Man, what a good read this was, great work Ryan. It is interesting to start seeing some *hard-to-see-but-definitely-there* cracks on Steam's impenetrable defense throughout the years.
Yes, Steam has done A LOT for gamers around the globe, and they have earned their position at the very top of the market by virtue of arriving first and managing to defend their position while being very consumer friendly. But there are things that could improve, things that most are willing to let slide due to convenience, and its a good thing to finally star having a discussion about it.
The concept of monopoly you brought up is something I have thought about so much already.
While I agree that it is in Steam's merit that they were able to build such a well-rounded product, it reached a point at which they became renters and are doing more harm than good, and the way they shook policies around to support the big guys rather than the other way around point out they're trying to stall (such as Apple did through their process) rather than solve for it.
And while I think Epic is doing god's work by suing Apple and trying to "right" this, they only targeted EGS at developers, failing to understand that this gtm was supposed to be focused on the end consumer and have sprinkles towards developers rather than the other way around put them at this awkward position.
The platform itself is evolving, but still lags so much behind Steam and tbh I think it's as much about community (friends list, reviews, groups, playtime counter, friends also played, and so many other features built through decades) as it is about sunk cost fallacy (games library)
and I do think developers were excited for it, but as you pointed out, they are already so strangled for resources (especially for marketing) that adding a new platform to their distribution strategy only adds more cost with very unclear returns, thus even though they liked it, they weren't even putting effort into promoting it either
and then it circles back to the product itself - I think EGS is v far behind as a platform compared to steam - I see it as egs still being a marketplace whereas steam is already a platform - and EGS is being very slow at adapting to put users at the centerpiece of it and creating tools/products that make communities relevant within the egs platform
I loved a slide on matthew's ball latest report that covers reed's law (even more powerful than metcalfe's law) and >that< is what makes steam steam, imo
It was 2010 or 2011 when Valve came to me at a previous employer and said they were changing the terms of the publishing deal. They said they were following the Apple model and matching Apple's terms. I could take it or leave it -- no modifications. If I didn't take it, "we could part as friends." I was struck by that unusual phrasing.
I'm sure they are now making careful preparations for continuing to follow Apple's model and match Apple's updated terms. Right?
lol holy hell. I wonder how many more stories there are like this—Valve's comms with devs are so guarded that it's no wonder these stories mostly go untold
To be fair, I'm pretty sure Valve's already compliant with the Epic v Apple ruling. Valve does not block other game launchers the way iOS was blocking third party app stores. Valve does allow games to utilize third-party payment services and does not take a cut; they only take 30% if the game uses Valve's API to process payments.
The word you're looking for in how to describe a platform that has so much power they can dictate what suppliers take is called a Monopsony. While in a monopoly you have one primary supplier who can set prices accordingly, a Monopsony is the opposite where there is only one primary demander and they can dictate what they want to pay. Other examples are Walmart or Amazon, where you have to take what they offer or lose a huge distribution platform for the good you're supplying.
Terms aside, I like the article and the focus on how their terms are regressive. I think your conclusion of users being locked in is accurate though- until another platform has similar features and pricing and can lure users away, or unless Valve really drops the ball (which I could see if it goes public) I think Steam will keep it's crown.
Excellent article, however there is another angle to consider. Valve promotes games based on money they produce for them. If indie games made less money for them, Indies would lose their chance of getting all important promotion slots at the storefront (DQ, Trending etc.) would diminish; Valve would be less motivated to promote the little indie guy.
The side bar speculates but doesn't give the origins of the 30% fee. You can find this in the Season 2, Episode 6 podcast "Game Craft" with Mitch Lasky and Blake Robbins. ( https://gamecraftpod.com/podcast/episode-06/ )
That fee originated with the Telecom providers in the early 2000s on phone applications made in frameworks such as Brew. If I recall, the percent was arbitrary, but they felt (in exchange) for the carriers owning the customer relationship and providing distribution, they should charge something. Apple, and others, adopted it as it was the closest thing to a "standard".
I think Steam's 30% across-the-board cut is short-sighted at best, and cynical at worst. It sends a clear message that Valve doesn't value small developers—solo creators and small teams are treated as expendable, with no meaningful consideration for their tighter margins or unique challenges.
I feel it would be wiser to at least lower that cut to nurture fledgling developers. That way they are more likely to make enough money to keep developing games. Ideally, the quality of their games will increase over time, and improve the likelihood of impressive sales numbers (also helped by repeat customers who are advocates for the developer).
Imagine if Zeekerss had to quit after his first game. We would have no Lethal Company and Valve would be out all its sales. How many Lethal Company's have not come to pass because the developers could not afford to keep making games?
Sorry if I'm being dent - but from your perspective, why do you think Valve is retaining the 30% for <$1mm earners? Is it just out of convenience? Are we missing anything?
Because from your numbers (which I believe to be true), it doesn't make any economic sense, especially when Gabe Newell (the decision maker) is vocal about his mission to provide long-term value.
Maybe we forget to account for the simpler reasons: he's human, reducing fee is work, and it looks like it's not really paying off xD unless there's a public backlash from all the discourse, of course.
Edit: After reflecting about it, I'd say a really big reason is that he's a businessman, and having that fee minimizes the amount of shovelware that plagues the rest of the platforms, and even then, there's already a few that manage to make it onto Steam.
Man, what a good read this was, great work Ryan. It is interesting to start seeing some *hard-to-see-but-definitely-there* cracks on Steam's impenetrable defense throughout the years.
