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IGN: Steam's 30% Cut Is Actually the Industry Standard
- Thread starter AHA-Lambda
- Start date
No it isn't.
I was contacted by the Epic Store, proposing that I enter into an exclusivity agreement with them instead of releasing DARQ on Steam. They made it clear that releasing DARQ non-exclusively is not an option.
That's forcing a developer to choose.
Same thing happened with the developer of Skatebird.
I think people misunderstood you. They thought you meant that Steam/Valve is the one not allowing games to launch in both Steam and EGS, when Epic is the one restricting that case.
Ah, apologies, the way your reply was phrased, it could easily mean that Valve stopped a game being sold on EGS. Sorry if I was a bit "raghhhh". :)
I took the "they" to refer to Valve, when I should've re-read the post you were replying to. My fault entirely.
And i don't recall Sweeney or Epic ever denying that they are indeed paying to get timed exclusives so that people will use their store instead of Steam.
That, plus the smaller cut has led to some wanted indie games and even AAA games like Borderlands 3 being released only on EGS, though some of those exclusives you can get on Windows Store through Game Pass from what i hear.
The problem is that other stores like GOG also don't get the game either, only Epic and Microsoft's special service get them.
That, plus the smaller cut has led to some wanted indie games and even AAA games like Borderlands 3 being released only on EGS, though some of those exclusives you can get on Windows Store through Game Pass from what i hear.
The problem is that other stores like GOG also don't get the game either, only Epic and Microsoft's special service get them.
A hardware platform has much higher exposure to risk and costs more to run.
One could argue that there's a stability to hardware platform that mitigates the hardware manufacturing costs, and that that stability is not present in pure retail.
Ah, OK. Your wording in the initial post made it look like you were blaming Steam for the exclusivity stuff. You're literally right here :P
I feel like when it comes to console cuts, suddenly we're pretending that the console makers are barely scraping by.
Meanwhile Sony paid Activision God knows how much to get an exclusive CoD mode all to themselves for an entire year. So the money's there to give to developers, let's not pretend it isn't.
Firstly, higher exposure to risk would only mean that consoles that have either failed or are at the start of their life count; no console on the market right now is in a bad position. Nintendo has enough funds to finance a hundred Wii Us (and with the Switch those funds can only grow) and Sony/Microsoft are massive multi-faceted tech firms of which their gaming business is only a fraction of the whole.
Secondly, "Costing more to run," is relative, it says nothing about what the actual costs are for each company and what revenue streams those companies have to offset them. So, for instance, if I'm running a small independent shop then I will still need to charge as much, if not more, commission from my suppliers as a mega-firm like Walmart because, despite my business costing much less to run, I will not be able to cover those costs if I arbitrarily decide to charge lower commission because of my size. I'm not going to deny that console manufacturing costs a lot, that's not the point and it's impossible to prove it or not without , but you cannot simply say that it "costs more," to explain why Valve could 100% lower their cut for all games.
I mean, if you look at their digital stores it's apparent they don't even have money for decent web developers, Sony and Nintendo in particular.
Reminder that console manufacturers also:
- Get money from physical games.
- Force users to pay 50€/year (or well, 20€/year for Nintendo) to play online
- Get money from overpriced accessories
- Have decided last gen that critcally burning through cash with a giant loss leader approach at gen start is stupid (thankfully), offering much normal priced products (that are slight modifications of normal consumer products).
It's hilarious to me that Ubisoft have the audacity to call it unsustainable. Wanna know what IS unsustainable? Having microtransactions in every aspect of every single game you release Ubi, making all of it nothing more than work you can skip with cash. Or demanding people work for free so you can finally make Beyond Good and Evil done after all these years and pick from the free assets you're asking for. You're a fucking gigantic company you cheap scummy fucks. Kinda wish Vivendi smashed Guiillemots dreams a few years back given how shit they remained.
Another thing to consider is how credit card fees are handled.
From my understanding Valve eats the costs while Epic passes the costs onto consumers or developers. Actually I think Epic's the only one that doesn't eat the fees.
That matters and should be taken into account, when discussing these lower percentages.
From my understanding Valve eats the costs while Epic passes the costs onto consumers or developers. Actually I think Epic's the only one that doesn't eat the fees.
