Epic Games' new digital gaming market announced earlier this week and the surprise launch during the Game Awards last night has raised many eyebrows in the industry. With its 88% -12% favorable dividend split and CEO Epic's promise Tim Sweeney to better support creators, many in the industry are wondering if this will be the game store that would really rival Valve Steam, which has been the dominant platform for PC game distribution. for more than a decade.
We will not know the success of the store for some time. Last night, Epic announced the first batch of games to support its store, and that list remains tiny compared to the tens of thousands of titles available in Valve's showcase. And while Epic has the benefit of positioning your store inside the Epic Launcher, which is the software you need to upgrade and start playing your mega-hit Fortnite, there remains the distinct possibility that consumers no longer want to fragment their game libraries. In this scenario, Steam remains dominant, and the Epic store becomes just another less popular alternative, such as GOG or Green Man Gaming, while smaller stores such as Itch.io and Humble Bundle remain focused on the independent games.
But the question of why Valve needs a competitor in the first place is still important and worth exploring. That's because the current state of game distribution speaks volumes about the impending platform war that has been brewing for years. How this can change, how millions of people buy and play games in the future, and how developers in turn make money from those sales.
As it stands, if a developer is making a game for PC, chances are that he will sell it on Steam. If they are not selling a game on Steam, this is likely to happen for one of two reasons: they are a major publisher such as EA or Ubisoft, which operates its own digital store; or they are a manufacturer of game consoles or a studio owned or paid by a manufacturer of gaming consoles like Microsoft or Sony. In these rare cases, a developer is accepting the loss of not selling a game on Steam because a larger company is paying the bills and there may be a strategic business reason, such as console or store exclusivity, for a company like Microsoft, port PC from Gears of War 4 through Steam, but in the Microsoft Store.
This is the old way of doing business in the gaming industry, and Valve has reap the benefits for years. The company is estimated to have billed $ 4.3 billion with only Steam revenue last year, not including the standard 30 percent cut in content purchases and in-game expansions. Under the current agreement, Valve could never develop another video game and continue to be one of the industry's highest paying companies simply because it is the intermediary between PC consumers and game developers and publishers. The company not only gets 30% of almost all sales on Steam, but also gets revenue from classics like Counterattack, Half lifeand Team Fortress, while his juggernaut e-sports Dota 2 remains one of the most popular games on the planet.
In other words, Steam has been sitting for years like Apple in the PC gaming market, running an app store and deciding how much money it takes from each sale. The only problem is that, unlike Apple, Valve has no control over the hardware people use and, in turn, has no control over what software they use. Valve can not prevent a user from downloading another game store and buy their games elsewhere, just as it can not prevent Epic or Ubisoft from creating their own game launchers and require players to download launch software Fortnite or Assassin & Creed on the PC.
So far, this is not a problem for Valve. Players, especially PC gamers, tend to be offended by what is seen as a transparent invasion at the expense of the consumer. This has transformed EA and Ubisoft's store fronts and launchers – famous for blocking games with digital rights management restrictions – for corporate evildoers in the industry. Valve, with its loose restrictions and generous reimbursement policies, has always seemed to be the most consumer-friendly option.
This started to change and Epic came to the perfect moment to shake things up. Just like you did Fortnite at the perfect moment to take advantage of the battle royale trend, Epic is now pushing Steam at a crucial time for the distribution of the game. Because of the billions of dollars you earned through FortniteEpic now has enough in its war chest to fight adequately with Valve, and is doing this by offering revenue streams more favorable to the developer and using its Unreal Engine toolkit as a strategic weapon. If you use Unreal to make your game, Epic will now give you back the 5% it normally takes out of all game sales, as well as allowing you to keep 88% of all sales in the Epic store.
The timing could not be worse for Valve, and Steam has begun to lose its luster as a market that does not please the consumer. For years, the company has taken a non-intervention approach to moderating its storefront and the way users behave on their platform. This has resulted in high-profile controversies surrounding games such as Hate, a mass murder simulator that was taken from the company's Greenlight program just to be reinstated, and unpleasant tactics from users like odious and trollish vapor healer pages, rampant fanaticism in community gaming forums, and bombardment review of indies games considered excessively progressive by right alt communities. Valve's philosophy around Steam has been consolidated over the summer after the rare launch of a game centered on school shootings, with a new policy that allows "everything" to Steam, unless it is unlawfully or intentionally designed to infuriate the people.
The result has been more developers eager to sell their games elsewhere, and more consumers interested in alternatives to Steam, as the store has become overrun with substandard games and moderately loose community boards. Meanwhile, Valve's virtually non-existent curation strategy makes it harder than ever to find games that you enjoy, while developers have long lamented issues with the recommendation algorithm and the Steam discovery features that directly affect traffic on game listings.
This has created an opportunity not only for Epic, but for other companies who see Steam's weaknesses as problematic points to be explored. Game Chat Platform Discord now runs its own game store because it already has the social infrastructure around how PC gamers connect with friends and chat via voice and text. Selling games to these same consumers and giving them a destination to launch them and play them with friends could make the Discord a more attractive store.
The valve is clearly feeling the heat. She began copying Discord's social resources and announced in September that she would begin to moderate community boards. Last year, he said he would try to fix the review bomb by temporarily freezing the revisions. But most importantly, prior to the launch of Epic in the store, Valve said last week that it would change its terms in the revenue divisions for game developers. That way, if you sold more than 10 million copies, you would get 5% more revenue (70% to 75%) and 5% more if you sold at least 50 million copies. It was a clear admission from Valve that it knows its platform is not untouchable, and that improving the financial incentives to sell a game on Steam may be the only way to prevent developers from migrating elsewhere.
That may not be enough. As pointed out by game developer Rami Ismail, who was one of the founders of the indie studio Vlambeer, Valve's new policies are aimed at appeasing developers of large budgets. "Have things really gotten so bad for Valve in the increasingly competitive front-of-shop scene that they now need to subsidize big studios?" He wrote on Twitter last Friday. "Are they so unwanted for big titles now that the big titles tend to launch their own store?"
Have things really gotten so bad for Valve in the increasingly competitive store front scene that they now have to subsidize big studios? Are they undesirable for big bonds now that the big bonds tend to launch their own store?
– Rami Ismail (@tha_rami) December 1, 2018
"Steam's new 25% and 20% levels represent a major improvement for the 1% of games and make Steam a significantly better deal for gaming than Google Play and the iOS App Store," joked Sweeney in a interview. The Verge This week, make it clear that the new terms of Steam do not favor all creators – only the largest.
How will this ultimately end up for consumers? This is an open question, but competition usually results in lower prices. If game developers get a bigger sales cut from the Epic store, they may be able to reduce the initial price of the game by $ 5 or as much as $ 10. Such an advantage could drive consumers away from Steam or, minimum, reduce the financial burden on some developers and allow them the freedom to create another game or to produce an expansion. Regardless, Epic's move – not just with revenue sharing, but also with the waiving of Unreal's royalty rates – will earn more money for developers. This could be all the encouragement they need to stay on Epic's side in the future.