Tim Sweeney has been actively defending the policy of Epic Games acquiring all sorts of exclusives for its new storefront. The most recent comment from the CEO is a bold one this time; he claims that if Valve were to increase the revenue share that developers earn on Steam, Epic would back down from hoarding exclusive titles, and would even consider putting Epic-made games on Steam as a sign of extending an olive branch. Currently, Epic Games offers an 88% cut, as opposed to Steam's 70%, though the latter slightly changed their policy last year, to offer 75% once a game sells over $10 million, and a further 80% for titles that clear a $50 million earnings threshold. While Sweeney is vocal on his policy against storefronts imposing such a large percentage on developers, a 70-30 split tends to be the norm when it comes to the industry--which means unless Valve is willing to take such a massive profit cut, we won't be seeing Sweeney's claims come true any time soon.

If Steam committed to a permanent 88% revenue share for all developers and publishers without major strings attached, Epic would hastily organize a retreat from exclusives (while honoring our partner commitments) and consider putting our own games on Steam.

— Tim Sweeney (@TimSweeneyEpic) April 25, 2019

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[Taleweaver]

I...don't understand this sort of reply. The way I see it, it's like this:

* steam takes a higher cut and invests it in the things we come to expect/like from the things surrounding its community (rewards...moderated forums...achievements...linux support...and so on).
* valve takes a lower cut and thus manages to secure some exclusives, but cannot invest or grow as much

It's really not that different than any real store. Buy the same bottle of water in your local shop around the corner vs one in a fancy shopping gallery. The latter is more expensive, but due to higher costs on e.g. the rent of the shop, things "kind of" balance out.

In this case, the shop around the corner would be Epic store. It doesn't have fancy music playing or sparklingly clean floors, less personel but as such, they can offer a certain brand of water bottles for a tad less. And while the analogy breaks a bit because online, everything is "just around the corner", it's still more or less the same situation: the local shop has some exclusive water branches, customers don't like having to shop in more than one shop* and want the local shop owner to quit hogging the exclusives...

...to which the local shop owner says "we'll stop hogging these sought-after water bottles when our main competitor lowers their profit margin for all their water supply!".


...and that's just ridiculous. Up to this point, I saw valve just as a smarter** virtual store competitor than, say, gog.com. They had their business model, and are attempting to grow to...erm...to at least profitable margins (seriously...while I like the freebies, I don't expect this to be a solid business model). But really: this is just a dick move. It serves no purpose other than attempting to discredit steam's reputation.






*as a CIS man, this analogy makes perfect sense. Women generally don't seem to mind visiting two shops, though.
**since I see disagreement on this front, lemme stress here that you gotta look it from their perspective. Good quality exclusive games are the best way to draw paying customers to your store. As such, it is a smart move, even though we as consumers aren't fan of the strategic move.

 

[urigeller]

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Tim Sweeney has been actively defending the policy of Epic Games acquiring all sorts of exclusives for its new storefront. The most recent comment from the CEO is a bold one this time; he claims that if Valve were to increase the revenue share that developers earn on Steam, Epic would back down from hoarding exclusive titles, and would even consider putting Epic-made games on Steam as a sign of extending an olive branch. Currently, Epic Games offers an 88% cut, as opposed to Steam's 70%, though the latter slightly changed their policy last year, to offer 75% once a game sells over $10 million, and a further 80% for titles that clear a $50 million earnings threshold. While Sweeney is vocal on his policy against storefronts imposing such a large percentage on developers, a 70-30 split tends to be the norm when it comes to the industry--which means unless Valve is willing to take such a massive profit cut, we won't be seeing Sweeney's claims come true any time soon.

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He is a dick, his policies are stupid, also his games are not appealing, in fact, Cd Media, supports Nintendo + Steam, so I benefit. I see little to fucking nothing in any indie/'small dev on epic game store. this idiot shouldn't take 10/20 percent and he should enjoy the clout he got from fortnite!!! A FUCKING HELL OF A BETA THAT PICKED UP

 

[Deleted_413010]

Also, they give you free online, which none of the big three do. Free cloud saving, which Sony and Nintendo do not.