That matters and should be taken into account, when discussing these lower percentages.
Steam is objectively not the only game in town if you want to sell on PC. There are multiple services that perform that function and the ecosystem is open to anyone willing to compete. Steam is of course by far the most successful and undoubtedly the dominant digital distribution platform on PC but they earned and hold that position by providing the best service compared to everyone else. What Steam does is cultivate and maintain the market that you want to sell to.
IGN seems to not get the concept of setting the standard.
Why do you think everyone is 30%? It's because Steam is the proof of concept for digital reselling pc games, and the profit machine formula everyone follows. I mean, dear lord. What a troll article.
Why do you think everyone is 30%? It's because Steam is the proof of concept for digital reselling pc games, and the profit machine formula everyone follows. I mean, dear lord. What a troll article.
30% was first done by Apple tho... Steam did not set the standard! Heck, X360 launched before Steam accepted third party games.
Seems like that would be an interesting focal point for a follow-up article: Steam as a platform and how it compares to console platforms in terms of consumer / dev offerings, software, R&D, and potentially with some bits about whether it justifies the cut comparatively.
iTunes is older than Steam.
Valve started acting as publishers of small games in 2005 (indies), but it wasnt until later on in 2007 when the big publishers started to also use Steam, more or less simultaneously as GFWL started to life and die.
This is the only correct answer.
Not sure why some people are taking the "30% equals what I can see" stance, and are not thinking about developer SDKs/APIs and support.
They also have more ways to make up money (ie online subscriptions, hardware sales, controllers sales etc...).
This should help if you're interested in the subject:
Just gonna repeat myself here:
Everyone talking about Sony and Microsoft and Nintendo having R&D costs for their consoles.
A) Valve has enormous R&D costs. Most of their company is R&D. They pour more into R&D than most companies.
B) Everyone pays for Sony and Microsoft and Nintendo's R&D costs. Both consumers and developers. We buy the hardware, and much more importantly, DEVELOPERS PAY ENORMOUS FEES FOR "PERMISSION" TO DEVELOP ON CONSOLES. Everything on consoles costs money. Did you know you have to pay a large fee every time you submit to cert? Not a one time fee for cert, but every single submission. And when you get declined 10 or so times, that adds up to a lot. That's ON TOP of the licensing fee, on TOP of the retail cut, on TOP of the console manufacturers cut.
By comparison, I have never once had to pay a dime to develop with any of Valve's technologies. And their technologies are fundamental, the type that the other companies being brought up don't provide except microsoft. Most people on this forum won't get this comparison, because they know jack shit about game development, but Valve's primary competition is Microsoft, not Epic or anyone else. Valve competes primarily against Microsoft. When you are developing games using industry leading tools, you are either using Microsoft's products, or recently, within the last 10 or so years, you are increasingly using a number of valve funded (as in, their R&D) alternatives. Even if you're not working on a PC game at all. Because they use their R&D to develop fundamental technologies. Like libsdl-dev. If you have to google what that is to partake in this conversation, you don't belong in it.
So, story time about Valve's VR hardware: they literally gave it away for free to Oculus. It's amazing how no big gaming publications have ever tried to investigate this story. Look at who left Valve for Oculus during the facebook buy out. The story goes like this: When John Carmack at Quakecon showed off "carmack's VR headset" (which was Palmer Luckey's duct tape prototype) Valve hit him up as they'd already been doing R&D on their own VR hardware with Michael Abrash for a couple of years. They had two teams working on what they considered the *Reality projects: One lead by Abrash, which became their VR division, and one lead by Jerri Elsworth, who was developing an AR solution. Valve decided to back their VR solution, and as such let Elsworth keep all of her valve-funded, valve-developed research and development and take it to her own company (which is amazing on its own).
But back to VR -- Valve hit up Luckey and Carmack and offered to share their solution because they flat out didn't want to enter the hardware market. They needed a big player to take their tech and run with it, so they could have a market to sell with. Valve basically defined modern VR. You can look at the list of features their early headset had, that Oculus cribbed. For example, the constellation tracking system of the rift? It came from Valve, valve was prototyping 10 different types of tracking solutions at the time. Their constellation system was the last one Oculus got to see before they split, which is why Vive uses the more advanced Lighthouse tracking where Oculus went with the older constellation tracking.
