The former Paradox Interactive CEO thinks "platform holders" 30% cut is "outrageous"

Valve was investing heavily in PC platform games and distribution when everybody else were busy declaring the PC a dead platform and consoles were supposed to the be future.
Now look where we are, Steam is one of, if not the biggest gaming platform in the world. If anything Valve saved PC gaming, not killed it.
Fredrik Wester needs perspective.

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.

That's per publisher/developer, not per game.

Paradox 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.

lol, when you have maximum 5 dlc for the game. But for paradox you got like 40 DLC and 10 expansions (in the case of CK2 wich is the game I play mostly). The base game lacks a lot of features, so it's not like the experience is really enjoyable without dlc.

What are your thoughts?

That Wester is either an idiot or a hypocrite. I'd go for the latter.

Counter argument for you Paradox:

• 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.

But looking at it not from an indie developer's perspective, and a single player game, much of what Valve offer simply isn't used, isn't relevent. And some of the services Valve provide are more to try lock developers into Steam than anything else.
Then "Proton" isn't expensive for Valve. Wine is free. DXVK was not started by Valve, but they do invest in it by paying a developer. Except that's not going justify 30% cut of every game. "Proton" and other investments are only Valve trying to make sure they're not beholden to Microsoft and Windows - they're not a service provided to publishers.
As for network infrastructure, forums, etc, well...I don't think it's worth 30% of every game either. Yes, they have to charge something. But 30%? That's probably a bit much for an infrastructure that is in place, has been paid for, and is mostly just maintenance. Moderation, curating, etc, are even pawned off to the community so Valve doesn't even do anything there.
Plus the more expensive and larger games are going to use more of their infrastructure than some small indie. Yet by earning a bit more, Valve will take less of a cut. Hmm.

I'm not saying Valve are evil. I might have given that impression, so allow me to say that they are investing in areas that are useful to GNU/Linux users. That doesn't mean they don't need a bit of competition though. That 30% cut is from lack of competition more than anything else, and I think developers are starting to suffer slightly from it. If only the epic store could adjust to being _healthy_ competition, then it might be alright.

Keeping such a network infrastructure that is needed for this is way more than just maintenance, as the number of users and published games keep increasing you have to constantly increase the bandwidth, number of storage units and so on. And that shit costs a lot of money, now I'm not saying that it costs 30% of all sales on Valve to do this (let's be honest here, Valve is making lots of money here) but it's a major cost item on Valves book keepings.

And this is the major point where Epic currently have the upper hand because they already need that enormous network to feed Fortnite so currently they give away that for free for their game publishers. Once Fortnite decreases in popularity they will have to stop subsidizing that network and then it will be interesting to see what happens to the cut that Epic takes.

What are your thoughts?

That Wester is either an idiot or a hypocrite. I'd go for the latter.

I would more say that he is speaking from the viewpoint of his own company, it's of course in Paradox best interest to keep their own prices as high as possible while having to pay as little as possible to others like Valve. That is hardly being a hypocrite.

I'm with Valve on this. They offer alot for us consumers. To name one, on consoles you have to pay for the online service. For most big companies I don't really care. They detract more from gaming than add to it. These companies that I have in mind are ones that are likely to abuse purpose of Steam Play by not using developing their games natively for Linux if a time comes when we have market share. They are the ones that want better condition for themselves, more money, but then don't give a damn about linux gamers even when situation allows them to do so with little cost (e.g Doom and Bethesda/Zenimax). They are the ones that divide us on hardware and software platforms through exclusivity deals instead of uniting us. They will claim to set a precedent with the 12-88 split, that a new age of better prices for PC gamers will come. As "developers" will pass on the savings.

They are the developers who cheer Google on when they announce their Stadia announcement. And as they cheer them on, many of them probably don't think "This great. I can now also justify a Linux port because Stadia and Linux are in same pool". Excuse me but I don't care that much about devs except those who I know are worthy of praise. Why should I care about fairness in relation to the split when they don't care about me as a gamer? That said, I do think Valve's 30% for indies is not fair. For the bigger companies, I think it's justified.


Last edited by Linuxwarper on 2 Jul 2019 at 12:52 pm UTC

Steam is a Global shipping company to the Epic Store's one-man bicycle delivery service. Comparing them solely on the basis of their cut of the action is the act of a moron or a shill. Westing was CEO of Paradox, so he's not a moron ...

As for the whole "'70s Warner Brothers 30%" song and dance---even if it is true---so. the. fuck. what. That 30% is figured into the asking price by the game dev/publisher up front. It's added onto and not taken from the maker's net (not gross) profit, before the game ever gets to Steam.

Speaking of which, are games being sold on Epic's store for 18% cheaper? If they're not, then that's more money for the makers, nothing good for the customer. Win/lose in that relationship.

How about for the employees at the game companies like Paradox? Are the board members, share-holders, and executives using that additional 18% profit to hire more employees, or give raises to current employees or otherwise improve working conditions? I don't know, but from what I've seen of corporations, not unless you put a gun to their collective head.

Saying that providing the services Steam does "doesn't cost anything" is only slightly less stupid and fallacious than saying Steam was taking "a 30% tax" on the gaming industry.

I'd be more interested to hear the likes of Fredrik Wester to be critical of Epic's crap store. He's just taking cheap shots at Steam, and he's doing it from the dirty sheets of Tim Sweenye's bed.

Everything about the Epic store continues to smack of lies and greed.


Last edited by Nanobang on 2 Jul 2019 at 12:53 pm UTC

Speaking of which, are games being sold on Epic's store for 18% cheaper? If they're not, then that's more money for the makers, nothing good for the customer. Win/lose in that relationship.

