10 ms·

I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission. I

by PakG1 8y ago

I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission. I mean, it's obviously possible because it's reality, but it's nonintuitive. I wonder if it will continue to be that way. For iOS, you don't really have a way to install apps outside the app store without jailbreaking, but you do for macOS, and I've seen a number of high-profile macOS titles decide they're not going to sell on the App Store anymore. That's gotta damage the moat somehow and thereby damage the App Store's ability to maintain its commission margin (eventually?). I wonder what it would take to get that to happen on the iOS side. So long as the iPhone remains a market leader, I guess I don't see anything changing.

methodover 8y ago
> I am surprised that ... are able to command as high a margin as they do for sales commission. Yep. Me too. I’ve long thought that Steam charges way too much considering the platform. There would seem to be tons of room for a competitor to undercut Steam. I’m excited about Discord’s new store. Revenue share is a killer for a business, especially as one as volatile as computer games. Any game needs to be 25% better than it otherwise would have been because of Steam’s revenue share. Does it really bring that much to the table? In 2018? Enough to justify their absolutely enormous cost?
- tylerl 8y ago
  There's a GDC talk about this (up on YouTube, can't remember the title) about the cost/difficulty going alone vs going through steam. The tldr is that valve apparently knows exactly how much it costs you to run this apparatus yourself, and the rev share reflects that reality. The numbers are apparently really close. The catch is that as you sell more units, the cost of the apparatus starts to diminish as a percentage of revenue, so running your own marketplace starrs to make sense when you get into the blockbuster territory. This pricing update apparently takes that fact into account, which means that when companies start running the numbers on their new game launch, the justification for building their own marketplace starts to go away.
  - eropple 8y ago
    I'm pretty sure it's not the talk you're thinking of, but Jeff Vogel (who has been mostly-successfully making indie games consistently since 1995) mentions it in this GDC vault talk: https://www.youtube.com/watch?v=stxVBJem3Rs https://www.youtube.com/watch?v=stxVBJem3Rs They were able to stop paying a third employee when they went to Steam. That's a lot of value to the business.
    - cheez 8y ago
      > They were able to stop paying a third employee when they went to Steam. That's a lot of value to the business. They were able to stop paying? Doesn't that mean they make less money?
      - Retric 8y ago
        Revenue is fairly useless it’s profit that you care about. Having less employees also means less effort managing them.
        cheez 8y ago
        Ah I see.
        eropple 8y ago
        They also made more money, even with Steam's cut. People are expensive. (Hence the whole "oncoming economic doom" thing.)
  - methodover 8y ago
    For sure, a service like Steam offers tons of value for a game developer. And I’m sure you’re right that the price of Steam matches the cost of an individual developer developing a launcher and hosting service. That’s all true. But I feel like the margins for Steam are so wide that it’s wide open for undercutting; for others to offer a cheaper, probably better product. I’d hope that game hosting quickly becomes commoditized due to lots of competitors vying for the cheapest possible price. That’s good for developers, and really good for gamers.
- kbwt 8y ago
  > Any game needs to be 25% better Actually, 42.86% better with the 30% cut, and 33.33% better with the 25% cut, and 25% better with the 20% cut.
  - methodover 8y ago
    I appreciate the precision!
- on_and_off 8y ago
  Steam used to be the best way to make your game visible .. but now haha, not really. Not that I am against Steam opening its doors .. the curation was very subjective which was problematic since it could mean life or death for a studio. Right now .. I guess it is still better than nothing if you have an unknown game to sell .. but I would not have my game only sold on steam.
- JusticeJuice 8y ago
  The money games can make on steam is infinitely higher than other platforms - what you're paying for is to get your game on the platform with the most users. A local game company I knew had a game on the humble bundle, their website, and a few other platform for months - they made a few thousand. Then it got greenlight on steam and they pulled 1m over 4 months. Steam is not merely a payment processing system, it's an audience.
wging 8y ago