I tried their headset at Dev Days, where it was known as "The Valve Room." This was way, way before even the DK2 had been announced. They already had a dual screen, 1080p per eye VR headset with full roomscale tracking and asynchronous reprojection going. Like, 2 full years before Oculus released the DK2. The Oculus rift DK2 and CV1, to an enormous degree, looks like a commercial version of "The Valve Room"
So back to the story about Oculus: There was actually conflict at valve between VR team members over whether or not they should share their technology completely free with Oculus. Valve quite literally gave their tech to Oculus, no strings attached. When Mark Zuckerberg was shown a prototype at Oculus' office as a pitch for facebook to buy them out, they showed them the Valve room and not the DK2. Zuckerberg literally thought, when he bought oculus, that he bought valve's technology. When he learned that they didn't have the team, or the exact demo he tried, they tried to buy out valve, and when they couldn't, they tried to poach the VR team. Maybe I shouldn't share this stuff as it's really contentious, but those who stay told me that the people who left for big raises at Oculus, are the same people who had been arguing prior that Valve should give their tech away to oculus for free.
Anywho, Facebook's attempt to poach Valve's VR division actually didn't work, with the vast majority of the VR division staying and working to this day. They cross over into other R&D, as to "power" their VR technology, they had to simultaneously prop up technologies like dx2vk (in fact, their VR conference is WHERE they announced dx2vk, during their "use our free tools for gamedev" lecture), sdl2, etc.
Valve has the single most unrecouped R&D costs in the entire VR market. They literally charged absolutely nothing for their R&D.
Welp, I'd like to source my claims about Valve and Oculus to Alan Yates, the person behind lighthouse itself, but it looks like he deleted his account where he said some thing. Despite that, a few pictures of evidence:
That's a leaked pic of Zuck's actual VR pitch, he's literally in the valve room. This is the same room Valve took users into one on one with Michael Abrash at Dev Days.
some direct quotes from him on the subject:
Their R&D is seriously why valve "doesn't make games anymore." They pour everything into R&D, much of which the actual gaming public doesn't see directly (but actually use).
At or below cost? They charge thousands of dollars per license to develop with their hardware. Microsoft, sony, etc aren't eating the cost of their R&D. It's literally passed onto both consumers, and developers, directly. A PS4 dev kit costs about $3000. That's just the dev kit, the actual licensing fee can be somewhere in the range of $10k.
Did you know, for example, that Valve basically single-handedly funds SDL2? They basically pay Ryan Gordon's entire years salary, but he ISN'T an employee for them. Valve funds things, in the same way that NASA's frontiers program funds things: We give you the money, you keep the tech.
And you will never know all the things valve actually funds, because many of them aren't even owned by Valve. But they still contribute to them. Take, for example, dx2vk. They don't own it, that's FOSS. But valve doesn't just fund it, they directly contribute to it. you can look at the git commits, and if you actually look up the names behind the commits, a lot of valve employees spend their days directly contributing to fundamental technologies. As in, not just paying contractors to work on it, but their in-house staff directly coding the things which are to be used for free.
It stems from you, and others in this topic, not really knowing what a "gaming platform" actually is. The money Valve spends developing Steam, is very comparable to the money Sony and Microsoft and such spend on their consoles. Actually, a better example would be the kind of money valve spends on steam is comparable to the money microsoft spends on WINDOWS, and DIRECTX, and VISUAL STUDIO and so forth. You know, microsoft's actual largest money sinks, which cost more than their console development.
I want to tell a story about what development tools mean to small developers who can't really afford to spend literally years making their own tools. Buddy of mine, Matt Philips, dude behind tanglewood, was talking one day about how awesome Visual Studio is for his homebrew Dreamcast development:
And if you've never developed for a console like that, especially an old one, what he's showing is insanely cool. That's super slick GDB integration, looks all pretty seamless. But talking to him more privately, he went with Visual studio to do this, because he thought visual studio was the only IDE with such capabilities. Keep in mind, a professional copy of Visual Studio costs $500 for a stand alone license, per computer.
So here's MY setup:
Same slick feature set, same integrated IDE, only difference? This is being made using entirely free software, most of which has been propped up by valve funding.