Nintendo USED to. Now they've turned into every other company.

 

[brunocar]

More than that, if hypothetically steam agrees and gives a bigger share for devs, what would it win? Get games back from Epic Store? It would at best make thing look like before the release of Epic Store, that's not a win, just not losing. What games does epic really habe to offer? Fortnight? Fortnite on Steam would just make it's playerbase bigger. Epic has nothing to lose on this bluff.

No, that revenue cut is unsustainable, what epic is doing is what origin couldnt, try to push the PC industry to a less consumer friendly enviroment in order to get publishers more money.

 

[FAST6191]

No, that revenue cut is unsustainable, what epic is doing is what origin couldnt, try to push the PC industry to a less consumer friendly enviroment in order to get publishers more money.

Is it unsustainable? Valve being a private company we don't have hard numbers for them. We could try to zero in on some numbers based on expected play/download rates of things and hardware refresh cycles but I don't see the requirements being into the realms of "absolutely needs custom hardware and hardcore custom made storage setups designed for niche uses". Nothing outside the realms of what a reasonably competent tech company with reasonable means has at their disposal.

As far as less consumer friendly. Both are DRM services and download providers without an interest in allowing game resale. Six of one, half a dozen of another from where I sit. I would rather they both became download services with a sale frontend if they have to exist but if I have to live with them then if they are no different...

 

[Deleted_413010]

Is it unsustainable? Valve being a private company we don't have hard numbers for them. We could try to zero in on some numbers based on expected play/download rates of things and hardware refresh cycles but I don't see the requirements being into the realms of "absolutely needs custom hardware and hardcore custom made storage setups designed for niche uses". Nothing outside the realms of what a reasonably competent tech company with reasonable means has at their disposal.

As far as less consumer friendly. Both are DRM services and download providers without an interest in allowing game resale. Six of one, half a dozen of another from where I sit. I would rather they both became download services with a sale frontend if they have to exist but if I have to live with them then if they are no different...

What would happen if Valve became a publicly traded company?

 

[FAST6191]

What would happen if Valve became a publicly traded company?

As far as my post there goes? If they are public various accounts and financial reports get made available which gives us some financial info as far as their income and expenditure which we could use in calculations there, and while it is limited in scope they seem to have fallen out of the habit of making games and have effectively transitioned to a service company so it is probably still going to be fairly accurate. I would still run the numbers like if I was doing it myself from scratch tomorrow (giant CDN is easy enough to play designer for) in case they have legacy overheads* (quite possible given the reports we have heard from people leaving the company in the past, and general ideas of things from people taking over existing companies) but it would help in basing the calculations.

*beyond that new company comes up and is able to run leaner is a fairly common scenario.

In general? Afraid I will have to leave that are you are going to have to look it up. Being almost the default business trajectory it is a fairly well studied concept as far as changing cash flows, resulting investor pushes, regulations and such so many a business studies type course will cover it.

 

[Deleted_413010]

As far as my post there goes? If they are public various accounts and financial reports get made available which gives us some financial info as far as their income and expenditure which we could use in calculations there, and while it is limited in scope they seem to have fallen out of the habit of making games and have effectively transitioned to a service company so it is probably still going to be fairly accurate. I would still run the numbers like if I was doing it myself from scratch tomorrow (giant CDN is easy enough to play designer for) in case they have legacy overheads* (quite possible given the reports we have heard from people leaving the company in the past, and general ideas of things from people taking over existing companies) but it would help in basing the calculations.

*beyond that new company comes up and is able to run leaner is a fairly common scenario.

In general? Afraid I will have to leave that are you are going to have to look it up. Being almost the default business trajectory it is a fairly well studied concept as far as changing cash flows, resulting investor pushes, regulations and such so many a business studies type course will cover it.

I kind of meant would it be a good thing for the future of Steam

 

[Xzi]

Is it unsustainable?

