Valve lowers their % of cut for 3rd-party games on Steam with new tiered fee system

[Delicieuxz]

 

Steam starts taking smaller sales cut from biggest games

Quote

In a move to keep more big publishers on Steam, Valve are starting to take a smaller cut of sales from games which make loads and loads of money. After $10 million (£8m), Valve’s cut will go down from 30% to 25%, then beyond $50 million (£40m) they’ll starting taking 20%. Valve say that that big games have “positive network effects” for all of Steam so they’re worth keeping around and rewarding. It’s still pretty gutting to introduce a regressive tax, the rich getting richer while many smaller developers struggle.

 

“The value of a large network like Steam has many benefits that are contributed to and shared by all the participants. Finding the right balance to reflect those contributions is a tricky but important factor in a well-functioning network,” Valve said in last night’s announcement on Steam’s development group. “It’s always been apparent that successful games and their large audiences have a material impact on those network effects so making sure Steam recognises and continues to be an attractive platform for those games is an important goal for all participants in the network.”

 

...

 

The new revenue share deal only applies on sales from October 1st, not all the way back to a game’s launch. All a game’s DLC, in-game sales, and Community Marketplace fees do contribute to the milestones.

 

“Our hope is this change will reward the positive network effects generated by developers of big games, further aligning their interests with Steam and the community,” Valve concluded.

 

Electronic Arts ditched Steam in 2011 to sell their games through their own garbage store app, Origin. Activision ditched Steam with Destiny 2 and this year’s Call Of Duty, instead putting them on their own garbage store app. Epic Games quietly drifted away from Steam then made a kajillion dollars on Fortnite Battle Royale through their own client. Microsoft use their own garbage Microsoft Store app for their Windows 10 games, the likes of Forza Horizon 4 and Sea Of Thieves. Bethesda ditched Steam for their own garbage store app for Fallout 76, a game where Steam’s easy refunds would be welcome. And Ubisoft did launch their own garbage store app, Uplay, but have kept their games on Steam too.

 

Ubisoft and Take-Two (the owners of Rockstar) are perhaps the biggest publishers still releasing games on Steam. Rainbow Six Siege and Grand Theft Auto V are two of Steam’s most popular games, so Ubi and Take-Two must have a fair bit of influence over Valve – especially with Red Dead Redemption 2 hopefully coming to PC at some point.

 

Personally, I see nothing bad for smaller developers about this and only positive things. That's because, while bigger publishers will get to keep more of the profits from their games' sales, smaller developers aren't getting any less than they were before, and will benefit from the larger Steam customer-base that having big publishers there will attract. So, there will be more people browsing Steam games and purchasing games of all types.

 

Also, when a big publisher knows that their game is going to be a massive seller, it does kind of beg the question why shouldn't they simply publish it themselves and get more profit rather than give 30% to Steam for services that might become trivial-looking compared to how much is being paid for them with a larger game release.

 

 

All that said, Steam, the pioneer of digital game distribution, is hands-down the best digital game service out there. Valve revolutionized the PC games industry with the Steam platform, making it attractive again to developers and publishers that had abandoned the PC sphere for then-burgeoning console platforms.

 

And while Valve's 30% cut of digital game sales might seem like a lot to some people for the services provided today, when Valve created Steam and introduced it with their 30% take on game sales, that low cut was also revolutionary and made PC game development far more viable for big and small game developers and publishers alike.

 

Before the Steam platform with its 30% to Valve / 70% to the publisher and developer payment split, it was typical for a developer to receive less than 15% of their game's sale-price. So, with Steam, it was suddenly possible for a developer to receive almost 5 times more from their games then they were used to getting, providing they were also their own publisher.

 

 

Retail vs Steam: A comparison of the benefits for developers

 

Excerpt:

Quote

Since 1997, when 1C’s gaming division was founded, the company worked on a model whereby a title developed and sold by 1C in Russia was then sub-licensed to our great publishing partners. 

 

As a generalisation, retail would pay these guys a maximum of 40 per cent of what they made. So on a £29.99 game the publisher would receive about £12 (and on a sub-licensed deal, we would then only get about £4.25 of that) – minus return, write down and consignment costs. 

 

When would we get that money? Well, payment would be by the end of the quarter. 

 

So, let’s say £10 per unit sale goes to the publisher, £3 to the developer/sub-licensor, and it’s in your bank five months after the customer has paid out £30.

 

Compare that to the digital model. On a £29.99 sale, the digital partner will pay the publisher – or in many cases direct to the developer – between 60 and 70 per cent, by the end of the month following the sale. 

