent titles gain momentum. Greenlight was scrapped last year in favour of Steam Direct, a policy many saw as Valve abdicating any curatorial responsibility, followed by controversy around the surge of vulgar titles making their way to the platform.
They are also the company that made headway in the market with the major support of modding, a scene that has always given young developers a platform. All of Valve’s titles owe a debt to modding communities. They wouldn’t exist without them.
But the Valve of 2018 is very different. It has become an unnecessary middle-man in the PC gaming market. It has no burning need to make the blockbuster 3’s that their aging audience so badly desire, because it’s already making so much money off the labour of external forces. It’s also a company that’s thrown a lot of resources behind VR — time’s gonna tell on that particular investment, though I wish them the best.
Earlier this year, Valve also acquired Campo Santo, the studio behind the popular first-person narrative title, Firewatch. It’s a move that could be indicative of Valve looking to publish in the future rather than develop. One would hope that means more Valve-quality games on the way, but there’s a lot of gears turning at the moment.
But it may be a matter of survival too. Becoming a publisher may be the only way to ensure continued AAA content on Steam. Over the past year, numerous AAA companies have been ditching Steam for proprietary platforms of their own or partnering with competitors. Activisionhas moved on to their own in-house Blizzard App, Bethesda built themselves a storefront on Bethesda.Net,and Ubisoft has been putting a lot of recent effort into their long-suffering platform Uplay. This comes as no surprise given the popularity of titles like For Honor and Rainbow Six Siege. Hosting these games on more direct storefronts allows publishers to better manage their revenue streams, avoid giving a substantial cut to a third party and ultimately rewards the developers and publishers better respectively.
Even Discord, of all platforms, have launched a store of their own. They are a company that makes a communications program. That’s how wild the scene is right now.
So why bail on Steam? Can it really be that beneficial from a monetary standpoint? Former EA ANZ community manager Jess Hodgson quickly illustrated why competing on revenue split is the last thing Valve might have expected, using EA as his example. The benefits EA saw as a result of their early transition away from Steam were non-trivial.
"Why did EA take their games off Steam?"
(Numbers are estimates based on available data)
BF3, the first Origin Exclusive title, sold 2.76 million copies on PC
At $60 US, that's $165.6M
30% of that is $49M
Just for being on Steam
— Jiggsy (@jiggsy) December 7, 2018
Jess’ thread refers to the Epic Games Store, the new storefront from the developer behind the monumentally successful Fortnite, and owners of popular Unreal Engine 4. Epic have this week released information on the amount they plan to make from revenue splitting on the platform — developers and publishers will keep 88% of their profits, with 12% going to Epic for hosting. If your game was built using the Unreal Engine 4 toolset, the fees usually incurred for launching a game made with the software will be scrapped for being hosted on the Epic store.
Epic already has a wealth of registered players using their app due to the immense popularity of Fortnite. With a single addition of a storefront, they’ve become the first real, substantial threat to Valve’s stranglehold on the marketplace.
This is great news for devs. It seems like Epic is fully willing to support new entries to the PC gaming market. It seems Valve only ever predicted a customer-focused approach to competition — better pricing, faster support and the like. They didn’t expect the Devs First approach, and it may cost them dearly in the long run.
Epic weren’t resting on their laurels following the store’s announcement. The Epic Games Store at The Game Awards last Friday was hard to miss. In some showcases, independent titles like Super Meat Boy Forever and Hades announced they’d be available on the Epic Games Store, but made no mention of Steam.
Some PC gamers have taken to Twitter to complain about having two different gaming apps — an old complaint at this point, but realistically, if you’ve been willing to put up with Battle.net, League, Uplay, Steam and Origin then one more isn’t going to kill you. As Jerry Holkins of Penny Arcade put it, “the question at this point is really about which one is the first to be removed.”
So lets tally up.
developers and publishers are starting to move away from Steam.
Steam no longer supports independent titles with Greenlight, and is happy for any old title to be released onto Steam, irrespective of its content.
Independent developers are starting to tie off relations with Steam in search of a better deal.
Valve has given every indication that it is looking to become a publisher rather than being a developer.
And the people who own Unreal Engine 4 are embracing content with open arms, on their very own store, and giving developers every excuse to use their software to make their games. If you wanted to trap a AAA publisher in the wild, this is the bait you would use.
Steam’s long and seemingly unstoppable reign might be entering its final phase at last. Developers have less and less need for the middle-man, especially when he wants such a big cut.