With Epic's Store On The Way, Steam Is Finally Feeling The Heat

Image: Luke Plunkett

Over the years, people have pondered what a viable competitor to Steam’s dominance would look like. Who would pull it off? What would be their silver bullet, capable of hobbling even Valve’s game-slinging behemoth?

Late last week, Valve announced that Steam will take a lesser cut of revenues from games that sell $US10 and $US50 million worth of copies—25 per cent for the former and 20 per cent for the latter.

Today, everyone emitted a collective “ohhhh, now I get it” upon finding out why: Unreal Engine creator and Fortnite developer Epic announced that it’s on the verge of launching its own store, one that’ll take a cut of just 12 per cent of earnings from developers—way down from the industry-standard 70/30 split that Steam helped pioneer.

In an interview with GamesIndustry.biz, Epic Games founder and CEO Tim Sweeney said that, while running Fortnite and selling digital goods through the world’s most popular game, Epic realised that 70/30 isn’t necessary.

“In our analysis, stores charging 30% are marking up their costs by 300% to 400%,” he said. “But with developers receiving 88% of revenue and Epic receiving 12%, this store will be a profitable business for us.”

Epic’s announcement puts more pressure on Valve, a company known for its tendency to only react out of absolute necessity, whether in regards to hate groups in Steam’s inconsistently policed community section, “fake games” taking advantage of an exploit in Steam’s trading card system, the normalisation of review bombs as a viable tactic to try and tank games’ sales, or the Counter-Strike gambling ring.

Steam never had all the biggest games on PC, what with League of Legends, World of Warcraft, Minecraft, and others occupying their own mammoth chunks of the internet. Valve compensated by opening up Steam to indies and, over the years, home-growing hits that ranged from Terraria to Stardew Valley to PUBG to Rust to Undertale.

But the number of big-name absences has become more conspicuous in recent years. Two of this holiday season’s biggest games, Fallout 76 and Call of Duty: Black Ops 4, both eschewed series-typical Steam releases and came out on publisher-owned platforms instead.

Fortnite continues to do numbers that rival Steam all by its lonesome, Overwatch is dominating the team shooter scene on Battle.net, and EA’s Origin continues to, er, exist, which means series like Battlefield have also departed Valve’s storefront.

Other competitors, too, like the Discord store have popped up, though they haven’t made many waves so far.

There’s now a blueprint out for publishers taking their 30 per cent revenue cuts and going home, and more of them are starting to follow it. Valve doesn’t have one big competitor; rather, it’s surrounded by a bunch of fiefdoms that, simply by existing, call into question the necessity of publishing games on Steam at all.

Smaller developers, meanwhile, are dissatisfied with a service that seems increasingly indifferent to their needs, leaving them to force their signal through the noise while surrounded by tools that an increasingly toxic community can game as they please. Many have wanted to jump ship, but there hasn’t been anywhere else to go.

That feeling of helplessness has only bred further resentment as Valve has stubbornly stuck to its guns.

Despite all that, Steam is still massive, and through everything from deals to front page carousels to discovery algorithms, Valve has tried to give developers more ways to surface and resurface their games.

Getting games up on the store has become a relatively straightforward process given how many eyeballs they stand to be seen by, so in terms of bang for potential buck, Steam remains tough to beat—even with smaller, more developer-focused stores like Itch.io in the mix. Steam can still be a hit-maker - as demonstrated by recent success stories like Raft, Slay The Spire, and They Are Billions - albeit one that makes improbable underdog magic happen on an increasingly rare basis.

But Steam is also cluttered with features and games, the product of years of problem-solving through addition rather than streamlined subtraction, and the diehard portion of its user base that’s often responsible for elevating games to a place of visibility has relatively homogenized tastes, making the environment inhospitable (or even downright hostile) to games that want to explore, for example, marginalised identities, status-quo-defying politics, or even just non-traditional mechanics.