I'd say yes. Given Epic's desperate bluff here, it's obvious they're already running somewhat low on funds. If Valve could make their cut lower and still make a decent profit after all of the overhead costs, they would've done it years before EGS launched.

I kind of meant would it be a good thing for the future of Steam

On the contrary, I think taking the company public would put far more "money men" in charge and ruin everything unique about Valve/Steam. They certainly wouldn't be bothering to make advancements in VR hardware.

 

[sarkwalvein]

Probably Valve can make their cut lower and make more than a decent profit, but they don't need to. I don't think Epic could really hurt their leadership position so they don't care about the "challenge". Kind of a "let them empty their wallets until they run out of money, we don't care" approach, possible thanks to their near monopolistic position (gigantic fish in the pond of digital distribution platforms).

 

[FAST6191]

I kind of meant would it be a good thing for the future of Steam

No idea on that one. We are well into the business analyst realm there and I am a lowly hammer thrower for the most part so a bit outside my scope -- most of what I know here is so I can talk to such people, because some books on the matter (some of the dullest stuff I have ever read) and to help when I can analyse a company to either invest in it or take a job with them. There are pitfalls and perks associated with both private and public formats, and ways to do badly at both, as well as odd and uncommon things you can do with them. Valve are a tech company, though likely not one in the crazy growth phase (they are not gobbling up companies, their hiring is not "as much as we can get", their products beyond their key businesses are somewhat restrained but with the potential to explode in popularity if they do hit, all that and more paint a certain picture), and Silicon Valley is an odd place (and probably going to go through a bit of a burst bubble when the chickens come home to roost for Uber and that WeWork business office sharing company -- the values of both compared to... reality are not good, and we have already seen the likes of Twitter and Facebook start to falter).
Valve are mostly a software company at this point -- their IP collection is nothing amazing (Steam is basically a CDN, most of their games I would not appraise highly (would Half Life 3 really do that much if sold to another company, or be expected to sell that much if Valve dropped it tomorrow?) and what few patents they have from that bit with them doing crazy controllers is nothing earth shattering either), their hardware resources are nothing spectacular (not like they have factories and servers have a limited shelf life) and they have the trappings of a software company otherwise, one that might have a competitor nipping at its heels before long and probably able to be usurped with relative ease. To that end they would probably be treated as one.

It would open up a pool of cash to Valve but probably nothing they could not get through existing investors or loans, or project specific loans (see something like what Nintendo did a few years back for the then upcoming Wii U), and they likely have a fair bit of cash in the bank as well.

Given all I have said I would probably say private is not a bad thing for them to stay as, and while public would be neutral overall why put the effort in for no great gain. A lot of tech companies are also going private where they can of late as well -- Dell probably being the first of the notable really early ones (might even be said to have started a trend, or at least really kicked it off) but plenty of others are doing it where they can.

I'd say yes. Given Epic's desperate bluff here, it's obvious they're already running somewhat low on funds. If Valve could make their cut lower and still make a decent profit after all of the overhead costs, they would've done it years before EGS launched.

If they effectively don't have competition and people are willing to pay them then what incentive do they have to lower their prices?

 

[Viri]

Nintendo USED to. Now they've turned into every other company.

Yep, I can't blame them either. Sony and Microsoft players paid for it, so why shouldn't Nintendo jump in? It's just too bad their service sucks. I personally don't pay for it, as my Switch is hacked.

 

[FAST6191]

Yep, I can't blame them either. Sony and Microsoft players paid for it, so why shouldn't Nintendo jump in? It's just too bad their service sucks. I personally don't pay for it, as my Switch is hacked.

If they can't provide the service then that would be a good reason not to charge for it.

 

[Viri]

If they can't provide the service then that would be a good reason not to charge for it.

Well, people bitched about Sony and Microsoft charging, yet they still paid for it. So, Nintendo jumped on board. People bitched and complained, and Nintendo nearly has 10 million users paying for online.

