Valve's 30 percent revenue cut was 'killing PC gaming,' says former employee

https://www.techspot.com/news/79566-valve-30-percent-revenue-cut-killing-pc-gaming.html

In context: To say the PC gaming community is torn at the moment would be a massive understatement. Heated Epic Games Store vs. Steam arguments are raging on across Reddit, Twitter, and even TechSpot. It's not hard to see why this is the case - Epic hasn't exactly earned itself a lot of goodwill with its business practices as of late.

Despite missing a widevariety of features that Steam already has, Epic continues to scoop up numerous upcoming titles (sometimes shortly before they were set to launch on Steam) and make them timed exclusives on their own storefront.

Regardless of which side of the debate (if any) you land on, one thing is certain: the Epic Games Store is here to stay. Why? According to one former Valve developer, Richard Geldreich, it's because Steam's 30 percent revenue cut is unsustainable in the current market

Geldreich, who posted his thoughts on the matter on Twitter, went so far as to say said revenue cut has been "killing PC gaming." He also claims that at this rate, Steam will eventually only contain "shovelware," indie games, "porn" and other 2nd-tier titles.

Of course, there's more to the story. For starters, Geldreich was talking in a non-official capacity and simply giving his opinions on a social media platform. As such, his point that Steam was killing PC gaming was likely hyperbole, and he only mentioned it in direct response to somebody else who claimed Epicwas killing PC gaming.

In truth, the industry has actually been doing pretty well for itself, hardware sales aside. PC gaming platforms are bigger now than they've ever been, and numerous smaller studios have found great success with their latest titles on PC, like Divinity: Original Sin 2 or Kingdom Come: Deliverance.

However, Geldreich's deeper point here is that Steam's 30 percent revenue sharing model became obsolete some time ago, not just recently with the Epic Games Store controversy. As he notes, when the only alternative was traditional retail and its 50 percent (or more) revenue split, Steam's cut probably seemed pretty appealing.

Now, the industry is in a different place, and AAA games have become significantly more expensive to make. Despite the Epic Store's faults, Epic's mere 12 percent revenue cut theoretically allows for developers to invest more resources into their projects or pass the savings on to consumers (if not both).

It's important to note that the long-term success of Epic as a company is irrelevant here. All that matters is what Epic may force Steam to do in the next couple of years.

After all, as Epic continues to swipe more and more high-profile titles from Steam, Valve will likely have to react eventually. How soon it will do so and what form that reaction takes is unknown.

If we had to speculate, it'd make sense for Valve to either match Epic's 12 percent cut, or at least come close at around 15 or 18 percent. Alternatively, Valve may start throwing its own money around to secure Steam exclusives. That could backfire, though, given the major negative public sentiment that Epic is currently dealing with.

At the end of the day, for now, the situation isn't great for PC gamers. Exclusivity deals are generally disliked by consumers (and many devs seem to consider them a necessary evil at best), and it doesn't help that these deals are being signed by some of the most popular, well-liked development studios out there, including Gearbox and Obsidian.

However, with a little luck, Epic's allegedly anti-consumer business practices may just improve the industry as a whole over the next few years.

So, MS/Sony/Nintendo's more than 30% cut is also killing the console industry? Anyway, Steam gives me regional pricing and covers my transaction fees while Epic doesn't. In some cases it's 50% more expensive to me. Do tell me why the heck would I support Epic when it has a shitty service that is also expensive compared to Steam? Lastly Valve have reduced the percentage cut way before Epic to 20% based on sales slabs.

As NoodleFighter rightly pointed out in another thread it's not about percentage cuts because Discord offers 10% cut while having a user base of 250M. How many games uses Discord as a store? 30%/12% is a just a PR thing.

Read through his twitter posts, the guy has a boner for Epic.

However, I do agree that 30% is too much, and that being lowered could be about the only good thing from Epic.

But again, it benefits dickheads who never know when enough is enough. An industry that recently, tried to make gambling aimed at children the norm, turning a £50 product, into a mobile game model or grind or pay (which they still do) among an entire collage or bullshit to you (the consumers) detriment.

It's sort of like trying to empathize with Saddam Hussein as he's hiding in his hole as the Amiercans come, very very difficult.

I love how he says Steam is for indie and porn games and Epic is for AAA games.

He has a personal vendetta out for Valve.

He should go and work for Epic.

"it doesn't help that these deals are being signed by some of the most popular, well-liked development studios out there, including Gearbox and Obsidian."

But the deals are signed by Publishers, not the developers?

And nobody likes the Publishers, at all.

Epic are only swiping titles as exclusives because they're paying upfront for them. If 30% was such a big deal devs would going in flocks to the Discord Store which only takes a 10% cut.

