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A few exclusives is more than worth breaking Valve's near-monopoly and 30% toll on game revenue. That 30% is coming straight out of gamers' pockets and HN usua

A few exclusives is more than worth breaking Valve's near-monopoly and 30% toll on game revenue. That 30% is coming straight out of gamers' pockets and HN usually hates middlemen; it's baffling to see so many people in support of Valve.

Jach 7y ago
30% became the industry standard not just for video games for a reason. It costs money to seamlessly do business across n countries, and it's not like Valve does nothing else to try and earn that fee either. Epic's play is to try and see if being a better looking deal for game devs will translate to being better for gamers or other groups (like linux users, open source advocates) too. We'll see. Valve has already demonstrated their goodwill towards all the groups multiple times, even if it's motivated by keeping their platform dominance.
- ThrowawayR2 7y ago
  > 30% became the industry standard not just for video games for a reason. Yeah, it became the industry standard because it rakes in mind-blowingly huge revenue for the app store owner, e.g. https://www.cultofmac.com/601492/app-store-google-play-revenue-2018/ https://www.cultofmac.com/601492/app-store-google-play-reven.... From the article: "It’s no wonder Services — which includes App Store revenue — has become an increasingly important business for Apple as hardware sales have slowed.". While you're correct that it costs money to run Steam, it's not _that_ much money.
  - Jach 7y ago
    There are probably economies of scale, sure, which is part of why Epic can get away with a lower fee for now. But it's also just business. They know how much it costs without economies of scale, and that sets a floor. https://youtube.com/watch?v=stxVBJem3Rs https://youtube.com/watch?v=stxVBJem3Rs Here's a talk from a very old indie company, there's one section talking about how they existed pre-Steam (and other stores they use since Steam's not exclusive) and appreciate what it's enabled.
    - lapnitnelav 7y ago
      With the right time : https://youtu.be/stxVBJem3Rs?t=1564 https://youtu.be/stxVBJem3Rs?t=1564
- learc83 7y ago
  The only reason 30% is the industry standard is because network effects and walled gardens make competition very difficult. The cost to valve, Apple, and Google aren't anywhere close to that, which in an efficient market means that the price should go down as competitors enter the space. Steam isn't so much better than the competition that no one can compete with them--they just got into the market at the right time and network effects have taken over.
  - Jach 7y ago
    What are the costs close to, and what are the costs of distribution if you did it yourself? Feel free to break it down into cost of business across n countries, cost of storage and bandwidth, some bare-minimum listing fee somewhere to at least enable theoretical discovery, and ignore all the other services the platforms provide. I mentioned probable economies of scale in a cousin comment, but I don't think they offer all that much. Do you have a % in mind that you intuitively think could be knocked off from the stores of Valve, GOG, Google, Apple, Microsoft, Salesforce App Exchange, and Amazon Appstore, all taking around 30% before you get into the fine print?
    - gamblor956 7y ago
      The costs aren't 30%. Assume a $50 game. 100,000 sales. 5 gigs. Storage and bandwidth = $28,000 (per Amazon's calculator) Cost of doing business in N countries = use paypal = 2.9%+0.30/sale = approximately $1.75/sale = $175,000 Costs = $203,000 Revenue = $5,000,000 Ratio = 4.1% So yeah, Valve is not the shining knight here and that 30% fee is unjustifiable. Even Epic's 12% share is still very much profitable for Epic. The 30% fee is also nowhere comparable to wholesale pricing schema of the retail model (effectively a 40-60% fee), since that involved the sale of physical copies of goods, and the retailers had to deal with issues like shrinkage and the risk of unsold inventory.
      - zlsa 7y ago
        I don't have any numbers, but I would not expect the median sale price to be anywhere near $50. I'd expect there to be more sales of <$30 games, as a percentage of revenue, than >$30 games. And the cost of distribution goes up relative to the cost of the game as the sale price goes down.
- syshum 7y ago
  It became and Industry standard because Apple is Greedy as fuck, not because it is hard to make a store I hate Epic for their Exclusivity, but lets not pretend that 30% Fee is nothing more than a money grab by Apple, Google, Valve and the rest of these platforms
saltminer 7y ago
Originally, Steam's 30% cut was a huge windfall for developers (retail stores could take 60%+). But I won't harp on that, just a historical note for why people (including developers) might still like the (existing) middlemen. The 30% figure is a bit deceiving. If you sell a lot on Steam, you can get a better cut from Valve, but you don't even need to sell a single copy to get a 100% cut - Valve charges nothing for Steam key generation. You could sell keys on your own website and only pay payment processing fees, or get a decent cut from Humble, GMG, etc and not have to manage a storefront. One-third of all Steam game registrations are key activations [0], so this isn't some insignificant revenue stream. What HN gets annoyed with is exclusivity and lies. Valve never required exclusivity and did not try to become a monopoly (you could sell on GOG, Origin, and any other storefront alongside Steam if you wanted), they just sucked less than the competition (GFWL et al) and developed consumer loyalty through their sales. Valve is far from perfect, but they're decent and aren't anti-consumer, so when Tim Sweeney starts handing out $2 million for exclusives [1] to undermine everyone else and lies through his teeth on Twitter, people get mad. Epic doesn't want fair competition or they'd focus on making a much better launcher and sell their platform on its merits rather than its exclusives. Tim doesn't care about introducing competition, because it already exists (GOG, Origin, UPlay, etc), and people are still happy to stick with Valve. >That 30% is coming straight out of gamers' pockets This implies gamers care about the cut like it's a tax, and that if Valve lowered their cut, games on Steam would be cheaper. I did a quick check and saw the new Watch Dogs: Legion can be preordered on EGS for $59.99. Logically speaking, if the 12% cut is priced at $60, buying from Ubisoft directly (where there's a 0% cut to EGS) should be even cheaper, but nope, it's the same price. The lower cut translates to more profits, and executives won't lower prices just because they're getting more money. The reason for this is that video games are intellectual property, not commodity goods where people can directly compare prices for equivalent products (that is, while I can pick and choose a generic paper towel brand over Bounty and get similar utility for less money, choosing Need for Speed over Forza will result in a very different experience, such that you can't really compare games on price). Given that Tim wants to force everyone to use his crappy launcher with no intention of Linux support, I can see why HN would rally around Valve. Middlemen are necessary for distribution, server hosting, and dealing with scammers trying to chargeback thousands of transactions, so we might as well have a company that isn't actively hostile to consumers doing it. Valve could lower their cut, but it would do nothing unless they stooped to Tim's level and started paying for exclusives, and Gabe has made it clear he wants PC gaming to remain an open platform, making paid exclusives unlikely. Doing so would result in a race to the bottom, and Tim knows that although Epic has tons of VC money to fund such a race with, Valve's refusal to take VC funds over the years would result in them losing. [0]: https://twitter.com/Mortiel/status/1120357602305560577 https://twitter.com/Mortiel/status/1120357602305560577 [1]: https://www.pcgamer.com/phoenix-points-epic-store-exclusivity-deal-is-worth-dollar225-million-says-fig-investor/ https://www.pcgamer.com/phoenix-points-epic-store-exclusivit...

