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During Gamelab 2019 at a panel hosted by GamesIndustry.biz, Paradox Interactive's former CEO Fredrik Wester (now the Executive Chairman of the Board at Paradox Interactive) talked about the cut "platform holders" take from sales and they're not impressed.

The one this always comes back to is Valve's store Steam, which has a standard 30% cut they take from developers. Although, they did tweak this for higher earning games in December last year so for games that earn $10 million it's reduced to 25% and 20% at $50 million and that does include money from DLC, in-game transactions, Steam market fees and so on.

Wester said "I think the 70/30 revenue split is outrageous", noting that it was likely established in the '70s by Warner Bros when distributing physical media like boxed VHS tapes and so on saying "That was physical. It cost a lot of money". Wester went on to say "This doesn't cost anything." and thanked Epic Games for what they're doing with their much smaller 12% cut.

Claiming it "doesn't cost anything" isn't quite right though, considering all the services Steam actually provides including things like Cloud Saving, Achievements, Leaderboards, Valve Anti-Cheat (VAC), Inventory Services and quite a bit more. Valve also provide free keys to developers to sell on other stores like itch.io, Humble Store, Fanatical and many others (there's a huge amount of Steam key stores out there) of which Valve don't see a penny from. That's on top of various open source projects Valve fund too like DXVK, improving KWin and a ton more those are just two very recent examples.

Wester isn't the only one who has mentioned this of course, former Valve staffer Richard Geldreich said on Twitter back in April:

Steam was killing PC gaming. It was a 30% tax on an entire industry. It was unsustainable. You have no idea how profitable Steam was for Valve. It was a virtual printing press. It distorted the entire company. Epic is fixing this for all gamers.

The State of the Industry Survey done by GDC also noted how only 6% of developers asked thought Valve's 30% cut was justified.

What are your thoughts?

Hat tip to Mr. Doomguy in Discord.

Article taken from GamingOnLinux.com.
Tags: Editorial
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75 comments
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sketch Jul 2, 2019
I think that Publishers and developers are most of the time greedy bastards that steamroll soul-less games only for money. Even at paradox whose games i usually like a lot, they have the absolute worst dlc politic. The point here is that even reviewers and gaming sites giving a say to publishers in the matters is a mistake, for a very simple reason. Steam is not a service to publishers, it is a mean, while Steam is not a mean to gamers, it is a service. Since Valve is a service to gamers, and since gamers are free to choose where to buy games, it's all fine.

What's wrong with epic is not that they provide competition, but it is that as someone with the knowledge has pointed out, there is all evidence they are dealing with a cut that puts them in red, only for to damage steam. And THAT is unfair. dealing a % that is not sustainable to directly damage a competitor that delivers a set of services to players, it's like directly undermining those services. They are not the industry saviours, they are the exact opposite.
Maath Jul 2, 2019
Quoting: MaathTo the developers who complain about the 30% cut that Valve receives, I would ask, "What percentage do you deem fair?" How much do you think it costs to provide all of the services that Valve offers? Do you put any value in Valve's hardware endeavors?
Quoting: EikeThey don't know either.
Nobody but Valve really knows.
My questions, "...deem fair...," "...do you think...," "...put any value..." are not questions of knowledge, but of opinion. As developers, they "know" that these services do not come for free. If 30% is considered "outrageous," and 0% is obviously untenable, then what, in their opinion, is the middle ground? I don't think they want to pin down a specific number, because then we can compare with what Valve really provides, and also factor in the 0% for keys sold outside of Steam and other things to come up with a value not that much smaller than 30%, and certainly no where near 12%.

Quoting: MaathFurther, if the estimation of the cost of all of Steam's features is low, then I wonder why no one else has matched them with their own platform. In particular, Epic still pales in comparison. It's been a year now, or nearly so?
Quoting: EikeTo play devil's advocate:
Why do people do that? Business can take care of themselves.

Quoting: EikeBecause it's a defacto monopoly, which is hard to break.
A while ago, somobody linked a lengthy article depicting just how hard it would be to break it.
Steam is not a "de-facto monopoly." There are plenty of ways to obtain video games. It certainly is the primary way to obtain computer games. But this doesn't answer my question. Steam being the primary means of obtaining computer games does not preclude anyone from creating a competing digital computer game purchasing store front themselves. I call out Epic specifically because they have the capital to do it, but have so far chosen not to.

My premise is that Epic and these developers are trying to undercut Steam. Instead of providing an attractive platform that would woo gamers to use it (and cost close to 30% to operate), they rather have a simple platform with low overhead, and operate with a lower revenue split to try to get Valve to budge on its price. Move the developers and the gamers will begrudgingly follow, instead of enticing the gamers and the developers will willingly follow.
Asu Jul 2, 2019
Quoting: BeamboomJust to provide a perspective on that number:
Unless recently changed, 30% is also what Google and Apple takes on transactions at their marketplaces. Apple takes an annual developer fee of $99 in addition, and they both have a one time fee of $25 per app.

Steam is very much the Google Play / Apple Store of PC gaming.

steam has one time fee too. $100 to put your game on the store. But you can recoup that as you sell copies.
monnef Jul 2, 2019
Gamer's perspective: Steam is great. I love reviews and ratings, curator system, forums, achievements, saves, easy to use client, linux support. That said, I dislike few things too, eg increasing trend of "good" manipulation of reviews and ratings, inconsistent censoring of games not based on any rules. Few cases of customers loosing their account, worth thousands of dollars, because disobeying rules on forums? Why not warning and then ban on a game's forum? I would consider these cases a theft, since I don't believe these customers were refunded. In this regard, I like the GoG's approach, but I fear games linked to account (unplayable after being banned or service dies) won't vanish.