If they’re not careful (and sometimes, even if they are), developers can find themselves up to their necks in a quicksand of community toxicity, sagging sales, race-to-the-bottom pricing, and Valve’s notorious hands-off approach, which frequently exacerbates these issues.

In the past, developers and publishers worked with Steam because Valve’s store offered guaranteed exposure - and hopefully, sales—to millions of users who weren’t going anywhere because they’d purchased so many other games on the service.

These days, it’s not clear that getting on the platform leads to sufficient visibility, especially given how much potential trouble developers have to deal with in the process. Bigger games will, of course, rise to the top of the charts faster than others due to expensive marketing campaigns and things of the like, but even those games struggle to remain on top for long.

Now Epic is trying to do Steam one better. A 70/30 split might not be appealing to developers and publishers anymore, but how about 88/12? On top of that, Epic is touting scale-tipping features Steam developers have been requesting for years like a built-in bug-reporting system, opt-in/out user reviews, and a lack of forums and other social media to mitigate Steam’s rampant toxicity issues. Developers, it sounds like, will be able to handle things more on their own terms.

In addition, if developers decide to use Epic’s Unreal Engine 4 to make their games, they don’t have to pay additional royalties to Epic—a proposition likely appealing to smaller developers already burned by Steam’s new make-the-rich-richer approach.

Contrary to popular belief, competition between behemoths is not always good. While it’s theoretically better than a virtual monopoly, it can lead to exclusives, a lack of online play between versions of the same game, and other decisions that ultimately hurt people stuck in the middle.

The fact that Epic’s first salvo seems to have caused Steam to go all-in on big publishers at the cost of already incensed indies lends credence to that. Still, there’s a lot to like about Epic’s approach, and with Steam clearly feeling the heat, maybe Valve will finally fix a platform it can no longer afford to leave broken.

And if not, perhaps the company will finally suffer some real consequences for its prolonged inaction.


Comments

    Another launcher? Yay! /s

    And game companies will just pocket the extra cash. You are dreaming if you think prices will drop.

    Last edited 05/12/18 4:11 pm

    The system needs a shake up, so let's see how this goes.

    I've noted on here (and elsewhere) for years that with the slow proliferation of publisher\developer stores, that Valve would need to start making acquisitions in order to ensure AAA titles on its own store, and kick start its own development as well.

    Well, Valve managed to make a card game. lol.

      Maybe it'll push Valve into getting their shit together? They literally have a catalogue of waiting to be made games that would be smash hits:

      Left 4 Dead 3, Half Life 3, Team Fortress 3 and a legit Counter Strike 2 to begin with would be killer?

        I feel like Half Life 3 could be the best game ever released but people's expectations would be so high it'd still get trashed in reviews. Wasn't CSGO basically CS2 also? I haven't played the CS games in ages so I have no idea.

          CSGO was ok, but felt more like an expansion. I feel like they could make an incredible CS sequel these days totally revitalising the game. Office environments, whole buildings etc. Totally redo the game from the ground up like TF2 did to TF1.

      They did acquire the developers of Firewatch. Plus they have a few VR titles in the works. A AAA game from them would be pretty good right about now though.

    The question though is will we see a revolution in gaming storefronts or a collective "Oooh, that's why Valve made those decisions."? On that topic, how have storefronts that aren't GOG and Steam been going? I hardly hear anything about Origin, the UbiStore, (does that actually exist?) the Windows App Store, the Discord Store, the Twitch Store (they had one right?) and whichever other online marketplaces other people and their furry companions have.

      You can find cheaper keys for Ubisoft games that are valid for their own store. Otherwise people are actively hostile to Origin and other stores (except GOG, which is fairly unique). Any attempt to challenge is going to be an uphill battle and few people will care that’s Generic Indie Game isn’t on Steam. They sure as hell will if the next AssCreed or Doom isn’t.

    Steam now finally starting to feel the heat?

    Not when Origin launched?
    Not When uplay launched?
    Not when GoG launched?