Jach 7y ago

30% became the industry standard not just for video games for a reason. It costs money to seamlessly do business across n countries, and it's not like Valve does nothing else to try and earn that fee either. Epic's play is to try and see if being a better looking deal for game devs will translate to being better for gamers or other groups (like linux users, open source advocates) too. We'll see. Valve has already demonstrated their goodwill towards all the groups multiple times, even if it's motivated by keeping their platform dominance.

ThrowawayR2 7y ago
> 30% became the industry standard not just for video games for a reason. Yeah, it became the industry standard because it rakes in mind-blowingly huge revenue for the app store owner, e.g. https://www.cultofmac.com/601492/app-store-google-play-revenue-2018/ https://www.cultofmac.com/601492/app-store-google-play-reven.... From the article: "It’s no wonder Services — which includes App Store revenue — has become an increasingly important business for Apple as hardware sales have slowed.". While you're correct that it costs money to run Steam, it's not _that_ much money.
- Jach 7y ago
  There are probably economies of scale, sure, which is part of why Epic can get away with a lower fee for now. But it's also just business. They know how much it costs without economies of scale, and that sets a floor. https://youtube.com/watch?v=stxVBJem3Rs https://youtube.com/watch?v=stxVBJem3Rs Here's a talk from a very old indie company, there's one section talking about how they existed pre-Steam (and other stores they use since Steam's not exclusive) and appreciate what it's enabled.
  - lapnitnelav 7y ago
    With the right time : https://youtu.be/stxVBJem3Rs?t=1564 https://youtu.be/stxVBJem3Rs?t=1564
learc83 7y ago
The only reason 30% is the industry standard is because network effects and walled gardens make competition very difficult. The cost to valve, Apple, and Google aren't anywhere close to that, which in an efficient market means that the price should go down as competitors enter the space. Steam isn't so much better than the competition that no one can compete with them--they just got into the market at the right time and network effects have taken over.
- Jach 7y ago
  What are the costs close to, and what are the costs of distribution if you did it yourself? Feel free to break it down into cost of business across n countries, cost of storage and bandwidth, some bare-minimum listing fee somewhere to at least enable theoretical discovery, and ignore all the other services the platforms provide. I mentioned probable economies of scale in a cousin comment, but I don't think they offer all that much. Do you have a % in mind that you intuitively think could be knocked off from the stores of Valve, GOG, Google, Apple, Microsoft, Salesforce App Exchange, and Amazon Appstore, all taking around 30% before you get into the fine print?
  - gamblor956 7y ago
    The costs aren't 30%. Assume a $50 game. 100,000 sales. 5 gigs. Storage and bandwidth = $28,000 (per Amazon's calculator) Cost of doing business in N countries = use paypal = 2.9%+0.30/sale = approximately $1.75/sale = $175,000 Costs = $203,000 Revenue = $5,000,000 Ratio = 4.1% So yeah, Valve is not the shining knight here and that 30% fee is unjustifiable. Even Epic's 12% share is still very much profitable for Epic. The 30% fee is also nowhere comparable to wholesale pricing schema of the retail model (effectively a 40-60% fee), since that involved the sale of physical copies of goods, and the retailers had to deal with issues like shrinkage and the risk of unsold inventory.
    - zlsa 7y ago
      I don't have any numbers, but I would not expect the median sale price to be anywhere near $50. I'd expect there to be more sales of <$30 games, as a percentage of revenue, than >$30 games. And the cost of distribution goes up relative to the cost of the game as the sale price goes down.
syshum 7y ago
It became and Industry standard because Apple is Greedy as fuck, not because it is hard to make a store I hate Epic for their Exclusivity, but lets not pretend that 30% Fee is nothing more than a money grab by Apple, Google, Valve and the rest of these platforms

