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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.
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84 comments
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Purple Library Guy 3 July 2019 at 11:30 pm UTC
Mal
cprn"Epic is fixing it" while they have money... But they'll have to start making it at some point. And those extra data centres aren't free. Things like power, storage, transfer, backup, people and hardware redundancy cost a little fortune. That debt will sooner or later have to be paid. By us. So lets not fall in love yet. With any side.

I have a theory. Imho people don't understand that it's not loyal consumers Epic is after. The customers they have will just go back to Steam or Gog as soon as they have the freedom to do so. At Epic they are not so stupid to not see it. They can't be. Steam is superior and Epic has no intention to ever compete with them feature wise. Sweeney said that over and over.

Epic just want an install base large enough to convince the remaining big publishers to join their cartel. Including publishers with their own launchers like EA. The 12% thing is there to convince them that it would be much more convenient even for them to just let them handle distribution. Then they will have all the cards in their hand. And with that they will be able to dictate the rules: prices and conditions.

After trying to make a sense from what they are doing, I convinced myself that the real monetization they are after will come from monthly subscription memberships for all the on line features that as of today status quo are included a PC game price tag (the evil 30% steam tax) as opposed to pretty much every other console or stream service out there. Once they have all the large publishers on board, they will be able to force that kind of model on PC. And even Steam would not have the resources to challenge that (their full set of features benefit more small devs compared to big publishers which can invest in their own infrastructure. So in a sense big ones pays for small ones in Steam). The final objective is to make PC market more console like.

Ofc it's just theory of mine. But if I had to be convinced to invest ton of money and assets in this crazy adventure, that is the kind of argument that would convince me.
Interesting theory. No way of knowing at this point if it's true, and with luck they'll fail completely enough that we'll never find out. But I wouldn't rule it out.
Tuxee 4 July 2019 at 1:34 pm UTC
F.Ultra
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.

He said "This doesn't cost anything." Then he's an idiot. I can live with that, too.
Munk 5 July 2019 at 2:38 pm UTC
Mal
MunkI will never buy your game on EGS, Origin, and likely not on GoG.

Careful, that exactly the message that Epic is trying to pass. Which is blatant lie.

The day Steam competitors offers the same/equally worth/better features, people will naturally buy games from there too. It's a matter of value proposition. There is people who doesn't like Steam and value more GoG for instance. Other people would likely be happy to buy from present day EGS if they were discounted the value of missing features from the front price. That is way nobody has tried before (ofc they don't, in the end it's all about raping customers, not about fair deals).

In case of Paradox for instance if they put together a service with friends, multiplayer, mods, save cloud, guides/forums, automatic updates and patch management and such I'd say they would already have a compelling case for them going by themselves (though I would still miss streaming in my case and controller profiles for niche games like Magicka2, I absolutely love how they used Steam Controller api in that game it's fantastic). Ofc all that stuff costs and so 12% (which already do not contain transaction fees in Epic implementation, so they do sell at higher prices) becomes a chimera.
I understand that you're talking about people in general, however, I was speaking specifically about myself.

With regard to Epic and EA, feature parity isn't the issue, it's that I believe these companies to be unethical in their practices and refuse to do business with them, ever. With GoG, they're trying to solve the most major problem I have, which is library parity (via GoG connect). I can respect GoG's attempt, but until a much more significant portion of my library is available through this feature as well as have a Linux client for GoG Galaxy, I'm simply not interested in the platform. I don't believe they'll ever do enough to win me away from Steam, especially as a Linux gamer. I just want all of my achievements, screenshots, saves, friends, comments, reviews, etc, all to be in the same place. I don't want a fragmented library, and it's going to take a lot to get me to switch.

Epic and EA have no chance at my money. GoG might, but they've got very long way to go.
Klaus 15 July 2019 at 7:19 am UTC
DedaleI have no idea what the "fair" cut would be. I would need to work in this business, know the actual numbers and crunch them.

But -for what it's worth- i recall posts i had read from BOOK publishers who explained why their ebooks were actually not cheaper than the paper ones. It was because the infrastructure to distribute them was more expensive. Networks of computer did cost them more than printing presses, paper and shipping. The computer people paid to maintain such infrastructure was more expensive than librarians.

But the public would have none of it. Downloading an ebook looks simple so they wanted the electronic versions of their books for cheaper !

ArdjeThat's true, if you use DRM. They have to pay DRM license, hosting at adobe and whatever kind of crap they pull to keep it locked down. It's false if your books are DRM free.
So I always buy DRM free. And they are indeed cheaper than physical books.

Plus, DRM harms the value of the book, as it is reduced from property to a license tied to some account and operator. It also doesn't really prevent piracy, as the DRM is easily removed. Also, you can't lend the book away.

Now that eBooks are established, I will usually prefer to buy a book as eBook over softcover, even if it were slightly more expensive. But asking for the same price at the beginning was really just asking Amazon to monopolize the market... Especially in Austria/Germany, where the publishers were used to releasing soft-cover versions with a one-year delay, and then tied the eBook prices to whatever was the highest price on the market.

Meaning that until Amazon Kindle became available, eBooks required additional hardware and were LESS convenient, due to having to mess with a DRM setup, while being sold at the premium price.

Established publishers tend to shoot themselves in the foot and then blame the ignorant customers.
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