 

Wow. To recap: on a sale over the counter today, we can have our £3 by the end of March, or on a digital sale, we can have £20 by Christmas. 

 

Remind me why we should choose to go with retail and decline to let Steam sell the game?

 

 

Also, while some people criticize Steam's traditional 30% take as being high, it's notable that subsequent digital game retailers, such as Origin and Uplay, also set their take from 3rd-party games at 30%, matching Steam's, and that being at a market disadvantage due to being late-comers to the digital retailer business and not having nearly as comprehensive and refined a platform and library as Steam's didn't make them want to offer even a fraction of a % of a better deal to 3rd-party pubs/devs compared to Valve's Steam.

 

What this strongly suggests is that these other companies matched Valve's 30% profits-sharing rate because they had to in order to qualify as an option for 3rd-party publishers and developers. And if Valve hadn't set the standard so low to begin with, I expect that none of those other digital game retailers would have been willing to go even as low as 30%. Left to set the bar on their own, I think it's likely that they might have started things off at something like a 50% / 50% profits-sharing system - and even that still would have represented a significant increase in profits for pubs/devs compared to what they were getting from retail sales.

 

By reducing the fee for Steam's biggest games from 30% to 20%, Valve are again setting a new standard for the games retail business.

[leadeater]

1 minute ago, Delicieuxz said:

Also, when a big publisher knows that their game is going to be a massive seller, it does kind of beg the question why shouldn't they simply publish it themselves and get more profit rather than give 30% to Steam for services that might become trivial-looking compared to how much is being paid for them with a larger game release.

I hate it when games go off platform and do their own "Steam". Like monopolies are bad in all but well, it's bloody annoying and I'm fundamentally lazy.

[Curufinwe_wins]

Yeah.. regressive fee system sucks.

 

Basically it's more like 'in order to encourage large developers to come here instead of other services', we have reduced out rates for them. But we still want to make as much money as possible so lets not reduce it for the rest.

 

I guess it isn't worse for them instead. 'Yay'

[SupaKomputa]

I thought it was free for a certain numbers of installations. So small developer wont be charged until they make money.

[RejZoR]

Also, Steam does most of advertisement with featured games messages and providing all the infrastructure to host the game. Developer literally doesn't need anything but provide the game. It can entirely exist on Steam and do well. So, 30% cut isn't all that high all things considered imo.

[Delicieuxz]

30 minutes ago, leadeater said:

I hate it when games go off platform and do their own "Steam". Like monopolies are bad in all but well, it's bloody annoying and I'm fundamentally lazy.

And then their own clients and services are barebones in comparison to Steam.

 

Posterity of service is another major concern that I have when buying games from digital retailers other than Steam. I trust Steam to be around the longest and also to be the most considerate of their customers in the long-term. I don't see Valve pulling a Microsoft / GFWL move and just shutting down all their servers and leaving no recourse to their customers.

 

I hope that Steam is going to be around until a time when a universal old game archive exists where say all games older than a certain date are available for free for everyone, at which time Steam's older library will transfer to said archive. Maybe Valve will also be a proponent in the creation of such a public archive.

 

27 minutes ago, Curufinwe_wins said:

Yeah.. regressive fee system sucks.

 

Basically it's more like 'in order to encourage large developers to come here instead of other services', we have reduced out rates for them. But we still want to make as much money as possible so lets not reduce it for the rest.

Well, the fact is, nobody is losing with this new move by Valve, and all parties are benefiting - though to different degrees:

 

Big publishers get to keep 5 - 10% more of the proceeds from their game sales on Steam.

Small developers have more people looking at and buying their games due to the increased crowd-draw from more big publishers being on Steam.

 

Also, while a big-selling game easily covers Valve's costs of hosting and upkeep, and a lot more, maybe many tiny-selling indie games don't cover their hosting and upkeep costs, and so maybe larger-selling titles are subsidizing many low-selling titles so that very small developers get to put their games out at the same 30% fee.

[asus killer]

valve takes 30% from us, consumers, not developers. it's our money. I always considered this a robbery, useless blood sucking vampires with a monopoly

[Thaldor]

10 minutes ago, asus killer said:

valve takes 30% from us, consumers, not developers. it's our money. I always considered this a robbery, useless blood sucking vampires with a monopoly

Well you are free to use Uplay, Origin, Battle.net, Twitch or even support the new leech Discord. OH and would you on your way go to place some flowers to the graves of developers who ended up for one or other reason sell their sould to the EA or Ubisoft? Thanks, mate!