saltminer 7y ago

Originally, Steam's 30% cut was a huge windfall for developers (retail stores could take 60%+). But I won't harp on that, just a historical note for why people (including developers) might still like the (existing) middlemen. The 30% figure is a bit deceiving. If you sell a lot on Steam, you can get a better cut from Valve, but you don't even need to sell a single copy to get a 100% cut - Valve charges nothing for Steam key generation. You could sell keys on your own website and only pay payment processing fees, or get a decent cut from Humble, GMG, etc and not have to manage a storefront. One-third of all Steam game registrations are key activations [0], so this isn't some insignificant revenue stream. What HN gets annoyed with is exclusivity and lies. Valve never required exclusivity and did not try to become a monopoly (you could sell on GOG, Origin, and any other storefront alongside Steam if you wanted), they just sucked less than the competition (GFWL et al) and developed consumer loyalty through their sales. Valve is far from perfect, but they're decent and aren't anti-consumer, so when Tim Sweeney starts handing out $2 million for exclusives [1] to undermine everyone else and lies through his teeth on Twitter, people get mad. Epic doesn't want fair competition or they'd focus on making a much better launcher and sell their platform on its merits rather than its exclusives. Tim doesn't care about introducing competition, because it already exists (GOG, Origin, UPlay, etc), and people are still happy to stick with Valve. >That 30% is coming straight out of gamers' pockets This implies gamers care about the cut like it's a tax, and that if Valve lowered their cut, games on Steam would be cheaper. I did a quick check and saw the new Watch Dogs: Legion can be preordered on EGS for $59.99. Logically speaking, if the 12% cut is priced at $60, buying from Ubisoft directly (where there's a 0% cut to EGS) should be even cheaper, but nope, it's the same price. The lower cut translates to more profits, and executives won't lower prices just because they're getting more money. The reason for this is that video games are intellectual property, not commodity goods where people can directly compare prices for equivalent products (that is, while I can pick and choose a generic paper towel brand over Bounty and get similar utility for less money, choosing Need for Speed over Forza will result in a very different experience, such that you can't really compare games on price). Given that Tim wants to force everyone to use his crappy launcher with no intention of Linux support, I can see why HN would rally around Valve. Middlemen are necessary for distribution, server hosting, and dealing with scammers trying to chargeback thousands of transactions, so we might as well have a company that isn't actively hostile to consumers doing it. Valve could lower their cut, but it would do nothing unless they stooped to Tim's level and started paying for exclusives, and Gabe has made it clear he wants PC gaming to remain an open platform, making paid exclusives unlikely. Doing so would result in a race to the bottom, and Tim knows that although Epic has tons of VC money to fund such a race with, Valve's refusal to take VC funds over the years would result in them losing. [0]: https://twitter.com/Mortiel/status/1120357602305560577 https://twitter.com/Mortiel/status/1120357602305560577 [1]: https://www.pcgamer.com/phoenix-points-epic-store-exclusivity-deal-is-worth-dollar225-million-says-fig-investor/ https://www.pcgamer.com/phoenix-points-epic-store-exclusivit...