How about for the employees at the game companies like Paradox? Are the board members, share-holders, and executives using that additional 18% profit to hire more employees, or give raises to current employees or otherwise improve working conditions? I don't know, but from what I've seen of corporations, not unless you put a gun to their collective head.

I don't believe any of that. The cheaper games seems to be just a phase for them to be able to market the store. "Look gamers get cheaper games". Then when the dust settles and Epic gets foot hold, the prices will go back to the same as usual. Same for developers who work on games, most likely money will not be spread fairly to devs or used to hire more.

EDIT: There are or was games on Epic being sold for less than $60. I think Metro Exodus and World War Z was two of them. But as I said it seems to be just a act to market the store as opposed to a new price rule. Epic has not made any rule, like GOG has with DRM, where they say games must cost less than $60. It's all up to publishers and those who hold the right.


Last edited by Linuxwarper on 2 Jul 2019 at 12:57 pm UTC

Valve was investing heavily in PC platform games and distribution when everybody else were busy declaring the PC a dead platform and consoles were supposed to the be future.
Now look where we are, Steam is one of, if not the biggest gaming platform in the world. If anything Valve saved PC gaming, not killed it.
Fredrik Wester needs perspective.

That's aktually a very good point indeed.

The question here would be on how much does PS4 Store, Xbox Store, Nintendo, etc. charges for publishing and ask if they consider them "outrageous" too.

Steam is probably the most featured-rich store application in the market, so it's quite obvious why it has most the PC market share. To say that the 30% is outrageous they should take in the equation how much would cost to them the marketing campaign in order to reach a similar market share without using their platform.

By the way, many mentioned the taxes but bare in mind that many times those taxes aren't in the price (out of the income tax, of course), so it's a number that is payed by the buyer and not by the seller. For example, in my country we have a VAT of 21% but it is the credit card of my country the entity that takes care of retain and pay the taxes (that in the end I pay as an extra fee in my credit card bill).


Last edited by x_wing on 2 Jul 2019 at 1:01 pm UTC

I cannot estimate the respective costs of Valve and Epic.
But when a publisher accuses a shop of greed, opportunism is certainly at play.
If a profit oriented shop accuses another of greed, it's an underbidding competition, and it's also hypocritical in this case, because Epic, unlike Valve, also markets player data.

But -for what it's worth- i recall posts i had read from BOOK publishers who explained why their ebooks were actually not cheaper than the paper ones. It was because the infrastructure to distribute them was more expensive. Networks of computer did cost them more than printing presses, paper and shipping. The computer people paid to maintain such infrastructure was more expensive than librarians.

That's true, if you use DRM. They have to pay DRM license, hosting at adobe and whatever kind of crap they pull to keep it locked down. It's false if your books are DRM free.
So I always buy DRM free. And they are indeed cheaper than physical books.

To be fair to Epic, they have little power over consoles. On Mac, Windows and Android they can release their store but Xbox and PS4 they can't. So they have to either take out their games from consoles, to sending a message (losing alot revenue), or let them stay there for time being til split changes on PC and then they can pressure consoles with that change. One of the things on their roadmap is a Android store, so they seem to have intentions to go after Google too if they are successful on Windows.
So it's reasonable what they are doing. I just question how sincere they are. Epic seems like a snake in grass trying to attack a wolf which is fishing for fish. I mean clearly Valve's fur isn't all white, but they certainly are good for PC gaming.


Last edited by Linuxwarper on 2 Jul 2019 at 1:17 pm UTC

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.

That's per publisher/developer, not per game.

For real?!

Holy crap I've been quoting that wrong then, I thought that was per game?!

If that's per publisher, then practically all of the major publishers are already at 20%?! What on earth is Paradox even complaining about?

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.

That's per publisher/developer, not per game.

For real?!

Holy crap I've been quoting that wrong then, I thought that was per game?!

If that's per publisher, then practically all of the major publishers are already at 20%?! What on earth is Paradox even complaining about?

Wrong. It is per-game, not per developer.

From Valve's post on it:

Starting from October 1, 2018 (i.e. revenues prior to that date are not included), when a game makes over $10 million on Steam

*emphasis mine

The guy is misinformed. Valve introduced the 30% cut by its own. And at that time it was super convenient because physical distribution cut was around 50%. Ah the golden ages before steam: when nobody cared that the developers were making less money than the distributor and publishers made less money without becoming outraged in the process. Will we ever see them coming again?

Sarcasm aside, I used to believe that someone could actually do better than Valve and challenge them if they tried. But when an intelligent and competent man with an endless amount of money like Tim Sweeney says that it's impossible to do better and the only way for he and his big publishers buddies to get higher margins is to remove all steam features, all steam services while keeping the consumer prices unaltered (or even increased a little because, why not? Monopoly FTW)... well I believe him. I'm now genuinely convinced that 30% is the best price possible for that kind of service.


Last edited by Mal on 4 Jul 2019 at 4:00 pm UTC

From Valve's post on it:

Starting from October 1, 2018 (i.e. revenues prior to that date are not included), when a game makes over $10 million on Steam

*emphasis mine

Not unimportant here: ... including DLCs.

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.

That's per publisher/developer, not per game.

For real?!

Holy crap I've been quoting that wrong then, I thought that was per game?!

If that's per publisher, then practically all of the major publishers are already at 20%?! What on earth is Paradox even complaining about?

Wrong. It is per-game, not per developer.

From Valve's post on it:

Starting from October 1, 2018 (i.e. revenues prior to that date are not included), when a game makes over $10 million on Steam

*emphasis mine

Ahh thankyou, I was questioning myself there, whew.

From Valve's post on it:

Starting from October 1, 2018 (i.e. revenues prior to that date are not included), when a game makes over $10 million on Steam

*emphasis mine

Not unimportant here: ... including DLCs.

Indeed it does, I've added that to the article to be clearer :)