 

[Xzi]

If they effectively don't have competition and people are willing to pay them then what incentive do they have to lower their prices?

Steam has literally never been without competition, it's just that all its competition is fairly subpar by comparison. Pricing from the customer's standpoint certainly isn't an issue with third-party key redemption. The only ones complaining are greedy publishers, and they know exactly what Steam's cut has to be in order to maintain profits and operating expenditures.

 

[FAST6191]

Steam has literally never been without competition, it's just that all its competition is fairly subpar by comparison. Pricing from the customer's standpoint certainly isn't an issue with third-party key redemption. The only ones complaining are greedy publishers, and they know exactly what Steam's cut has to be in order to maintain profits and operating expenditures.

From a technical sense then sure. From a practical sense then not so much -- most things there are competition the same way my guestbook is a competitor to twitter.

As far as greedy devs/pubs then I am sure they ran the numbers and decided the initial expenditure in creating servers, frontloading the bandwidth and also advertising to overcome Steam's position (it is not only a dominant service but seemingly a beloved one) would be more than they care to invest at a given point and they pay the fee. Where that lines up compared to Steam's operating costs I don't know and don't actually much see as relevant in this, for if no other reason said devs/pubs would pick Valve's carcass clean and/or surf them into oblivion (jumping off at the last moment, pausing only to adjust their tie whilst not looking back) given half a chance. Epic seems to have decided to give it a punt though.

Well, people bitched about Sony and Microsoft charging, yet they still paid for it. So, Nintendo jumped on board. People bitched and complained, and Nintendo nearly has 10 million users paying for online.

All I can say is I have never paid for such things and have long advocated for others to not pay either. Sadly it seems the world suffers no shortage of fools with money to burn.

 

[Deleted_413010]

Sadly it seems the world suffers no shortage of fools with money to burn.

Its not being a fool if the companies force you to pay to play online. Its fucking bullshit. We live in a capitalist world.

 

[Xzi]

As far as greedy devs/pubs then I am sure they ran the numbers and decided the initial expenditure in creating servers, frontloading the bandwidth and also advertising to overcome Steam's position (it is not only a dominant service but seemingly a beloved one) would be more than they care to invest at a given point and they pay the fee. Where that lines up compared to Steam's operating costs I don't know and don't actually much see as relevant in this, for if no other reason said devs/pubs would pick Valve's carcass clean and/or surf them into oblivion (jumping off at the last moment, pausing only to adjust their tie whilst not looking back) given half a chance.

Of course they would, that's the cutthroat nature of all business involving massive profit. Unfortunately for them, Steam's market dominance is proof that the customers have all the power in this relationship, not publishers. They have to go where the money is eventually, whether they want to bitch and moan about it in the short-term or not.

Epic seems to have decided to give it a punt though.

On that we completely agree.

 

[FAST6191]

Its not being a fool if the companies force you to pay to play online. Its fucking bullshit. We live in a capitalist world.

Online is optional last I checked, and even on things like the 360 I had an absolutely fantastic time, possibly the best I ever had in gaming (though I did have a gaming PC during a lot of its lifetime), with it being offline essentially the entire time*.

*my brother used a trial or two once, I did not. I also played online when round with friends at points but as said online was splitscreen at the time...

Edit.

Of course they would, that's the cutthroat nature of all business involving massive profit. Unfortunately for them, Steam's market dominance is proof that the customers have all the power in this relationship, not publishers. They have to go where the money is eventually, whether they want to bitch and moan about it in the short-term or not.

If Epic is willing to put up the money/theoretical difference...

I would similarly not view Steam as what a properly discerning customer would pick (all the censorship, the inability to flog old games, the lack of features, if they care about the pubs then the cut they take for surprisingly little...), as much as best of a bad bunch.

 

[Viri]

All I can say is I have never paid for such things and have long advocated for others to not pay either. Sadly it seems the world suffers no shortage of fools with money to burn.

I have never paid for them either. Also never paid online for MMOs lol.