For the iPhone monopoly, I think you should keep an eye on Apple Inc. v. Pepper.
user5994461 8y ago
>>> I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission. What makes you think that they have high margin? It's not like each game creators could run a worldwide distribution and payment operation with just a few percent more of revenues.
- michaelmrose 8y ago
  "It's not like each game creators could run a worldwide distribution and payment operation" You mean like a website? I think it's more fruitful to imagine multiple merchants competing to sell devs wares and lessor commissions as a result of competition.
  - user5994461 8y ago
    You realize that it takes a lot of work to make a website to accept payment from a hundred countries in dozens of currencies and handle customer support and chargeback and fight fraud? You can try to run your own website, to save 10% fees on a minuscule userbase, it simply doesn't cover the costs.
    - azhenley 8y ago
      Serious question: isn’t this what services like PayPal are for? Along with customer service services. Certainly not trivial, but it seems doable.
      - mschuster91 8y ago
        Paypal only handles payment. You still gotta do customer support, CDN infra (with games running at over 60GB each, that's not easy!), fraud detection, client dev and technical support for over three platforms (Win with 3 major versions, OS X with probably the same, and a myriad of Linux distros/kernel versions/GPU drivers), social networking/messaging stuff and a whole lot of small-ish stuff to get at half the functionality Steam offers.
      - 8y ago
55555 8y ago
Monopolies often charge around 30%. Google ads, App store, Play store, cell phone billing for subscription numbers, etc
- deleted 8y ago
  [deleted]
mtgx 8y ago
The reason Google and Apple are able to command such high commissions, it's because they are monopolies in their own markets. Most people who want iOS can only buy iPhones and use the app store. Most people who want to use Android, tend to buy Android phones and don't switch to iPhones. As such, Google and Apple's app store's don't really have strong competition against each other. Plus, most developers pretty much have to build apps for both anyway. Their respective markets are huge enough. Steam, on the other hand, although it had its own monopoly of sorts in terms of "central gaming repository", it's always had high competition from game developers releasing their games outside of Steam, and more recently GOG has become a direct competitor, and EA and a few other huge gaming companies started their own central repositories and keep their games off of Steam. This is what forced Valve to make this move now. Competition virtually always favors the consumer (the companies, too, in the long term, as they are forced to improve their products, but that's another issue and most companies are too short-sighted to see that by themselves), and we're seeing yet another example of that.
- notSupplied 8y ago
  This. Indie developers opt-in to Steam's 30% cut because they've done the math and found thay it's better than going at it alone. If iOS developers had a choice, many would find that Apple simoly does not do enough for them to justify their cut. The same thing is happening with Google, except you DO have the option to bypass Google play if you have enough muscle, which is exactly what Fortnite did. One argument I often hear is that "Becsuse they created the platform! They deserve to tax it!". This presumes that platform is doing software a great service. Funnily, just a generation ago, Mac was widely considered the losing horse because "all the software is on Windows." So the question of "who needs who more badly" was reversed.
dogma1138 8y ago
Brick and mortar stores pay about $45 for a $60 dollar game, and have additional bonuses for sales targets. Some larger publishers operate on a different scheme similar to the large DIY and big box stores in which they “rent” shelf space, pay for promotional services and share a smaller percentage of each sale revenue. A lot of times there are other restrictions such as game stores need approval for things like unofficial bundles e.g. if they want to bundle a specific game with a console outside of officially branded promotional bundles. I think the big problem with Steam at least as far as big publishers go isn’t that they charge 30% this is about the same as other channels but that the big publishers have their own distribution platforms atm. If you buy an EA, Activision or Ubisoft game on Steam atm you don’t download it from Steam you’ll download it from the Publisher via their own client. Granted they caused this problem to themselves by trying to compete with Steam but they still bare the majority of the cost these days.
- cptskippy 8y ago
