I think it’s better to reframe the question as “Are there downsides to Valve’s PC market dominance?” or “How is Steam’s 30% cut different from Xbox or Playstation?”
For the latter: it’s worth noting that Microsoft and Sony sell their hardware at a loss, and make up the difference through software, so there are obvious developer benefits to the 70-30 split. For Steam, the equivalent value-add for developers is only the platform itself, and I would wager for many of those developers the biggest reason for selling on Steam is not the feature set - though obviously useful - but because that’s where the users are.
So, users get a feature-rich distribution platform, and developers (and by extension users) pay a tax to access those users. So the question is, how fair is that tax, and what effect does that tax have on the games that get made? Your view on that is going to depend on what you want from Steam, but more relevant I think is how much Steam costs to operate. How much of that 30% cut feeds back into Steam? My guess is not much; though I could be wrong.
But anyway, let’s imagine you took away half the 30% cut. Where does that money go? Well, one of two places: either your pocket, or the developers (or publishers) pocket (depending on how the change affects pricing). The benefits to your pocket are obvious, but what if developers just charge the same price? Well, as far as I’m aware, a lot of games are just not profitable - I read somewhere that for every 10 games, 7 fail, 2 break even, and 1 is a huge success - so my personal view is that this is an industry where developers need all the help they can get. If that extra 15% helps them stay afloat long enough to put out the next thing without selling their soul to Microsoft or Sony or whoever is buying up companies these days, and Steam isn’t severely negatively impacted, I’d call that a win.
But of course, that won’t happen, because Steam has no reason to change. That’s where the users are, and they are fine with the status quo.
So, users get a feature-rich distribution platform, and developers (and by extension users) pay a tax to access those users. So the question is, how fair is that tax, and what effect does that tax have on the games that get made? Your view on that is going to depend on what you want from Steam, but more relevant I think is how much Steam costs to operate. How much of that 30% cut feeds back into Steam? My guess is not much; though I could be wrong.
But anyway, let’s imagine you took away half the 30% cut. Where does that money go? Well, one of two places: either your pocket, or the developers (or publishers) pocket (depending on how the change affects pricing). The benefits to your pocket are obvious, but what if developers just charge the same price? Well, as far as I’m aware, a lot of games are just not profitable - I read somewhere that for every 10 games, 7 fail, 2 break even, and 1 is a huge success - so my personal view is that this is an industry where developers need all the help they can get. If that extra 15% helps them stay afloat long enough to put out the next thing without selling their soul to Microsoft or Sony or whoever is buying up companies these days, and Steam isn’t severely negatively impacted, I’d call that a win.
Would you claim that devs who also port their game to console are guilty as the consoles also take 30% cut? The entire console scene is basically what Valve is doing, except valve decides to compete on an open platform instead of a walled garden.
The consoles justify the amount they take more because they are selling hardware at a loss to bring in users, so as a developer, you are seeing direct, tangible, and ongoing benefits to giving the manufacturers a cut. Every console cycle, there is renewed investment in the ecosystem to keep users interested.
For digital platforms, the continued investment in the platform itself is both less tangible, and I would wager less overall (though we can’t know this for Steam because we don’t have access to numbers like that). The longer Steam continues as a platform, the more true this is, unless you believe that Steam will continue to improve at the same rate. I don’t see my interaction with Steam being much different 5 years from now as it is today, so it is less obvious to me that such at steep rate is justified.
Like, imagine they “perfected” Steam. They made all the features users could ever want, and there becomes no reason to make any more changes. Should they keep charging the same rate? Or, maybe a better way to frame it, would be that rather than investing some of that 30% rate into improving the platform, they invest in developers themselves to make better products, because it’s the only place left to make the platform better than it was before. This would be equivalent to just lowering the rate across the board, in my opinion.
Not all consoles sell at a loss. Nintendo outright sells for profit, and the ones that didnt are the WiiU and thr Virtual Boy, and I don’t have to remind you how those sold.
And we are also at an age where even Valve is in the console space. They sell the steamdeck at a severely lower price point compared to its competion.
Look at the ROG Ally, Lenovo Legion Go, Aya Neos entire catelog, GPD Win 4, Ayn Loki and a bunch more.
The argument about consoles selling it at subsidized price is justifyable means your saying Valve is in the right to given they are now in that market.
This is an interesting perspective, and gave me something to think about!
I don’t think the Steam Deck is quite there in terms of adoption to justify an across the board tax. The order of operations is kind of reversed, where Steam is reinvesting money made from previous sales towards R&D and Hardware ambitions, rather than using the Steam Deck to bring in users. But if you’re developer that benefits from the Steam Deck’s existence, or saw a sales bump from Steam Deck sales, or some other benefit like that, I agree it’s a pretty good trade-off in that case.
Nintendo is a bit different because they sort of focus on their own thing and everyone else is secondary. Something like 80% of software sales for Nintendo platforms are first party, so it’s mostly a Nintendo machine. Frankly, I think they should take less of a cut. Indies do really well on Nintendo though. They have a kind of pseudo-monopoly of a younger casual gamer demographic, and they maintain that user base by putting out great software. It is an interesting counterpoint though.