Valve likely aren't trying to compete with Epic's percentage cut yet and are trying to wait them out because Epic is heavily relying on buying out devs and publishers and they will eventually run out of Fortnite money to burn through.

Not in the case of Borderlands, as Randy is the one who convinced the publisher to go for the Epic exclusivity.

+ I'm certain that Valve's VR set will support a shit ton of "AAA" Steam titles and that alone will be worth it for people not to use Epic.

Only filthy peasants swim in them Steaming Pee Salty Seas.... Go X1X MonsterBox or go home. lol :P

Quite literally, Pornhub has more features then the Epic Store XD

Here's 2 things Epic could have done and what they did do, laid out. Could have:

1. Offered the same games as Steam with no exclusives but at lesser prices. (if the developers wanted to lower prices of course) That would have been actual competition, and that would have been ok. Just decent but not great.
2. Epic could have taken all that Fortnite money that they are buying up exclusives with and funded a bunch of AA games. The market is nothing but big and little, AAA games and indies. There's nothing in between, they could have filled the market out with a dozen or so AA games and done a real service to the community. That would have been awesome.

I don't like using Epic store unless I really don't have other options to buy the game I really want to play and luckily, I got Metro Exodus with my RTX 2070 purchase thus it's the only game I have in the Epic store Library.

True exclusives could be the draw for me. I don't mind using Battle.net for Warcraft, Microsoft store for Forza nor Uplay or Origin for the Ubisoft and EA games...

Now they are just buying games away and my thoughts are just:

"Well thank you for locking Control away for a year, that just gives me more time to clear my backlog. And I will enjoy the game next year ... on steam"

I'm not 100% positive but I think this is complete bullshit. The 30% that Steam charges is nothing compared to the costs of designing and printing, packaging, storing, shipping & logistics, local marketing, and buying store shelf space in stores. I don't know how long ago this was, but we have done a rough estimation of the costs involved with physical distribution compared to digital if you run the store. And 30% of the profits is nothing compared to the old way of distributing games. Of course, compared to other digital stores? That is maybe a different story. But they are making so much money per digital sale compared to physical sale it's almost criminal. (A digital price of around $35 would get them about as much money as a $50 physical release, not even taking into account increased sales numbers because of a lower price point. Epic came out years later, with basically the same story.) There is no way that a 30% cut is somehow 'killing PC gaming'. They are still distributing physically, and it's so profitable to take that 30% cut that to speak of killing PC gaming is just mind boggling.

I cannot imagine that 30% is unsustainable for Steam unless their digital competitors ask way less for a similar treatment. And that's the real point here, right? Epic asks way less. It's a huge gap that will grow magnitudes smaller. As I'm sure the Epic store will start offering more and more features like Steam (which cost money). (And if they don't, Steam doesn't have much to fear.) BUT they have the wrong mindset. They are against user reviews. They're more about curation. They want to determine for you what game is good enough for you to get the chance to purchase it. As things get saturated, good or great games may not even get a chance on the Epic store if it doesn't please them enough. They are scared of the people and are unwilling to work with them. Despite the Chinese backing (Chinese move way faster than the rest of the world.) I bet it will take them at least 5 years to change their mind about those things and give the consumer the same level of power that Steam offers. And until that happens, there will be a huge market for Steam, even at a 30% rate. Cause these people keep thinking about things the wrong way around. You can have the products, that doesn't mean you're going to get the audience. You need the audience, and the products. It's not a guarantee in gaming that you get and keep the audience. Especially when you offer less for the same price to consumers.

"Despite the Epic Store's faults, Epic's mere 12 percent revenue cut theoretically allows for developers to invest more resources into their projects or pass the savings on to consumers (if not both)." - Pricing on the Epic store has not even normalized compared to physical. They are still charging the same prices as physical (or higher than physical in some cases) depending on your location on Earth. So they are raking in cash on the Epic store, and why would they change that? Games will rarely ever directly compete with one another. There's no incentive for games to become cheaper unless we're talking winter-sales. The audience is used to paying this much...

Where did the hefty increase in profits from digital distribution go? Or the manifold profits made on microtransactions? Even if Steam told us "From today onward we shall charge nothing at all," it wouldn't matter as much as those two changes in the industry. Was there a big spike in more and better games being made by the big guys since their profits have skyrocketed? I'm under the impression that big publishers sit on more IP's, use less of them, and they make less games, and the prices stay up. So how are lower rates charged by Epic going to help, or are my assumptions wrong?

Eh there are so many games to play atm... I have no trouble waiting a bit longer for the game to come out on my platform of choice. I just want to continue my collection on the same place I been buying from the last many years.

