Court docs reveal Epic CEO's anger at Steam's 30% fees
arstechnica.com
arstechnica.com
People keep putting Steam on their desktop because Valve has spent decades cultivating customer's trust, meanwhile every other MBA has been burning it for short term gain. Partnering with Valve comes with access to things like APIs and tools, but you also receive a little bit of that trust by association.
Not only has EGS seemingly failed to build something with equivalent features, APIs, tooling, etc. but in doing so they've failed to show a reason to trust them. So if the lower cut isn't resulting lower prices, what's the value prop for customers? GOG has an angles: games nobody cared to make available for a long time and being DRM free. To me it looks like Epic took the MBA route and wanted to build a moat via console style exclusivity, but that's not trust. Free games aren't trust. Just being on the customer's machine isn't trust.
(Also, these letters aren't current. iirc Vale doesn't simply take a flat 30% cut in the current day)
Steam has a track record of making their product better and better and the biggest scandal I can remember is when they introduced paid mods since that risked undermining the free mod market and GabeN did adjust the pricing afterwards and did personally get involved with the PR fallout. Otherwise the service has just gradually gotten better and better for the customer. Steam is privately owned instead of being owned by publicly traded companies and that helps with my confidence in the company.
Not by Steam.
However there have been many cases where developers pushed an update that removed content, which is really the same problem. You can't play GTA San Andreas or GTA 4 with the original soundtracks if you purchased them on Steam!
https://www.pcgamer.com/grand-theft-auto-san-andreas-steam-u...
https://www.polygon.com/2018/4/27/17292836/gta-4-soundtrack-...
This should be illegal.
I play so few games that I'm happy to buy mostly from the much smaller gog.com. I'm not sure if their fees are less, but it at least raises competition.
I generally don't trust DRM platforms like Steam or Epic, but bravo to Tim Sweeney for championing smaller publishers unable to negotiate down from Steam's 30% fees.
As much as some Mall in your city charging high rental rates. If they are not stopping other malls from being built (say by bribing politicians), and they are not stopping people from setting up solo shops, I don't see where the anti-competitive force is.
Apple's case is much different. They are using oligopoly power in one area (high share of OS), to extract revenue in other area. It's like if one of the biggest cities in the country, had a Mayor who also owned the only Mall in that city and stopped any other Malls from being built and charged super high rental rates in that Mall.
I had a quick look.
Per https://www.shacknews.com/article/130287/valve-faces-antitru... , Valve are currently (?) being investigated for Most Favored Nation practices.
This is the equivalent of a high rent mall demanding that its shops don't charge less for its wares in lower rent malls.
Steam also doesn't do exclusives (beyond Valve's own titles), nor do they pay any OEMs to pre-install Steam - with the exception of the Steam Deck, all Steam installs come from people who actively seek them out. It's not like Apple where (until recently) you had to go through them to get your app on iOS and pay them every step of the way for the privilege.
It just comes off as greedy and whiney.
Games get my money on Steam because Steam provides me with a great experience to play those games. It's far more than just a CDN, and all it takes is to try to use an EA game on the Deck to see how bad other platforms are.
When they launched, afaik they were being pretty selective. A game being on Steam meant it was a good game, and in a way they were actually a publisher providing you with high converting distribution channels. It was like marketing and PR were almost baked in.
Now being on Steam means nothing. In fact they happily declared it means nothing: https://www.pcgamer.com/valve-says-it-will-no-longer-police-...
Steam even normalized a class of game (Early Access) that actually means negative things in general.
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Once they transitioned from publisher to glorified CDN + Forum Hosting, I think they should have reworked the pricing to reflect that.
A dev's game being on Steam and having access to that massive customer base is much more valuable to that dev than Generic Looter Shooter #8589 is to Steam.
Compared to nothing, yes there is 30% value is CDN hosting and a forum. Compared to a competitor there isn't - it's mainly network effects.
Or put differently, if you changed the name steam and launched them today along with a competitor that charges 15% is there enough more value to use Steam to downlad at that higher fee?
The answer is very likely not; however, that competition can't happen because of past network effects.
You want markets to compete on who has the better product, not on who got their first.
Game buyers don't care about the cut. They pay the same price. They're absolutely going to use a more polished more reliable service that actually offers refunds for defective games.
Game buyers are going to use the thing that's sitting on their desktop. Every other aspect of either store is tertiary.
EGS has been shoveling money in a furnace, solely to also be sitting on some desktops, but Steam has a decade+ head start and it's going to be an absolute slog.
So some developers only sell on that other store, and then people boycott them for not being on Steam.
Don't like the deal, don't take the deal.
I'm sure everyone would love to pay their suppliers less. Doesn't mean that they should.