Spoiler

Spoiler

Spoiler

 

 

 

[Mihle]

13 hours ago, asus killer said:

valve takes 30% from us, consumers, not developers. it's our money. I always considered this a robbery, useless blood sucking vampires with a monopoly

Games wouldn't be cheaper if the 30% was like 5% instead for example. The developer would just take the extra money. Game developers most of the time have a set price they want people to pay for their games, and the fee doesn't change that much.

 

Like a game that get priced at 50 € on Steam by a big developer was going to cost 50 € even if the fee was 5% instead of 30%

 

An example on that is that at least here, Ubisoft games cost almost exactly the same on Steam and Uplay.

 

Indie games might be a exception from that but don't know how often it is.

[asus killer]

3 minutes ago, Mihle said:

Games wouldn't be cheaper if the 30% was like 5% instead for example. The developer would just take the extra money. Game developers most of the time have a set price they want people to pay for their games, and the fee doesn't change that much.

 

Like a game that get priced at 50 € on Steam by a big developer was going to cost 50 € even if the fee was 5% instead of 30%

 

Indie games might be a exception from that but don't know how often it is.

i still remember the days PC games were a lot cheaper then in consoles. Probably just a coincidence that changed after steam

 

https://store.steampowered.com/app/606280/Darksiders_III/

https://store.playstation.com/en-us/product/UP4389-CUSA08880_00-DARKSIDERS3US001

 

sure it is 

[Delicieuxz]

7 hours ago, asus killer said:

i still remember the days PC games were a lot cheaper then in consoles. Probably just a coincidence that changed after steam

 

https://store.steampowered.com/app/606280/Darksiders_III/

https://store.playstation.com/en-us/product/UP4389-CUSA08880_00-DARKSIDERS3US001

 

sure it is 

They show up the same price for me: $80 CAD on Steam (which equals $60 USD), or $60 USD from the Sony store.

 

Regardless, Steam doesn't set the pricing for 3rd-party games - the publishers of those games, such as ActiVision, Ubisoft, etc, do that themselves. If there's any price discrepancy between Steam and other platforms, it's because the game's publisher chose to set a different price for Steam.

 

 

Console games used to normally cost around $10 USD more than PC games because selling a copy of a game for a console involves a per-game console licensing fee that goes to the console manufacturer (Nintendo, Microsoft, Sony). Since nobody owns the PC as a platform and there isn't a system fee for selling a game for PC, AAA-budget PC games used to commonly reflect that in their pricing by being a bit cheaper than their console version counterparts.

 

At some point very long after Steam came around and probably within the last 8 years, console game publishers decided they wanted to set the prices for their games on Steam and other digital retailers to match the prices for their games on console to make themselves more money, even though it still is actually cheaper for them to release their game on PC and especially Steam compared to on console.

 

That change in AAA-budget PC game pricing has appeared all over, not just on Steam.

[williamcll]

Imagine if they charge like a cloud datacenter, by usage/data flow rather than sales.

[Mihle]

31 minutes ago, asus killer said:

i still remember the days PC games were a lot cheaper then in consoles. Probably just a coincidence that changed after steam

 

https://store.steampowered.com/app/606280/Darksiders_III/

https://store.playstation.com/en-us/product/UP4389-CUSA08880_00-DARKSIDERS3US001

 

sure it is 

That's the developers choice, nothing to do with steam fee.

Even if new price is the same, when the games aren't new anymore, the sales is often better on PC still. On the games I have seen. But again, the that's what the developer chooses, not steam.

[asus killer]

2 hours ago, Delicieuxz said:

They show up the same price for me: $80 CAD on Steam (which equals $60 USD), or $60 USD from the Sony store.

 

Regardless, Steam doesn't set the pricing for 3rd-party games - the publishers of those games, such as ActiVision, Ubisoft, etc, do that themselves. If there's any price discrepancy between Steam and other platforms, it's because the game's publisher chose to set a different price for Steam.

 

 

Console games used to normally cost around $10 USD more than PC games because selling a copy of a game for a console involves a per-game console licensing fee that goes to the console manufacturer (Nintendo, Microsoft, Sony). Since nobody owns the PC as a platform and there isn't a system fee for selling a game for PC, AAA-budget PC games used to commonly reflect that in their pricing by being a bit cheaper than their console version counterparts.

 

At some point very long after Steam came around and probably within the last 8 years, console game publishers decided they wanted to set the prices for their games on Steam and other digital retailers to match the prices for their games on console to make themselves more money, even though it still is actually cheaper for them to release their game on PC and especially Steam compared to on console.