Dev's perspective: The cut is too big. Why I should be paying (high cut) for services my game doesn't use or I don't want to use? Why indie games should be paying more, in relative numbers, than big publishers?

Networking infrastructure for multiplayer games is not free when you pay it in a cut. I am pretty sure I read from several developers that workshop is not covered in the cut and dev/publisher is paying monthly. And when speaking about starting (or hobbyist) indie studios, I am quite sure that all services for a single player game could be covered by the initial fee - 100$. How much can cost providing download of few hundred MB for a thousand players in a span of weeks? Sure, you get some promotion, but unless you are a pro or really lucky with algorithm, I don't think it's worth the high cut either. The less a game is sold/played, the less promotion it gets. So if it doesn't attract customers right from the start (days), you are getting no promotions = no help from Steam, and you will have to promote it only on your own.
Purple Library Guy Jul 2, 2019
The problem here is that this is a question about facts, and we don't as far as I know have most of them. I don't know how much Steam's infrastructure and features cost. It's clearly false for Wester to say "This doesn't cost anything." I'm even sure it costs pretty big bucks. But there's a lot of room between "not anything" and "30% of all games sold". I don't think most of us have a clue if what they do really justifies the revenue or not.
Purple Library Guy Jul 2, 2019
Quoting: F.Ultra
Quoting: Tuxee
QuoteWhat are your thoughts?

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

I would more say that he is speaking from the viewpoint of his own company, it's of course in Paradox best interest to keep their own prices as high as possible while having to pay as little as possible to others like Valve. That is hardly being a hypocrite.
Just because being a hypocrite is solidly in your best interests does not make it stop being hypocrisy.
Beamboom Jul 2, 2019
Quoting: monnefWhy indie games should be paying more, in relative numbers, than big publishers?

If you talk about the fee on publishing the game, I dare say that $100 shouldn't be much for anyone. If you're semi-serious about putting your game out there on a an as massive market as Steam, I'd say it's pretty much nothing.

I think that particular part is a good idea, to keep the absolute worst out of the store.
Purple Library Guy Jul 2, 2019
Quoting: Beamboom
Quoting: monnefWhy indie games should be paying more, in relative numbers, than big publishers?

If you talk about the fee on publishing the game, I dare say that $100 shouldn't be much for anyone. If you're semi-serious about putting your game out there on a an as massive market as Steam, I'd say it's pretty much nothing.

I think that particular part is a good idea, to keep the absolute worst out of the store.
Probably monnef meant the recent policy shift where games (or maybe developers) that sell a little pay 30% while games that sell quite a bit pay 25% and games that sell big league numbers pay 20%.
monnef Jul 3, 2019
Quoting: Purple Library Guy
Quoting: Beamboom
Quoting: monnefWhy indie games should be paying more, in relative numbers, than big publishers?

If you talk about the fee on publishing the game, I dare say that $100 shouldn't be much for anyone. If you're semi-serious about putting your game out there on a an as massive market as Steam, I'd say it's pretty much nothing.

I think that particular part is a good idea, to keep the absolute worst out of the store.
Probably monnef meant the recent policy shift where games (or maybe developers) that sell a little pay 30% while games that sell quite a bit pay 25% and games that sell big league numbers pay 20%.

Yes, that was what I meant. 30% cut if you are a small indie, but only 20% if you are a big publisher. Why? If there is any imbalance, shouldn't it be reversed - helping small indies to survive, not AAA games with predatory mtx?

Speaking about the entry fee, to be frank, I spent way much more adapting my free game with donations to meet Steams requirements. I work in IT, in not-poor not-rich EU country, getting I am guessing lower end of median wages for my job/place/experience. If I would use my rate from my real job, then adapting the game for Steam cost me over SIX TIMES more than the entry fee is, over $600. :S:

Moral of the story - if you are publishing your game with donation model and not really expecting any profit, don't bother with Steam, you are just throwing money and time away. Compared to e.g. itch.io, Steam's configuration is a horror, it seems to me like an overengineered mess filled with arbitrary delays and waiting periods for approval. It's probably ok if you are doing games for the money (it gives a lot of choice), but if you simply want to put your game for a download and make few tiers of donations (for which Steam configuration is not built for, even though they allow it), then it's a massive waste of your time and money.
kuhpunkt Jul 3, 2019
Quoting: monnef
Quoting: Purple Library Guy
Quoting: Beamboom
Quoting: monnefWhy indie games should be paying more, in relative numbers, than big publishers?

If you talk about the fee on publishing the game, I dare say that $100 shouldn't be much for anyone. If you're semi-serious about putting your game out there on a an as massive market as Steam, I'd say it's pretty much nothing.

I think that particular part is a good idea, to keep the absolute worst out of the store.
Probably monnef meant the recent policy shift where games (or maybe developers) that sell a little pay 30% while games that sell quite a bit pay 25% and games that sell big league numbers pay 20%.

Yes, that was what I meant. 30% cut if you are a small indie, but only 20% if you are a big publisher. Why? If there is any imbalance, shouldn't it be reversed - helping small indies to survive, not AAA games with predatory mtx?

It depends on the revenue made, not on the size of the studio. Small indies with a hit can reach those goals, too.
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