If you sell your game on other platforms and don’t use steam keys (e.g. distribute it DRM-free on GOG), you aren’t bound to the pricing clause. It only applies if you’re generating the keys on steam to sell elsewhere. You’re welcome to give your game away on GOG and still charge $50 on Steam, as long as you’re not giving away steam keys for your game on GOG.
The following page lists some high level features but there's a lot more if you dig in: https://partner.steamgames.com/doc/features
Worth noting that Epic's store does not provide most of this. You get what you pay for.
The reason Steam gets my money is because the 10ft UX is by far better. It's not just a CDN, it's an experience to play games.
> Worth noting that Epic's store does not provide most of this. You get what you pay for.
Epic has EOS: https://dev.epicgames.com/docs/epic-online-services
And unlike Steam's solution, they're cross-platform aren't tied to being on EGS, meaning it's actually free, not costing you 30%.
> Anyone making games for Steam should make use of those to get the most out of their 30% in fees.
Not necessarily, because that will lock them into Steam. They should be using something like EGS or a 3rd party solution, because currently they end up needing to roll multiple versions of the game.
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I'm very well aware of Steamworks, but Steamwork's time has passed except for integrating directly with Steam. The features it offered have been completely and utterly commoditized. You've got stuff like PlayFab, Rivet, Photon, Normcore, etc, all taking a hell of a lot less than 30% of your revenue, even at massive scale.
Yes, making games depend on Steam-specific APIs will obviously make it more difficult to publish on other stores. But many games only publish to one store anyway.
Don't get me wrong, I don't think the 30% cut Steam takes is justified, but they take it because the competition isn't there yet.
- A Steam Networking equivalent is part of EOS: https://dev.epicgames.com/docs/game-services/p-2-p
- Epic offers a Steam Inventory equivalent: https://dev.epicgames.com/docs/epic-games-store/services/eco...
> But many games only publish to one store anyway.
Exactly the problem. Why exacerbate it?
> Don't get me wrong, I don't think the 30% cut Steam takes is justified
So then your original comment was just you being contrarian as you said "You get what you pay for." implying Steam is in fact offering what the game creators are paying for :/
Steam Networking is not P2P. It's client-server. Steam also has P2P networking but using P2P networking is a big risk these days when it exposes your players' IP addresses to others. Steam Networking has a sub-feature called Steam Datagram Relay which deals with routing issues and hides player IP addresses.
Steam's inventory service takes this to another level. It's not just microtransactions. Items can be traded with others, can be bought/sold on the marketplace for store credit, etc. The marketplace alone is a significant additional source of revenue for some Steam games because the game gets a cut out of each sale.
I simply meant that you get more out of Steam with it's bigger cut.
And it does this by integrating with XInput and DirectInput. So players who have Steam can use it, and players who don't have Steam can't use it anyways so it's not a loss.
> Peer connections will only ever use relay servers. This will add latency to all connections, but will hide IP Addresses from peers.
https://dev.epicgames.com/docs/en-US/api-ref/enums/eos-e-rel...
You can't have modern P2P without relay servers of some kind for NAT reasons anyways
It feels like you don't really know the tech you're talking about tbh. Steam's inventory system is not something that I'd call a net positive. An unregulated black market that's been tied to gambling and theft is not something most game developers are clamoring for (and that's reflected in how many games actually use the inventory system for anything of note)
Valve investing in Linux gaming? Same deal.
They're whiny and petulant and they play dirty with the press, but Epic is ultimately staking their deep pockets and public reputation on championing the cause of many little guys.
It is similar to how Microsoft is now unhappy to have to deal with Apple and Google, after killing Windows Phone, when it was around 10%.
Turns out 10% market share was still better than not owning any mobile platform where they can't really push XBox games as they wish.
According to the verge they killed it when it was 2.5% [1]. IDC also lists 2.5% by the second quarter of 2014 and a peak of 3.4% in 2013 [2].
[1]: https://www.theverge.com/2017/10/10/16452162/windows-phone-h...
https://www.ft.com/content/80972f3a-29c0-11e3-bbb8-00144feab...
https://thenextweb.com/news/report-windows-phone-overtakes-i...
https://thenextweb.com/news/windows-phone-climbs-to-nearly-1...
You can play pedantic and assert 9.2 isn't the same as rounding it off to 10, anyway.
it's a direct result of its private ownership, there is no need to constantly squeeze customers/suppliers for more every quarter
if it was owned by a VC/PE fund, or a public company then it would be very different experience indeed
maybe (MAYBE) back in the days of physical distribution the 30% would make sense... and don't bring it "Steam offers more than distribution" because plenty of big fish don't use it or wouldn't want to but the brain-less gamer community seems to like fancy trophy, streaming etc. so they have to comply
edit: wonder what if Nvidia, Intel, AMD and the likes starts charging 30% of all you created...