    Not when the many other platforms launched?

    Steam will continue to exist. It's a juggernaut.

    Nothing will change. Just like it has never changed the previous times.

      The Epic store has the benefit that it has the most eyes on it at the moment by people downloading and installing Fortnite.

      Well, origin library are mainly EA games, too little third party. Uplay have exclusive ubi games only, which even steam will launch Uplay to start the games. Lastly GoG, AAA rarely go DRM free.

      There is no store that have as open and big library as steam, hence the dominance. Not to mention the indie scene is already unhappy with steam charging them more than AAA studios. It can potentially cause a stir, toppling probably not but steam will have to make some concession in the long run.

      Last edited 05/12/18 5:07 pm

      Steam absolutely felt it when EA pulled their catalogue. It went from primarily carrying AAA titles, to pushing indie and early access titles. Look at the front page these days, that's primarily all it is. Gone are the days of fantastic sales and being 'the only kid on the block', now there's an abundance of choice.

    I think if Ubisoft stopped releasing their games on Steam that a lot more people would pay attention to their store... Especially with the discount codes they offer.

      Yeah I gotta admit, Uplay has gotten a lot better. I don't get dropouts on it anymore, both it and Origin are stable these days. Tbh, it's tiresome having multiple platforms for games, but like streaming services, it's inevitable.

    A big reason people use Steam, I think, is because it acts as a good-enough launcher for games. Whoever solves that problem - letting people take their Steam libraries, and still be able to access them elsewhere, even if it's just triggering Steam as a middleman - will probably get lots of people to jump ship.

    Careful what you wish for.

    Fragmentation of the market across multiple platforms increases inconvenience to consumers.

    Inconvenience to consumers increases piracy.

    Steam’s greatest contribution to the game’s industry was making it easier to manage a game library through unified purchasing than it was pirate them individually, to the point that price was a secondary consideration to convenience.

    Fuck that up, and the paradigm may shift once more. We’re seeing it with music and video. Too many walled gardens, too much exclusivity, too many platforms to manage and convenience disappears, along with the willingness to pay for a worse experience.

    I can easily see this happening, with publishers doubling down by making everything online-only, forced social/multiplayer, with revenue streams shifting further from box price to microtransactions; all proven techniques for combatting piracy.

      Careful what you wish for.That said, Steam has come frighteningly close to monopolising the PC digital distribution market - for some people it's effectively their only mode (by their own choice!) of getting games. A fragmented market would at least potentially increase competition - either by increasing cuts for developers, or reducing prices.

      It wasn't all that long ago that we just bought games from a store and could do with them as we pleased, we can probably go back to that. It'd mean abandoning DRM though.

    Epic Games must sell every game that Steam does and also games that Steam doesn't have, like Fallout 76.

    Epic Games Launcher must be the only launcher needed to play games, no more Uplay, Origin, Bethesda.net, Battle.net, etc.

    All games that have achievements on console must have achievements on Epic Games, especially Ubisoft games which have achievements on console but don't have achievements on Steam.

    Epic Games Launcher must have a reliable cloud service for ALL games.

    Must support Australian currency.

    Must have better, more customizable profile pages than Steam to display your achievements, recently played games and more. Also must not have profile name history.

    These are the only ways that Epic Games can beat Steam. Sadly, not one of these features will be added.

    So now that Epic Games is out of the way, we have the choice to play on PC where the only good thing is 60fps, or consoles where the only bad thing is 30fps.

    If you have any questions or complaints, I don't know what you can do about it because I won't see them.

    Good day.

    Well since steam offers an idiot-proof-ish method to run Windows games on Linux, and it's unlikely the others will even have a Linux launcher, I don't expect I'll be moving away from steam any time soon... And if games publishers decide to go full retard and only publish via a non-steam distribution platform, I for one won't buy their games. Not a hard decision.

    I hope Epic fails purely for the reason that if Valve were to go down and close shop (an extreme outcome), then I would lose many purchases.

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