  > If you buy an EA, Activision or Ubisoft game on Steam atm you don’t download it from Steam you’ll download it from the Publisher via their own client. All of my Ubisoft titles have been downloaded via Steam and not the UPlay client.
- e12e 8y ago
  > Brick and mortar stores pay about $45 for a $60 dollar game Really? I thought anything less than a 100% mark-up generally meant retail wasn't profitable? (ie 30 for a 60 dollar game)?
  - georgeecollins 8y ago
    Most dedicated game retailers (GameStop) make their profit from selling used games. There is a higher markup for that.
    - dogma1138 8y ago
      Not sure why this is downvoted this is correct, you get store credit and they get another resell at likely a higher markup than the original. This is why both publishers and console makers have constantly tried to get into this market, which have already been somewhat killed on the PC the moment CD keys were introduced.
pier25 8y ago
It's not surprising. Users want convenience, specially on mobile. Even on Android very few users would buy outside the Play Store. On desktop it's different, at least for a portion of users. I prefer buying outside the Mac App Store, but I know users that were first introduced to the ecosystem in iOS and had never considered you can but software outside the MAS.
mbesto 8y ago
> are able to command as high a margin as they do for sales commission. People are surprised that the entity that controls distribution and maintains the relationship with the customer can command whatever premium they want? I don't know how to say this any in any non-snarky way, but this is business 101. Control distribution = control the market.
- TheForumTroll 8y ago
  But Valve doesn't charge premium prices..
jrockway 8y ago
Collecting money is an important part of a business, but also not trivial. It therefore makes sense that people would outsource this. If you get big enough, you probably don't want a middleman in the way; this is why companies like Blizzard have their own store/launcher app. For everyone else, whatever they take is cheaper than having their own army of software engineers, lawyers, billing phone support, etc. In a world with Steam, as a game company, you don't have to worry about collecting money (and the associated customer support) and distribution. You can focus on your game. That is valuable, which is why people pay for it. I work at an ISP. Billing is a constant influx of "interesting" requests that I would love to outsource so our software engineering team could focus on stuff specific to our business. But we never found a service that could do it better than our homegrown system. Every week there are several one-off issues like "I overpaid because I didn't see the service credit" or "I would like to pay for the next 3 months in advance" or "my accounts payable department sent the wrong check, can you shred it and we'll pay with credit card". These things have to be handled manually. Not to mention people calling to change their payment method because they don't remember their password to the website, or just want to chat. All that is a drain on actually running the business, but unavoidable. You can't just say "nah we won't shred your check", so someone has to go find it and deal with it. While they're doing that, they're not making our product more innovative or reliable. They're running a check through a shredder. Anyone could do that, but unless you have 8 hours of check shredding to do a day, you are spending CFO salary on the task instead of check shredder salary on it. Therein lies the problem. If this could all be outsourced, I'd pay a lot of money for it. So would any business. Billing is something you have to do if you want to collect money, but it's a time sink. Game developers don't have to worry about this, and generally seem OK with that. I don't blame them. They are lucky Steam exists.
- mindslight 8y ago
  I don't disagree with your gist, but does Steam actually manually solve the examples you gave? It seems like part of the value add of outsourcing comes from the negativity of a policy not directly reflecting on your own business. If you refuse to hunt down a check (or even stop accepting checks altogether), a customer might switch to another ISP. But if your third party mechanically refuses, it's "nobody's fault". Even if the customer expends the effort to escalate and they're a big enough customer for you to listen, you can still salvage it as a positive CS experience.
sorenjan 8y ago
Epic haven't put Fortnite on Play store, they distribute it themselves instead. It's probably easier on Android than iOS. 30% is ok for small to medium developers to not have to deal with payment and distribution, but large companies like Epic, Blizzard, EA, and so on doesn't need that. 30% is way too much, Google and Apple doesn't add 30% of the value to a AAA game.