You guys don't understand how much of valve's fingers are everywhere in game dev, and how much money they save me as a developer. They make some best in class tools, and release them for completely free. It's insane.
I actually know and talk to lots and lots of valve employees. For example, they used me to populate their steam controller profile listings before the controller released. To do so, they granted me a special ability on steam where every single item on the store was free to me. Instead of a "buy" button, I had an "add to account" button on steam for me. The reason they were doing this, is because they needed some people to go through all of steam's library and populate default steam controller configs before they launched so it wouldn't be barren on launch day. I talk to many members of the Steam Controller team -- whose work made it into VR mind you -- to this day.
I also went to Dev Days and know a lot of these people I'm talking about personally. Alan Yates used to be a regular on r/oculus and we spoke super often. I run a VR conference, I founded a VR developers group in Houston. I go to IGDA meetings as a card carrying member where I talk to other game devs, information gets around. Like, I know Ryan Gordon. On top of talking to him directly, he has also said in podcasts where he gets his funding. He's super open about valve literally propping up his salary. You can see valve's commits on dx2vk, it's public. The dude behind renderdoc talks about how his openGL debugging is literally based on VOGL from valve, and how valve is the entire reason his program took it to another step. In other words, I know because I'm involved in this world.
Your entire premise for this thread is wrong.
I was looking for that post! Thank you. Krejlooc putting in work like always! ^-^
Enormous R&D? Are you joking? Compared to what? They have total of ~500 employees. Includes HQ, G&A, sales and marketing, customer service and R&D. Let's say 200 of those are pure R&D. $150k salaries MAX which would bring annual R&D spend in the $30m range. I'll throw some more at it and say $50. Compared with figures they are earning, north of $5bn (reportedly they did $4.3bn in 2017). Can safely say it is less than ~1% of their revenue, which is a joke on the outlay of first of all an AAA game and secondly the outlays that Sony/Microsoft/Nintendo spends developing hardware.
Never seen that post and, damn, it's really fascinating to see how much Valve actually 'does'.
Honestly I think so much of this whole debate comes down to the fact that most people are fundamentally ignorant of what business and, to a lesser extent, software development actually entails. On the business side many simply assume that business is this simplistic thing that can be easily defined and quantified.
Epic is taking advantage of this ignorance and, honestly, a lot of the arguments for what Epic is doing are themselves shadowed in that ignorance as well. It's how you can get major games journalists calling Steam a "monopoly" when the definition of a monopoly, which I learned when I was 16, would never include Steam; or how you get the argument that people who assume marketing is 'just something other people do' saying that Steam should (and, more importantly, can) be actively marketing every 'good' indie game that gets on its store. Hell, just a few posts above we have someone claiming that employee salaries is literally the only financial cost that something like R&D entails; no liabilities, no overheads, no asset purchasing, no all the many other things that companies have to finance, just salaries.
well,"fair" is relevant though. The fact that it is the industry standard,it doesn't mean it's fair. Steam certainly are by no means guilty of the 30% cut,but if the market changes and a 15% cut is established,then the rest have to follow and it will only mean there was room for more profit for the devs all these years,but the status quo never changed,until a strong competitor joined in
Come back when we can tell you didn't just stop at the third line in his quoted post. He elaborates.
You don't need to be "qualified" to see that R&D spend <1% of revenues is ridiculously low.
Just gonna repeat myself here:
Everyone talking about Sony and Microsoft and Nintendo having R&D costs for their consoles.
A) Valve has enormous R&D costs. Most of their company is R&D. They pour more into R&D than most companies.
I don't need to read more, rest was irrelevant to this point. They don't pour more into R&D than most companies. I was rebutting this statement.
No one is forcing these publishers to manufacture hardware. They chose to do so themselves and now they happen to sell that hardware at a profit. Store cut has exactly zero relevancy here.
He literally explains that statement and backs it up but feel free to ignore it. Just expect me to feel free to think you're being ridiculous for doing so.
The cut being lowered will also lower features on the consumer side and then sales. An higher margin on Steam for developers will also increase the amount of game released on the platform and the issue would stay the same.