Even big fish like EA and Ubisoft can't run their shops anywhere near the reliability that Valve provides. Sure, 30% isn't holy for me and I'm happy for Epic try and beat Valve, but so far, which is now nearly two decades, it's been worth very cent of the thousands of currency I've thrown Valve's way. Especially Proton is something I don't see anyone else do, and it's saves me money too.
Steam does not require pricing parity between marketplaces as long as you are not distributing Steam keys through them. I.e. if you sell Steam keys on Humble Bundle, you have to have price parity with Steam and match sales within 30 days before/after the Humble sale. But if you also sell on GOG, which does not provide Steam keys, the GOG price can be whatever you want. (So if you sell on these 3 platforms, if the normal Steam price is $30, then the normal Humble price also has to be $30, but you can price it on GOG at $5 all the time.)
To further illustrate my point, let's take some real-world examples. Ubisoft owns the Ubisoft Store and presumably takes a 0% cut for their own titles. The Ubisoft Store does not sell Steam keys, so it is not required to have pricing parity with Steam. One would therefore expect Ubisoft would attempt to court players into its own store with lower prices so they could get a higher percentage of each sale.
But if we look at Assassin's Creed Valhalla, the regular price is the same on both storefronts. Even more interesting is when we look at historical price data [0], which shows it actually goes on sale on Steam more often than it does on the Ubisoft Store.
Likewise, EA has F1 2024 available for pre-order at $69.99 on both Steam and the EA Store [1]. EA Sports FC 2024 also has the same normal price of $69.99 on both Steam and the EA Store, and it seems to go on sale on both platforms at about the same rate [2].
Cyberpunk 2077, developed by CDPR, owners of GOG, is also priced the same across all storefronts and goes on sale at about the same frequency on each [3].
For lack of a better term, the cut is a cost of doing business - it's a hidden tax that doesn't affect the end price consumers pay, even absent the typical pricing parity agreements that many D2C companies have entered into to get their product on traditional retailers' shelves.
Even in cases where there are no legal obligations to price match, the companies still do it, and when you think about it, the reason is obvious: the only people who benefit from a cut being lowered are executives who see bigger bonuses and shareholders who see larger dividends and increased stock prices. It doesn't actually affect the consumer, nor does it result in better pay for the individual developers.
If the cut were reduced (and back when games were mostly distributed by retailers, the cut was typically 60%+, so we have historical precedent for the effects of it being reduced), very few companies would drop prices - most would be content to enjoy the extra revenue because games are not a standardized commodity thanks to IP laws. (Think about it: Forza and Dirt don't really compete in the same market, despite both being racing sims, so one dropping the price won't be winning many customers from the other.)
I'm sure some small indie devs could meaningfully benefit from a smaller cut by the storefront, but indie devs typically price their games lower, so the ultimate monetary gain is much smaller for them than it is for Ubisoft, EA, etc. and if a decreased cut is what saves them from bankruptcy, they weren't in a very sustainable position to begin with.
I'm not trying to say a 30% cut is right, just that people talk about it as if lowering it would be a win for the consumer and for individual developers (and that Valve is holding the industry back as a result), when historically, the only ones who have really benefited are the AAAs' C-levels and shareholders.
[0]: https://isthereanydeal.com/game/assassins-creed-valhalla/his...
[1]: https://isthereanydeal.com/game/f1-24/info/
[2]: https://isthereanydeal.com/game/ea-sports-fc-24/history/
[3]: https://isthereanydeal.com/game/cyberpunk-2077/history/
No, back in physicals distribution times publisher was swallowing >70% and actual dev houses were bottom feeders often working on fixed commission.
He is fighting everyone's 30% fees.
Perhaps, just perhaps, they are worth it because if they weren't the it would be easy to create a platform.
Proof of his absolute stupidity is here [0], where he says (referring to MS, Nintendo, and Sony), "* Well, they subsidize hardware, so they sell their hardware, as far as I can tell from widely published reports, at a loss, and so the fee needs to cover that*".
WTF???? So if you lose money, the he isn't going to sue you, but if you make money, then he will sue you. At this point, I hope someone destroys his damn company due to a slip & fall lawsuit. God, I can't take his shit anymore!!!
[0] - https://www.gamesindustry.biz/epic-explains-why-it-hasnt-sue...
/rant
That seems totally reasonable to me.
Why 12% ? That's not cheap for what is essentially basic ACH billing service.
If I go to get a service like that, I have several vendors to choose from and only pay about 1/4 that price. [1]
Maybe someone should sue Epic for unreasonable pricing.
[0] - https://www.theverge.com/2023/3/9/23630864/epic-games-store-...
Perhaps. And perhaps its monopolistic behaviour. If so, we all stand to win by challenging it.
> WTF???? So if you lose money, the he isn't going to sue you, but if you make money, then he will sue you.
Sounds like Sweeney is suggesting the hardware itself is sold at a loss, not that console manufacturers make no money.
It is maybe easy to create a platform, but much harder to beat network effect.