During Gamelab 2019 at a panel hosted by GamesIndustry.biz, Paradox Interactive's former CEO Fredrik Wester (now the Executive Chairman of the Board at Paradox Interactive) talked about the cut "platform holders" take from sales and they're not impressed.
The one this always comes back to is Valve's store Steam, which has a standard 30% cut they take from developers. Although, they did tweak this for higher earning games in December last year so for games that earn $10 million it's reduced to 25% and 20% at $50 million and that does include money from DLC, in-game transactions, Steam market fees and so on.
Wester said "I think the 70/30 revenue split is outrageous", noting that it was likely established in the '70s by Warner Bros when distributing physical media like boxed VHS tapes and so on saying "That was physical. It cost a lot of money". Wester went on to say "This doesn't cost anything." and thanked Epic Games for what they're doing with their much smaller 12% cut.
Claiming it "doesn't cost anything" isn't quite right though, considering all the services Steam actually provides including things like Cloud Saving, Achievements, Leaderboards, Valve Anti-Cheat (VAC), Inventory Services and quite a bit more. Valve also provide free keys to developers to sell on other stores like itch.io, Humble Store, Fanatical and many others (there's a huge amount of Steam key stores out there) of which Valve don't see a penny from. That's on top of various open source projects Valve fund too like DXVK, improving KWin and a ton more those are just two very recent examples.
Wester isn't the only one who has mentioned this of course, former Valve staffer Richard Geldreich said on Twitter back in April:
Steam was killing PC gaming. It was a 30% tax on an entire industry. It was unsustainable. You have no idea how profitable Steam was for Valve. It was a virtual printing press. It distorted the entire company. Epic is fixing this for all gamers.
The State of the Industry Survey done by GDC also noted how only 6% of developers asked thought Valve's 30% cut was justified.
What are your thoughts?
Hat tip to Mr. Doomguy in Discord.
Article taken from GamingOnLinux.com.
Unless recently changed, 30% is also what Google and Apple takes on transactions at their marketplaces. Apple takes an annual developer fee of $99 in addition, and they both have a one time fee of $25 per app.
Steam is very much the Google Play / Apple Store of PC gaming.
Last edited by Beamboom on 2 July 2019 at 1:30 pm UTC
gradyvuckovic Jul 2, 2019
- For their cut of the sale, Valve hosts your games indefinitely and provides countless services for free, such as free DDOS protection by running game network traffic through Valve's network, free cloud saves hosting, game streaming (Twitch style), free remote game streaming (Stadia style) which runs off Valve's network as well, plus provides features like Proton that gives Windows only games extra sales on Linux. How do you expect Valve to pay for all those things?
- 30% is the starting rate, it drops to 25% after $10m USD in sales, then 20% after $50m USD of sales. $10m USD in sales is easy to hit for a popular mainstream AAA game, for a game like Sekiro for example, that's only 166,666 copies sold, and $50m USD is only 833,333 copies. It's safe to say Sekiro has blown past both of those numbers. Sekiro: Shadows Die Twice, across all platforms (don't have Steam only figures handy) sold 2 million units in the first 10 days of release, at release it had 125,000 concurrent players on Steam, so it likely hit that 25% threshold in the first 24 hours and quickly hit the 20% threshold in the first week. It is highly likely several of Paradox's games have hit the 20% threshold, such as Cities: Skylines, which according to SteamSpy has sold between 5m and 10m copies.
- Paradox sell their games outside of Steam as well and have their own store, and because Steam allows for free key generation and offer an API for account linking and game activation, Paradox accounts can link with Steam accounts, so it doesn't matter where you buy your game (Steam or Paradox) your game will be activated on both accounts. Games sold from Paradox directly, pay no royalty to Valve/Steam at all, Valve effectively hosts those sold units of the game for free. For a game already at the 20% threshold, every sale outside of Steam just lowers the rate even further.
(Personally I've bought my Paradox games directly from Paradox in the past to support them since they strongly supported Linux. Then I've activated those games on Steam, to enjoy Steam's service and keep all my games in one place. I'm sure others have too, otherwise Paradox would not have bothered setting up their store.) - If we want to talk about 'outrageous fees', lets talk about how much Paradox charges for some of their games. The total cost of buying Cities: Skylines for example, is $30USD for the base game, plus $180USD for all the DLC, for a total price of $210USD for the whole game.
Quoting: ZapporParadox has some outrageous DLC pricing of their own though... :-)
Major expansions around $20 and minor story packs around $10 seem very reasonable to me. Keep in mind that they get less than half that after platform fees, currency conversion and taxes.
As I have the choice to not buy their game if they are not on Steam...
They can publish their game directly, they have a good user base...
Then they can work to maintain the shop, the servers, the cloud save, the workshop...
I just can't understand those people who buy a product but don't want to pay the price...
Just don't publish on Steam and make it yourself if you are not happy with the Steam price...
But they probably make more money on Steam that publishing their games themself....
Steam is invaluable because of the recognition and discoverability in addition to all the services they offer for that cut. It's worth well over 30% IMO, if they wouldn't publish on Steam they would need to compensate the cut with price of server hosting, harder cross-platform support and promotion, which are IMO much more expensive than 30% of the revenue.
Actually, do so anyway. You can tell your customers to buy there instead of on Steam to support you. And maybe some of your fans will buy copies on multiple sites.
First of all, many stores, including google and apple do charge 30%
Second, the most expensive part for Valve is surely the CDN network in lots of cities in many countries. That's not just "let's put a rootserver somewhere and mirror all the data", it costs tons of bandwidth (which is not free!), power and servers.
Given the amount of traffic steam generates as seen here https://store.steampowered.com/stats/content/ .. I do not even want to criticize them in any way, you double these values with their internal traffic by the way, since surely no server holds all the game's data on its disks.
Also consider what e.g. microsoft charge here, given the fact that you have to pay to play as a customer - I am talking XBox live - which is outrageous to me. It's like: I bought a game and paid the share to microsoft, to the devs, and have to pay again to microsoft just to play it online. Just imagine Valve charging people for going online with counter strike?!
The transaction fees are about 10-30 US cent for each transaction + a few %, depending on the used method, which leaves for every party pretty much nothing for indie games sold for < $1
Also Valve offers lots of support there for the customers, without even contacting the Devs first, they are doing a pretty good job as far as I am concerned whenever I contacted them.
30% is a lot, yes, but it is imho fair, given the total one gets from valve here, also the devs are spared the transaction fees, chargeback fees, the network providing downloads and patches, partially support, partially even marketing - since steam is a huge platform to make your game noticeable to players.
It's like a "pay 30% and forget about everything else"-fee, honestly I would go with that if I was a dev.
Other companies like Epic may charge less, but they sell more expensive titles and I do not see indie games there for a few bucks, which create little revenue for everyone.
- Desktop gaming might become more profitable if the cut is reduced, but consoles don't care about Epic.
- Players don't want low-cost platforms like Epic sh*t. And Linux gamers just want... games lol.
We need to find a way to help small game developpers (sorry I won't cry for these big AS with their lootboxes and all sorts of microtransactions) get a better cut. But if Epic (or anyone wanting to help with a marketplace) can't make a real "platform" and if Nintendo and
Sony don't see a real marketing "plus", nothing will change.
So : Gamers need to be vocal ! Maybe even say out loud : "we will by next gen consoles if the cut is better there and come to Epic Store if it's no longer a sad joke for it's customers"
Don't get me wrong here your games are worth every penny that's been asked for and then some ...
Yet going on a rant about how much that cut is outrageous and saying that Valves just siphons out the market is just you showing your greed here ...
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