Because at the end of the day, this cut debate grew because more games were being released and the average revenue from being on Steam lowered (since more games means that consumer will buy even more different things). If the cut is being lowered to say 20% just because devs feels like 30% is too much, in a couple of years we'll see the same arguments and now devs would want a 10% cut and so on.
What's needs to be done is to find the equilibrium for a sustainable cut which allows devs to more easily break even while allowing Steam to invest in their platform and in maintenance. Because rest assured that a barebone client (especially if it's curated like EGS) will never reach the userbase Steam currently has.
Unfortunately we can't view Valve's financial statements as they're a private company, but just to make my point I'll point to Adobe's 2018 financial statements which put their own R&D expenses at a grand total of $11bn over a 9 month period, a cost that would require approximately 73,000 R&D employees all at your $150k estimate. Now the two companies are not exactly comparable in terms of market but I hope it shows that your notion that only hardware can create substantial R&D costs, and that employee numbers are somehow indicative of costs as a whole, is incredibly ignorant as to how substantial the costs of many businesses actually are. As Krejlooc says in the post you mostly ignored, Valve's R&D funds the kind of software that mega-firms such as Microsoft produce, and there is no way on this Earth that such R&D would take up a measly £30m in total over any singular year.
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You have no argument if you even refuse to acknowledge Krejlooc's very detailed post.
Aka you're just another poster out here arguing in bad faith. Par for the course in these threads.
It has all the relevance. You can't isolate hardware from software (that was the argument that people put forward). SonyMicrosoft look at the ecosystem as a whole, they invest in hardware so that they can get software fees.
The return equation over the lifetime is as follows:
Total Investments Required = R&D, manufacturing, sales/marketing to build installed base
Cumulative gross profit from hardware
Cumulative gross profit from software
If they believe cumulative gross profit from hardware and software combined will be bigger than total investments and get a certain return on that, they will do the project. Cumulative gross profit from hardware is not enough to justify the investments required.
I'm saying IF the the store cut was 0, they would not produce hardware (which was the argument of someone here, saying they make profit on the machines). It is a console cycle, they need to make back the investments before the console cycle ends. There is also huge risks involved if the console is not successful (might not even recoup initial investments). Look at Wii U as an example - Nintendo had negative profits during all years of Wii U. Steam will never have negative profits.
I'm not saying 30% is the right take rate for them (it should be lower, see my long post on p.7/p.8). But it is sure more justified than Steam (ridiculously low R&D relative to revenues)
You do realize Valve has developed and released hardware of their own right?
Or does that just not count for you because Valve?
First, learn to read financial statements. $11Bn? No, it says $1.4Bn. Second, Adobe has 21,000 employees. Third, ~$300m of that is relating to vesting of their stock options (because Adobe share price changed in value). Fourth, R&D costs for software is largely made up of employee costs.
Annualize that to $1.5Bn. 10,000 employees in R&D and you are back to $150k per head in development costs that I used in my assumptions.
I read it - but I wouldn't have to because the remainder was irrelevant to the argument.
Also R&D costs are only incurred by worker salaries for some reason. But for console manufacturers it magically isn't just that so 30% is something we owe them.
If the 30% cut is really a big deal, EGS will beat Steam and Steam will need to adapt or shut down. Plain and simple. Why should I care about any of this when there's more games being released than I could ever complete in ten lifetimes. The market will sort itself out.
Hell, if you really care you have options on PC to control this, and IMO there's not a single excuse not to if it bothers you. You can control exactly how much you want to give to a storefront if you shop elsewhere outside steam (or buy direct a lot of times), and a game's a game. Step outside your bubble and play lower budget stuff you wouldn't normally and you'd be surprised. Don't feel like you have to play some game and have it be locked up on a console or platform you're not a fan of, just play whatever you feel like that's there.
Hell, if you really care you have options on PC to control this, and IMO there's not a single excuse not to if it bothers you. You can control exactly how much you want to give to a storefront if you shop elsewhere outside steam (or buy direct a lot of times), and a game's a game. Step outside your bubble and play lower budget stuff you wouldn't normally and you'd be surprised. Don't feel like you have to play some game and have it be locked up on a console or platform you're not a fan of, just play whatever you feel like that's there.
I was about to post as much. Like, Valve actually make Steam Controllers, which means they must've spent a fuck-ton on the manufacturing side but apparently this cost nothing.