Yes, Steam has done A LOT for gamers around the globe, and they have earned their position at the very top of the market by virtue of arriving first and managing to defend their position while being very consumer friendly. But there are things that could improve, things that most are willing to let slide due to convenience, and its a good thing to finally star having a discussion about it.
The concept of monopoly you brought up is something I have thought about so much already.
While I agree that it is in Steam's merit that they were able to build such a well-rounded product, it reached a point at which they became renters and are doing more harm than good, and the way they shook policies around to support the big guys rather than the other way around point out they're trying to stall (such as Apple did through their process) rather than solve for it.
And while I think Epic is doing god's work by suing Apple and trying to "right" this, they only targeted EGS at developers, failing to understand that this gtm was supposed to be focused on the end consumer and have sprinkles towards developers rather than the other way around put them at this awkward position.
The platform itself is evolving, but still lags so much behind Steam and tbh I think it's as much about community (friends list, reviews, groups, playtime counter, friends also played, and so many other features built through decades) as it is about sunk cost fallacy (games library)
great read, Rigney!
Totally agree the messaging around EGS was poorly targeted. It was too focused on devs over players.
and I do think developers were excited for it, but as you pointed out, they are already so strangled for resources (especially for marketing) that adding a new platform to their distribution strategy only adds more cost with very unclear returns, thus even though they liked it, they weren't even putting effort into promoting it either
and then it circles back to the product itself - I think EGS is v far behind as a platform compared to steam - I see it as egs still being a marketplace whereas steam is already a platform - and EGS is being very slow at adapting to put users at the centerpiece of it and creating tools/products that make communities relevant within the egs platform
I loved a slide on matthew's ball latest report that covers reed's law (even more powerful than metcalfe's law) and >that< is what makes steam steam, imo
Heck of a read. Well done! And bonus points for the Buc-ees!
Was not expecting a Buccees reference but as a native Texan I'm extremely happy to see it.
It was 2010 or 2011 when Valve came to me at a previous employer and said they were changing the terms of the publishing deal. They said they were following the Apple model and matching Apple's terms. I could take it or leave it -- no modifications. If I didn't take it, "we could part as friends." I was struck by that unusual phrasing.
I'm sure they are now making careful preparations for continuing to follow Apple's model and match Apple's updated terms. Right?
lol holy hell. I wonder how many more stories there are like this—Valve's comms with devs are so guarded that it's no wonder these stories mostly go untold
To be fair, I'm pretty sure Valve's already compliant with the Epic v Apple ruling. Valve does not block other game launchers the way iOS was blocking third party app stores. Valve does allow games to utilize third-party payment services and does not take a cut; they only take 30% if the game uses Valve's API to process payments.
The word you're looking for in how to describe a platform that has so much power they can dictate what suppliers take is called a Monopsony. While in a monopoly you have one primary supplier who can set prices accordingly, a Monopsony is the opposite where there is only one primary demander and they can dictate what they want to pay. Other examples are Walmart or Amazon, where you have to take what they offer or lose a huge distribution platform for the good you're supplying.
Terms aside, I like the article and the focus on how their terms are regressive. I think your conclusion of users being locked in is accurate though- until another platform has similar features and pricing and can lure users away, or unless Valve really drops the ball (which I could see if it goes public) I think Steam will keep it's crown.
Great piece, thank you. I had no idea about Valve’s behavior behind the scenes.
Interesting write up, thank you
Excellent article, however there is another angle to consider. Valve promotes games based on money they produce for them. If indie games made less money for them, Indies would lose their chance of getting all important promotion slots at the storefront (DQ, Trending etc.) would diminish; Valve would be less motivated to promote the little indie guy.
The side bar speculates but doesn't give the origins of the 30% fee. You can find this in the Season 2, Episode 6 podcast "Game Craft" with Mitch Lasky and Blake Robbins. ( https://gamecraftpod.com/podcast/episode-06/ )
That fee originated with the Telecom providers in the early 2000s on phone applications made in frameworks such as Brew. If I recall, the percent was arbitrary, but they felt (in exchange) for the carriers owning the customer relationship and providing distribution, they should charge something. Apple, and others, adopted it as it was the closest thing to a "standard".
I think Steam's 30% across-the-board cut is short-sighted at best, and cynical at worst. It sends a clear message that Valve doesn't value small developers—solo creators and small teams are treated as expendable, with no meaningful consideration for their tighter margins or unique challenges.
I feel it would be wiser to at least lower that cut to nurture fledgling developers. That way they are more likely to make enough money to keep developing games. Ideally, the quality of their games will increase over time, and improve the likelihood of impressive sales numbers (also helped by repeat customers who are advocates for the developer).
Imagine if Zeekerss had to quit after his first game. We would have no Lethal Company and Valve would be out all its sales. How many Lethal Company's have not come to pass because the developers could not afford to keep making games?
Sorry if I'm being dent - but from your perspective, why do you think Valve is retaining the 30% for <$1mm earners? Is it just out of convenience? Are we missing anything?
Because from your numbers (which I believe to be true), it doesn't make any economic sense, especially when Gabe Newell (the decision maker) is vocal about his mission to provide long-term value.
Maybe we forget to account for the simpler reasons: he's human, reducing fee is work, and it looks like it's not really paying off xD unless there's a public backlash from all the discourse, of course.
Edit: After reflecting about it, I'd say a really big reason is that he's a businessman, and having that fee minimizes the amount of shovelware that plagues the rest of the platforms, and even then, there's already a few that manage to make it onto Steam.