Retail stores get a 30% cut from a game sale. Console manufacturers get a further $10 in licensing fees from that sale price, on top of the retail fee. That license cost is what goes to closing that loss leading pricing of the consoles. The retail fee they can charge through their digital storefronts is new to them but only helps them pay down their gap quicker, but they are also still taking that further $10 of licensing on top of the 30%.
That’s why some PC games are $10 cheaper than their console versions.
I think it’s better to reframe the question as “Are there downsides to Valve’s PC market dominance?” or “How is Steam’s 30% cut different from Xbox or Playstation?”
For the latter: it’s worth noting that Microsoft and Sony sell their hardware at a loss, and make up the difference through software, so there are obvious developer benefits to the 70-30 split. For Steam, the equivalent value-add for developers is only the platform itself, and I would wager for many of those developers the biggest reason for selling on Steam is not the feature set - though obviously useful - but because that’s where the users are.
So, users get a feature-rich distribution platform, and developers (and by extension users) pay a tax to access those users. So the question is, how fair is that tax, and what effect does that tax have on the games that get made? Your view on that is going to depend on what you want from Steam, but more relevant I think is how much Steam costs to operate. How much of that 30% cut feeds back into Steam? My guess is not much; though I could be wrong.
But anyway, let’s imagine you took away half the 30% cut. Where does that money go? Well, one of two places: either your pocket, or the developers (or publishers) pocket (depending on how the change affects pricing). The benefits to your pocket are obvious, but what if developers just charge the same price? Well, as far as I’m aware, a lot of games are just not profitable - I read somewhere that for every 10 games, 7 fail, 2 break even, and 1 is a huge success - so my personal view is that this is an industry where developers need all the help they can get. If that extra 15% helps them stay afloat long enough to put out the next thing without selling their soul to Microsoft or Sony or whoever is buying up companies these days, and Steam isn’t severely negatively impacted, I’d call that a win.
But of course, that won’t happen, because Steam has no reason to change. That’s where the users are, and they are fine with the status quo.
A (private) monopoly or virtual monopoly is always bad for consumers.
Would you claim that devs who also port their game to console are guilty as the consoles also take 30% cut? The entire console scene is basically what Valve is doing, except valve decides to compete on an open platform instead of a walled garden.
The consoles justify the amount they take more because they are selling hardware at a loss to bring in users, so as a developer, you are seeing direct, tangible, and ongoing benefits to giving the manufacturers a cut. Every console cycle, there is renewed investment in the ecosystem to keep users interested.
For digital platforms, the continued investment in the platform itself is both less tangible, and I would wager less overall (though we can’t know this for Steam because we don’t have access to numbers like that). The longer Steam continues as a platform, the more true this is, unless you believe that Steam will continue to improve at the same rate. I don’t see my interaction with Steam being much different 5 years from now as it is today, so it is less obvious to me that such at steep rate is justified.
Like, imagine they “perfected” Steam. They made all the features users could ever want, and there becomes no reason to make any more changes. Should they keep charging the same rate? Or, maybe a better way to frame it, would be that rather than investing some of that 30% rate into improving the platform, they invest in developers themselves to make better products, because it’s the only place left to make the platform better than it was before. This would be equivalent to just lowering the rate across the board, in my opinion.
Not all consoles sell at a loss. Nintendo outright sells for profit, and the ones that didnt are the WiiU and thr Virtual Boy, and I don’t have to remind you how those sold.
And we are also at an age where even Valve is in the console space. They sell the steamdeck at a severely lower price point compared to its competion.
Look at the ROG Ally, Lenovo Legion Go, Aya Neos entire catelog, GPD Win 4, Ayn Loki and a bunch more.
The argument about consoles selling it at subsidized price is justifyable means your saying Valve is in the right to given they are now in that market.
This is an interesting perspective, and gave me something to think about!
I don’t think the Steam Deck is quite there in terms of adoption to justify an across the board tax. The order of operations is kind of reversed, where Steam is reinvesting money made from previous sales towards R&D and Hardware ambitions, rather than using the Steam Deck to bring in users. But if you’re developer that benefits from the Steam Deck’s existence, or saw a sales bump from Steam Deck sales, or some other benefit like that, I agree it’s a pretty good trade-off in that case.
Nintendo is a bit different because they sort of focus on their own thing and everyone else is secondary. Something like 80% of software sales for Nintendo platforms are first party, so it’s mostly a Nintendo machine. Frankly, I think they should take less of a cut. Indies do really well on Nintendo though. They have a kind of pseudo-monopoly of a younger casual gamer demographic, and they maintain that user base by putting out great software. It is an interesting counterpoint though.
Retail stores get a 30% cut from a game sale. Console manufacturers get a further $10 in licensing fees from that sale price, on top of the retail fee. That license cost is what goes to closing that loss leading pricing of the consoles. The retail fee they can charge through their digital storefronts is new to them but only helps them pay down their gap quicker, but they are also still taking that further $10 of licensing on top of the 30%.
That’s why some PC games are $10 cheaper than their console versions.
Is there a source for the $10 fee for digital releases? I’d love to read more about it, had trouble finding it.