- muro 8y ago
  s/easier/possible/ on Android
TangoTrotFox 8y ago
Then you have the privilege of having not been in independent game development before Steam then! Steam takes about 30% and that comes with little to no stipulations. You can go put your product on other platforms, you can generate steam keys and then sell those keys off platform (and take 100% of the revenue), and from the very first sale you get ~70% of the revenue. In the age before Steam you had to approach a publisher to get your product out there. And in those days getting a 70% deal would have been amazing. Except back then 70% meant something rather different. The publisher was getting 70% and you received 30% in "royalties" (and generally substantially less than 30%). Oh and you received $0 in "royalties" until the publisher cleared 100% of their costs. And finally of course you had to relinquish nearly every right to your IP as well. I wouldn't underestimate the value that Steam adds. They take care of all financial related issues including trust, facilitate 'advertising', provide a captive audience upwards of 125 million, take care of data hosting (which can be a very significant issue in large-size products), and more. I'm sure they could get by with a smaller margin, but at the same time I think 30% is a pretty reasonable rate for the value they add.
- vatueil 8y ago
  > you can generate steam keys and then sell those keys off platform (and take 100% of the revenue) Which is significant, and missing from most of the discussions about Steam's revenue share. Game creators can generate as many keys to activate their game on Steam as they want at no cost, and sell them however they want. If you buy a game from Humble, Amazon, or any other website and receive a Steam game key, Valve doesn't receive any money from that purchase.
ineedasername 8y ago
Think of it like having your food brand be in the supermarket. Sure you can open your own stand alone stores but then you have to build and manage that infrastructure yourself, and your audience is a very small fraction of the traffic the supermarket gets. Practically no one sees your product without even more overhead in advertising and marketing.
akavel 8y ago
"So You Want To Compete With Steam": https://www.fortressofdoors.com/so-you-want-to-compete-with-steam/ https://www.fortressofdoors.com/so-you-want-to-compete-with-...
AmVess 8y ago
25% is a steal. They handle all the financial transactions and host and distribute the game files on the most popular client on the planet. They also handle the security. Handling your own billing is expensive and time consuming. Setting up your own distribution and hosting is also expensive and time consuming, and then there's the bandwidth cost. All this adds up rather quickly. Having someone else do the business end of selling games, and only for 25% is a bargain.
- MattRix 8y ago
  It's not a steal at all. Those things (especially stuff like hosting and bandwidth) cost a small fraction of the price. You can argue that it's worth it because of how popular Steam is, but it's getting harder and harder for smaller devs to even get seen by that large audience in the first place.
  - kkarakk 8y ago
    As a layman gamer who has only used steam as a consumer - This comment ignores the ground realities of Steam having a seemingly endless amount of trash. i logged on and wanted to play a game with wallrunning and a cyberpunk aesthetic and i only found ONE that was worth playing out of the seemingly thousands of options. Game developers on steam seem to release what they want to not what the audience wants in the vast majority of cases. Couple that with amateurish quality and it's actually easy to be seen if you choose to cater to the non oversaturated categories imo.
    - MattRix 8y ago
      > it's actually easy to be seen if you choose to cater to the non oversaturated categories imo. You're wrong, but sure.
- ehsankia 8y ago
  Steam provides many other things too, past CDN and billing. They provide a game hub, steamworks (match making, voice communication, friends list), workshop, cloud saves, advertising for your game, and much more too.
wdr1 8y ago
> I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission. I mean, it's obviously possible because it's reality, but it's nonintuitive. Why?
c3534l 8y ago
I tried to look up what Steam's profit margins are, but I can't find any good information on it, just a lot of confused people pretending as if they're an authority on Steam's finances, but who don't even know the difference between revenues, profits, and commissions. Does Steam have a high margin? I don't know. It could cost more than you think to run Steam. Or maybe it costs a lot less - I really don't know.