La connerie.

Valve have made many enemies over the years it would seem, if 30% is killing gaming I wonder what the likes of Nintendo or Sony are doing with their cut which is rumoured to be about the same.

But yes Valve do need to face their competition, they have been sitting on their hands a bit on the gaming side of things. L

I do like their focus on doing maximum damage to Microsoft though, Gabe has a personal vendetta against them which is always nice.

The main battle seems to be Epic vs Valve now. Even MS is more than willing to put a lot of their older titles on the Steam service, knowing it's a lot more popular than their very own MS store. Even the newest release of theirs: Halo MCC will be launching simultanously on Steam and MS store.

I do agree that Valve has been way too lazy when it comes to creating new games, on the other hand they have always continued to improve their steam store (while also making it worse by opening to flood gates to asset flips and distasteful games like porn and school shootings).

On the other hand I do have to wonder what Epic is doing for PC gaming that is making them better than Valve (not that you claimed any of that, just writing my personal feeling here). Fortnite was an interesting concept to me but I lost interest when it became Battle Royale. The last Epic games I have played have all been Xbox 360 exclusives. So instead of enticing me with quality new games, exclusives or new projects they just lock away my ability to purchase on Steam. Store wars are a bit absurd to me when there aren't real 'exclusives' in the equation.

Good. PC gaming is lame.

You should be buying AAA games on consoles. That is how games are meant to be played.

Steam is already the land of indies and porn sims. It’s gross and attracts the weirdos lol

Another thing I have to wonder here: He claims that Valve's 30% cut is (was?) killing PC gaming.

Yet with the rise of Valve and Steam we saw PC gaming prosper: We've never had this much support for PC gaming from Japanese companies as before, we never had this many PC version of console games before, we never had this much interest in PC gaming as ever before;

Why did Ubisoft, Bethesda, Epic, EA, Blizzard, Discord all create their own launchers to ape steam when it was killing PC gaming?

Who the hell hired this clown?

I wish I was a PC gamer so I could support Epic.

What they've done to pc gamers...is hilarious and deserves my support.

@Addict187: Not this guy again, Richard Gelddreich is as correct as someone who is standing in the middle of a storm and saying it´s sunny and there is no wind.

PC gaming has grown since 2012 and continue to grow each year, while it´s not a massive growth it´s still growing so one can only ask oneself "How much is Tencent paying Mr Richard Gelddreich" (Also it´s hilarious that Epic is only successful because of what began as a PC game Fortnite)

Or when the Fortnite money runs out. Epic knows they got lucky with Fortnite Battle Royale because Fortnite Save The World wasn't doing too well eventually the battle royal and Fortnite trend will die down and Epic won't be able to afford throwing around money for exclusivity deals as much, heck with their 12% cut they can't even afford to cover transaction fees of payment providers which makes game cost more for consumers and less likely to buy from the Epic Store which makes the 88% cut devs get meaningless if not nearly as many are buying it their as they would on Steam.

One of the main reasons why the Epic Store is so barebone is because Epic rushed it out to release because the Fortnite money would allow them to compensate for the lack of quality by locking games into exclusivity and quickly establish their store with somewhat of a large player base.

@Yams1980: Valve would also need to pay the pubs like Epic does to, not just the cut

@R4gn4r0k: I see a lot of these mixed signals from the industry. You'll have companies claim they need more money because games are getting more expensive to make, yet all the publishers are reporting record profits and the indie scene has blown up. The major publicly traded publishers all have dramatic increases in their stocks within the past decade.

When was the last time you heard a major release didn't make profit? More often, it makes a lot of money yet the greedy publisher just wants more (ex: Activision claiming destiny profits disappointed them).

I understand that Epics lower cut is more enticing alongside the pay out, I don't blame the publishers for taking the deal. However, I have a very hard time believing that the industry is struggling and the 30% cut is suddenly a massive problem.

Like @pc_rocks said... That 30% helps to cover a multitude of benefits to people in other countries.

I love it. Business is cut throat. Steam has competition now and it’s a good thing. Maybe they’ll start making some great games again at Valve.

Downloading another launcher isn’t that fvcking hard. Bunch of crybabies

30% is too much, especially for digital. I can't blame devs for wanting to jump ship for that reason at least. Platform holders need to come up with better licensing deals for pubs instead of soaking in so much of their money for work they didn't do. Having to pay nearly a third of your earnings to someone else for a game that may already have trouble selling seems like a raw deal. We really shouldn't be surprised at the splintering of digital storefronts.

What I hate most of all is that these companies aren't happy with the money they are making and will never be happy. They have to make all the money in the world.