 

That change in AAA-budget PC game pricing has appeared all over, not just on Steam, and it isn't related to Steam.

if you put a 30% tax you are indeed setting at least part of the price

 

2 hours ago, williamcll said:

Imagine if they charge like a cloud datacenter, by usage/data flow rather than sales.

false issue, they still charge 30% tax on single player games. So no way that is related to server costs.

[TechyBen]

2 hours ago, Mihle said:

That's the developers choice, nothing to do with steam fee.

Even if new price is the same, when the games aren't new anymore, the sales is often better on PC still. On the games I have seen. But again, the that's what the developer chooses, not steam.

Sometimes Consoles took a bigger cut, or pressing CDs/making cartridges cost more because proprietary systems.

[Misanthrope]

This is...a bad move.

 

Hear me out: The reason why EA, Bethesda, Microsoft, etc. Left (And other big names like Blizzard have never been there afaik) is not because they give Valve too much of a cut. Sure it might be one of the considerations but in the grand scheme of things I just don't think it weights heavily.

 

The reason EA, Bethesda, etc. Want to cultivate their own storm fronts is because they ultimately want what Valve has too: total control by being the premium store front. It is also the main battle between Apple and Google, Amazon (of all people) is pushing for the same thing as well and so on. Everybody wants to be in control of their own walled garden: the name of the game is complete control of as much as you can of the user experience.

 

Ultimately I am sure EA is aware they're potentially leaving millions off the table by not putting Battlefield games on Steam there's no doubt in my mind that their sales would be considerably better even with the current 30% take. The value of Origin for them is the fact that they might get to push some people that will play Battlefield anyway to start buying other publisher's games and maybe start using the Origin store more often and so on and so forth. 

 

So Valve reducing their own cut is not gonna bring this big ticket titles back I can almost guarantee that. At best they might prevent people like Ubisoft and Activision from completely leaving them but showing weakness right now is not in their best interest: EA, Beth, etc. Can just go "Oh yeah? Well come to our store we'll take only 15% Less? 10% Nah, make it 5% who gives a shit?" Because indeed: who gives a shit as long as they get people into their store they can potentially still make it worth it since right now simply taking business away from Steam is already worth it.

[Delicieuxz]

25 minutes ago, asus killer said:

if you put a 30% tax you are indeed setting at least part of the price

Steam's 30% take isn't analogous to the console system manufacturer's license fee, but instead compares to the rest of the costs involved in getting a game sold and into the buyer's hands, while for console games the console system manufacturer's license fee gets added on top of that cost.

 

So, Steam's 30% take of a game's sale-price would contrast against a hypothetical 60% cut of a retail console console game's sale-price, before a $10 - $15 system license fee is further added to the cost of selling the console game.

 

 

To sell a Steam game: 30% of the game's sale-price goes to the distributor (Steam). Total cost to sell a game is 30% of its sale-price.

 

To sell a retail console game: Hypothetically in a best-case scenario, 60% of the game's sale-price is spent on production, logistics, shelf-space, returns, etc  and then an additional $10 to $15 must be paid to the console system manufacturer as a license fee to be allowed to sell a game for their system. Total cost to sell a game is 60% of the sale-price plus an additional $10 to $15.

 

 

As you can see, with or without the console system license fee added on to the cost of selling a console game, selling a game on Steam is far cheaper and more profitable for a publisher or developer. So, Steam's 30% take greatly reduced the costs to sell games for publishers and developers.

[leadeater]

39 minutes ago, Misanthrope said:

So Valve reducing their own cut is not gonna bring this big ticket titles back I can almost guarantee that.

I can see EA not, I bet they think they are big enough and have enough under the EA umbrella they can just have there own thing and be fine which is pretty much the case.

[asus killer]

1 hour ago, Delicieuxz said:

Steam's 30% take isn't analogous to the console system manufacturer's license fee, but instead compares to the rest of the costs involved in getting a game sold and into the buyer's hands, while for console games the console system manufacturer's license fee gets added on top of that cost.

 

So, Steam's 30% take of a game's sale-price would contrast against a hypothetical 60% cut of a retail console console game's sale-price, before a $10 - $15 system license fee is further added to the cost of selling the console game.

 

 

To sell a Steam game: 30% of the game's sale-price goes to the distributor (Steam). Total cost to sell a game is 30% of its sale-price.

 

To sell a retail console game: Hypothetically in a best-case scenario, 60% of the game's sale-price is spent on production, logistics, shelf-space, returns, etc  and then an additional $10 to $15 must be paid to the console system manufacturer as a license fee to be allowed to sell a game for their system. Total cost to sell a game is 60% of the sale-price plus an additional $10 to $15.