by PakG1 8y ago

methodover 8y ago

> I am surprised that ... are able to command as high a margin as they do for sales commission. Yep. Me too. I’ve long thought that Steam charges way too much considering the platform. There would seem to be tons of room for a competitor to undercut Steam. I’m excited about Discord’s new store. Revenue share is a killer for a business, especially as one as volatile as computer games. Any game needs to be 25% better than it otherwise would have been because of Steam’s revenue share. Does it really bring that much to the table? In 2018? Enough to justify their absolutely enormous cost?

tylerl 8y ago
There's a GDC talk about this (up on YouTube, can't remember the title) about the cost/difficulty going alone vs going through steam. The tldr is that valve apparently knows exactly how much it costs you to run this apparatus yourself, and the rev share reflects that reality. The numbers are apparently really close. The catch is that as you sell more units, the cost of the apparatus starts to diminish as a percentage of revenue, so running your own marketplace starrs to make sense when you get into the blockbuster territory. This pricing update apparently takes that fact into account, which means that when companies start running the numbers on their new game launch, the justification for building their own marketplace starts to go away.
- eropple 8y ago
  I'm pretty sure it's not the talk you're thinking of, but Jeff Vogel (who has been mostly-successfully making indie games consistently since 1995) mentions it in this GDC vault talk: https://www.youtube.com/watch?v=stxVBJem3Rs https://www.youtube.com/watch?v=stxVBJem3Rs They were able to stop paying a third employee when they went to Steam. That's a lot of value to the business.
  - cheez 8y ago
    > They were able to stop paying a third employee when they went to Steam. That's a lot of value to the business. They were able to stop paying? Doesn't that mean they make less money?
    - Retric 8y ago
      Revenue is fairly useless it’s profit that you care about. Having less employees also means less effort managing them.
      - cheez 8y ago
        Ah I see.
        eropple 8y ago
        They also made more money, even with Steam's cut. People are expensive. (Hence the whole "oncoming economic doom" thing.)
- methodover 8y ago
  For sure, a service like Steam offers tons of value for a game developer. And I’m sure you’re right that the price of Steam matches the cost of an individual developer developing a launcher and hosting service. That’s all true. But I feel like the margins for Steam are so wide that it’s wide open for undercutting; for others to offer a cheaper, probably better product. I’d hope that game hosting quickly becomes commoditized due to lots of competitors vying for the cheapest possible price. That’s good for developers, and really good for gamers.
kbwt 8y ago
> Any game needs to be 25% better Actually, 42.86% better with the 30% cut, and 33.33% better with the 25% cut, and 25% better with the 20% cut.
- methodover 8y ago
  I appreciate the precision!
on_and_off 8y ago
Steam used to be the best way to make your game visible .. but now haha, not really. Not that I am against Steam opening its doors .. the curation was very subjective which was problematic since it could mean life or death for a studio. Right now .. I guess it is still better than nothing if you have an unknown game to sell .. but I would not have my game only sold on steam.
JusticeJuice 8y ago
The money games can make on steam is infinitely higher than other platforms - what you're paying for is to get your game on the platform with the most users. A local game company I knew had a game on the humble bundle, their website, and a few other platform for months - they made a few thousand. Then it got greenlight on steam and they pulled 1m over 4 months. Steam is not merely a payment processing system, it's an audience.

wging 8y ago

For the iPhone monopoly, I think you should keep an eye on Apple Inc. v. Pepper.

user5994461 8y ago

>>> I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission. What makes you think that they have high margin? It's not like each game creators could run a worldwide distribution and payment operation with just a few percent more of revenues.

michaelmrose 8y ago
"It's not like each game creators could run a worldwide distribution and payment operation" You mean like a website? I think it's more fruitful to imagine multiple merchants competing to sell devs wares and lessor commissions as a result of competition.
- user5994461 8y ago
  You realize that it takes a lot of work to make a website to accept payment from a hundred countries in dozens of currencies and handle customer support and chargeback and fight fraud? You can try to run your own website, to save 10% fees on a minuscule userbase, it simply doesn't cover the costs.
  - azhenley 8y ago
    Serious question: isn’t this what services like PayPal are for? Along with customer service services. Certainly not trivial, but it seems doable.
    - mschuster91 8y ago
      Paypal only handles payment. You still gotta do customer support, CDN infra (with games running at over 60GB each, that's not easy!), fraud detection, client dev and technical support for over three platforms (Win with 3 major versions, OS X with probably the same, and a myriad of Linux distros/kernel versions/GPU drivers), social networking/messaging stuff and a whole lot of small-ish stuff to get at half the functionality Steam offers.
    - 8y ago

55555 8y ago

Monopolies often charge around 30%. Google ads, App store, Play store, cell phone billing for subscription numbers, etc

deleted 8y ago
[deleted]

mtgx 8y ago

The reason Google and Apple are able to command such high commissions, it's because they are monopolies in their own markets. Most people who want iOS can only buy iPhones and use the app store. Most people who want to use Android, tend to buy Android phones and don't switch to iPhones. As such, Google and Apple's app store's don't really have strong competition against each other. Plus, most developers pretty much have to build apps for both anyway. Their respective markets are huge enough. Steam, on the other hand, although it had its own monopoly of sorts in terms of "central gaming repository", it's always had high competition from game developers releasing their games outside of Steam, and more recently GOG has become a direct competitor, and EA and a few other huge gaming companies started their own central repositories and keep their games off of Steam. This is what forced Valve to make this move now. Competition virtually always favors the consumer (the companies, too, in the long term, as they are forced to improve their products, but that's another issue and most companies are too short-sighted to see that by themselves), and we're seeing yet another example of that.

notSupplied 8y ago
This. Indie developers opt-in to Steam's 30% cut because they've done the math and found thay it's better than going at it alone. If iOS developers had a choice, many would find that Apple simoly does not do enough for them to justify their cut. The same thing is happening with Google, except you DO have the option to bypass Google play if you have enough muscle, which is exactly what Fortnite did. One argument I often hear is that "Becsuse they created the platform! They deserve to tax it!". This presumes that platform is doing software a great service. Funnily, just a generation ago, Mac was widely considered the losing horse because "all the software is on Windows." So the question of "who needs who more badly" was reversed.

dogma1138 8y ago

Brick and mortar stores pay about $45 for a $60 dollar game, and have additional bonuses for sales targets. Some larger publishers operate on a different scheme similar to the large DIY and big box stores in which they “rent” shelf space, pay for promotional services and share a smaller percentage of each sale revenue. A lot of times there are other restrictions such as game stores need approval for things like unofficial bundles e.g. if they want to bundle a specific game with a console outside of officially branded promotional bundles. I think the big problem with Steam at least as far as big publishers go isn’t that they charge 30% this is about the same as other channels but that the big publishers have their own distribution platforms atm. If you buy an EA, Activision or Ubisoft game on Steam atm you don’t download it from Steam you’ll download it from the Publisher via their own client. Granted they caused this problem to themselves by trying to compete with Steam but they still bare the majority of the cost these days.

cptskippy 8y ago
> If you buy an EA, Activision or Ubisoft game on Steam atm you don’t download it from Steam you’ll download it from the Publisher via their own client. All of my Ubisoft titles have been downloaded via Steam and not the UPlay client.
e12e 8y ago
> Brick and mortar stores pay about $45 for a $60 dollar game Really? I thought anything less than a 100% mark-up generally meant retail wasn't profitable? (ie 30 for a 60 dollar game)?
- georgeecollins 8y ago
  Most dedicated game retailers (GameStop) make their profit from selling used games. There is a higher markup for that.
  - dogma1138 8y ago
    Not sure why this is downvoted this is correct, you get store credit and they get another resell at likely a higher markup than the original. This is why both publishers and console makers have constantly tried to get into this market, which have already been somewhat killed on the PC the moment CD keys were introduced.

pier25 8y ago

It's not surprising. Users want convenience, specially on mobile. Even on Android very few users would buy outside the Play Store. On desktop it's different, at least for a portion of users. I prefer buying outside the Mac App Store, but I know users that were first introduced to the ecosystem in iOS and had never considered you can but software outside the MAS.

mbesto 8y ago

> are able to command as high a margin as they do for sales commission. People are surprised that the entity that controls distribution and maintains the relationship with the customer can command whatever premium they want? I don't know how to say this any in any non-snarky way, but this is business 101. Control distribution = control the market.

TheForumTroll 8y ago
But Valve doesn't charge premium prices..

jrockway 8y ago

Collecting money is an important part of a business, but also not trivial. It therefore makes sense that people would outsource this. If you get big enough, you probably don't want a middleman in the way; this is why companies like Blizzard have their own store/launcher app. For everyone else, whatever they take is cheaper than having their own army of software engineers, lawyers, billing phone support, etc. In a world with Steam, as a game company, you don't have to worry about collecting money (and the associated customer support) and distribution. You can focus on your game. That is valuable, which is why people pay for it. I work at an ISP. Billing is a constant influx of "interesting" requests that I would love to outsource so our software engineering team could focus on stuff specific to our business. But we never found a service that could do it better than our homegrown system. Every week there are several one-off issues like "I overpaid because I didn't see the service credit" or "I would like to pay for the next 3 months in advance" or "my accounts payable department sent the wrong check, can you shred it and we'll pay with credit card". These things have to be handled manually. Not to mention people calling to change their payment method because they don't remember their password to the website, or just want to chat. All that is a drain on actually running the business, but unavoidable. You can't just say "nah we won't shred your check", so someone has to go find it and deal with it. While they're doing that, they're not making our product more innovative or reliable. They're running a check through a shredder. Anyone could do that, but unless you have 8 hours of check shredding to do a day, you are spending CFO salary on the task instead of check shredder salary on it. Therein lies the problem. If this could all be outsourced, I'd pay a lot of money for it. So would any business. Billing is something you have to do if you want to collect money, but it's a time sink. Game developers don't have to worry about this, and generally seem OK with that. I don't blame them. They are lucky Steam exists.

mindslight 8y ago
I don't disagree with your gist, but does Steam actually manually solve the examples you gave? It seems like part of the value add of outsourcing comes from the negativity of a policy not directly reflecting on your own business. If you refuse to hunt down a check (or even stop accepting checks altogether), a customer might switch to another ISP. But if your third party mechanically refuses, it's "nobody's fault". Even if the customer expends the effort to escalate and they're a big enough customer for you to listen, you can still salvage it as a positive CS experience.