 

 

As you can see, with or without the console system license fee added on to the cost of selling a console game, selling a game on Steam is far cheaper and more profitable for a publisher or developer. So, Steam's 30% take greatly reduced the costs to sell games for publishers and developers.

I'm lost in your logic. Sorry. So because consoles are a bigger scam it's ok what steam charges?

 

Things you missed: less piracy (virtually none now) so more money for developers. Also anti piracy measures are sonys and ms expenses. In the pc the developers pay them themselves.

Console hardware is sold initially at a lost.

Sony and ms have costs marketing games in bundles for example, steam doesnt. If a pc developer wants publicity they have to pay for it.

[Delicieuxz]

1 hour ago, asus killer said:

I'm lost in your logic. Sorry. So because consoles are a bigger scam it's ok what steam charges?

Because Steam's rates are the lowest in the business (while also providing the most expansive services and the largest audience) and all other digital retailers' rates are as low as Steam's only because if they weren't then no 3rd-party would use their services, for those reasons I don't know what makes you think Steam's rate is a scam. They currently offer the best deal there is.

 

Regarding the logic, you alleged that an increase in PC game prices over time is somehow related to Steam:

6 hours ago, asus killer said:

i still remember the days PC games were a lot cheaper then in consoles. Probably just a coincidence that changed after steam

 

sure it is 

But, it isn't. Aside from the fact that PC games didn't reach parity with console game prices until a decade or so after Steam launched, the fact is that Steam doesn't set the pricing for 3rd-party games, and the cut that Valve take for Steam-sold games is a fraction of what it costs to sell a game for console. So, from no angle does it make sense to conclude that an increase in AAA PC game pricing is a scheme of Steam / Valve.

 

By pointing out that Steam greatly reduced publisher / developer costs and increased their profits, and that it's the 3rd-parties that set their prices on Steam, I'm showing that blaming rising AAA PC game prices on Steam defies logic.

 

Quote

Things you missed: less piracy (virtually none now) so more money for developers. Also anti piracy measures are sonys and ms expenses. In the pc the developers pay them themselves.

Console hardware is sold initially at a lost.

Sony and ms have costs marketing games in bundles for example, steam doesnt. If a pc developer wants publicity they have to pay for it.

Piracy is still alive and well, though I don't think it's significant to this topic. If a console developer wants a marketing campaign, they also pay for it.

 

7 hours ago, asus killer said:

valve takes 30% from us, consumers, not developers. it's our money. I always considered this a robbery, useless blood sucking vampires with a monopoly

I just don't see a basis for this complaint.

 

After a publisher has set a price for their game to be sold at on Steam, and after a customer chooses to buy the game at that price, Valve takes a set and relatively small fee for their services. Valve taking a % from Steam-sold games is no different than the various parties taking their % from a physical store-sold game. In both cases, the developer gets the remainder after the other parties take their cuts. It's also just like selling something on eBay, where eBay take a % of the sale price. It's being a reseller.

 

Being upset at Valve for this is like being upset at grocery stores and every physical retail store for charging you a higher price than what they paid for the items from their wholesalers. That's their business, and it's one of the most common types of business around. And Valve, a PC game reseller and provider of additional services, is certainly one of if not the best business of that type in the games industry.

[PlayStation 2]

when artifact fails so you try to bring devs back to make your money back on it

[Speed Weed]

Make Valve Great Again

[williamcll]

Only half life 3 can save Valve now.

[Mihle]

3 hours ago, TechyBen said:

Sometimes Consoles took a bigger cut, or pressing CDs/making cartridges cost more because proprietary systems.

I know, but my point is if there is price difference/fee difference between different platforms, the developer can choose to:

 

Keep the part they earn the same and let the price be different different places.

Or

Make so the price different places is the same, but earn more from some platforms per copy sold than others.

 

More and more of the time, at least big developers chooses the last of the two.

[TechyBen]

1 minute ago, Mihle said:

I know, but my point is if there is price difference/fee difference between different platforms, the developer can choose to:

 

Keep the part they earn the same and let the price be different different places.

Or

Make so the price different places is the same, but earn more from some platforms per copy sold than others.

 

More and more of the time, at least big developers chooses the last of the two.

Or get paid a little backhander, to be totally done over when the platform sells nothing, as Supermeatboy found out with Microsoft. XD

https://www.destructoid.com/team-meat-probably-won-t-work-with-microsoft-ever-again-211145.phtml

They sold more copies in 1 hour on Steam than the entire time on XBLA...