sorenjan 8y ago

Epic haven't put Fortnite on Play store, they distribute it themselves instead. It's probably easier on Android than iOS. 30% is ok for small to medium developers to not have to deal with payment and distribution, but large companies like Epic, Blizzard, EA, and so on doesn't need that. 30% is way too much, Google and Apple doesn't add 30% of the value to a AAA game.

muro 8y ago
s/easier/possible/ on Android

TangoTrotFox 8y ago

Then you have the privilege of having not been in independent game development before Steam then! Steam takes about 30% and that comes with little to no stipulations. You can go put your product on other platforms, you can generate steam keys and then sell those keys off platform (and take 100% of the revenue), and from the very first sale you get ~70% of the revenue. In the age before Steam you had to approach a publisher to get your product out there. And in those days getting a 70% deal would have been amazing. Except back then 70% meant something rather different. The publisher was getting 70% and you received 30% in "royalties" (and generally substantially less than 30%). Oh and you received $0 in "royalties" until the publisher cleared 100% of their costs. And finally of course you had to relinquish nearly every right to your IP as well. I wouldn't underestimate the value that Steam adds. They take care of all financial related issues including trust, facilitate 'advertising', provide a captive audience upwards of 125 million, take care of data hosting (which can be a very significant issue in large-size products), and more. I'm sure they could get by with a smaller margin, but at the same time I think 30% is a pretty reasonable rate for the value they add.

vatueil 8y ago
> you can generate steam keys and then sell those keys off platform (and take 100% of the revenue) Which is significant, and missing from most of the discussions about Steam's revenue share. Game creators can generate as many keys to activate their game on Steam as they want at no cost, and sell them however they want. If you buy a game from Humble, Amazon, or any other website and receive a Steam game key, Valve doesn't receive any money from that purchase.

ineedasername 8y ago

Think of it like having your food brand be in the supermarket. Sure you can open your own stand alone stores but then you have to build and manage that infrastructure yourself, and your audience is a very small fraction of the traffic the supermarket gets. Practically no one sees your product without even more overhead in advertising and marketing.

akavel 8y ago

"So You Want To Compete With Steam": https://www.fortressofdoors.com/so-you-want-to-compete-with-steam/ https://www.fortressofdoors.com/so-you-want-to-compete-with-...

AmVess 8y ago

25% is a steal. They handle all the financial transactions and host and distribute the game files on the most popular client on the planet. They also handle the security. Handling your own billing is expensive and time consuming. Setting up your own distribution and hosting is also expensive and time consuming, and then there's the bandwidth cost. All this adds up rather quickly. Having someone else do the business end of selling games, and only for 25% is a bargain.

MattRix 8y ago
It's not a steal at all. Those things (especially stuff like hosting and bandwidth) cost a small fraction of the price. You can argue that it's worth it because of how popular Steam is, but it's getting harder and harder for smaller devs to even get seen by that large audience in the first place.
- kkarakk 8y ago
  As a layman gamer who has only used steam as a consumer - This comment ignores the ground realities of Steam having a seemingly endless amount of trash. i logged on and wanted to play a game with wallrunning and a cyberpunk aesthetic and i only found ONE that was worth playing out of the seemingly thousands of options. Game developers on steam seem to release what they want to not what the audience wants in the vast majority of cases. Couple that with amateurish quality and it's actually easy to be seen if you choose to cater to the non oversaturated categories imo.
  - MattRix 8y ago
    > it's actually easy to be seen if you choose to cater to the non oversaturated categories imo. You're wrong, but sure.
ehsankia 8y ago
Steam provides many other things too, past CDN and billing. They provide a game hub, steamworks (match making, voice communication, friends list), workshop, cloud saves, advertising for your game, and much more too.

wdr1 8y ago

> I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission. I mean, it's obviously possible because it's reality, but it's nonintuitive. Why?

c3534l 8y ago

I tried to look up what Steam's profit margins are, but I can't find any good information on it, just a lot of confused people pretending as if they're an authority on Steam's finances, but who don't even know the difference between revenues, profits, and commissions. Does Steam have a high margin? I don't know. It could cost more than you think to run Steam. Or maybe it costs a lot less - I really don't know.