So that's why we see a lot of copies and trends being followed:

COD-clones

Dark Souls-clones

BR-clones

Every game has to be a live service these days

...

That to me is a serious problem with the industry and it hampers a lot of the creativity. That games have gotten more expensive only means that companies are less willing to invest in new IP or try out new ideas. Nah, let's just stick with what works.

I suppose that's one way to think about it. PC gaming wasn't being "killed" in any way. Hell, in the last 5 years or so, PC gaming got stronger, with more and more games being ported. We got games that we never imagined it would be on PC, and more companies started supporting PC gaming.

The fact that this Valve ex-employee makes no difference when his arguments are leakier then a sunken ship. He argues against Valve's oppressive 30% cut, while ignoring that all the other storefronts games can be sold on and activated on Steam don't give Valve any cut. He argues that all the other stores have exclusives too, including Steam, while ignoring the fact that Steam has never forced any developers to only sell on Steam, aside from Valve games which is legit and fair. Exclusivity on Steam is 100% the developer's choice, Epic on the other hand is actually locking developers into exclusivity contracts. That's a huge difference in strategy. Dude's arguments are full of BS!

U can't compare PC with Consoles. Console market is totally different from PC they are still stuck in the physical age and anything digital no matter the cut will most likely be far more favorable towards developers then sticking with physical.

(However the conflict what this guy in the article says also takes place already for ages on console space with publishers and developers so its not something unknown towards those platforms.)

And honestly he's right. Steam is great for just starters or indie games. Because it makes things more easier for them and a good start to push things forwards. However if your company is big and sells a lot or invests a lot in titles far more then indie developers any money you can gain will be preferable.

You can really see this with mmo's or other microtransaction games, they avoid steam like the plague until there game dies out entirely on population and they fast dump a dumpster version on steam to cash in some more and milk it dry before they pull the plug.

Steam is basically killing itself by simple charging to much money towards higher profile developers and this makes them a afterthought market or basically a graveyard for higher profile games. As they are better off making there own store or even compete at some point.

Epic / league of legends / blizzard / EA would probably all be on there platform if they only had to pay 5% and that 5% goes to 1% once they pass a certain mile stone. Nobody honestly would have been bother with there own client.

Also gaben is honestly not investing into 3rd party games even remotely. Sony and Microsoft go out of there way to developers to see what they want and provide or even make deals with publishers to get there games on there boxes. Why can't steam do that? why are all high profile single player games coming out on consoles first and then as afterthough get pushed towards PC a year or so later? Because there is more money to be made there.

With steam laziness epic gets created which could have been under there steam client to start with if the fee wasn't that big as it is now. And they are buying the rights to any game they seem worthy to push there shop with. With a 12% cut probably even lower and free dlc plan where all profits go towards the devs with a engine that probably is also free to use if its pushed on there platform. Steam is falling behind massively.

What steam honestly needs to do. Is lower there cuts massively so all the other platforms simple make no sense anymore. Make there client far more open to publishers so they can make there own sections in steam itself with control from those company's on those subsections to keep everything under one platform.

I personally would advice 5% cut on games that hit a certain money mile stone and even lower or free microtransactions in online games where devs reek the entire profits from.

Steam gets killed by its own greed and isn't doing PC gamers a favor. And fracture the market entirely.

A further future for steam is if they are still relevant at this point because epic will sure as hell move into this.

Is a netflix type of gaming where for 10 bucks you get access towards the entire library ( not streaming )

Conclusion

I basically agree with what the guy said about valve. Valve already has been a graveyard for publishers for a while now. And they are losing more and more developers / publishers by sticking with there outdated policy's.

Either of those 2 things would have been much better. Because they give you a way to use the store without feeling like you got a straight up worse deal.

I agree Rag. I don't have a problem using Origin for Apex Legends or any other enticing exclusives I can only get on that platform; same goes for Battle.net & U-Play. My gripe with Epic is that they just buy up these games last minute to keep them exclusive on Epic. Such a shitty store that is only being held up due to the Fortnite bank they made because everything else about the store is garbage anyways; especially the security around that store. I see countless issues pop up around Epic with how horrible customer support is, accounts being hacked, payments being compromised, etc.

I'm like OCD with my games as well, I like to keep everything on Steam but I don't want to buy something on Epic only for it to be available on Steam at a later date; rather wait and it's just what I'm doing.

I think most people are like us.

But it remains to be seen if all these millions that Epic is willing to spend will pay off in the end, i.e. buying customer goodwill and brand loyalty.

I'm genuinly curious for what the future holds.

I don't think the revenue cut is horrible, but, it could be bad for Valve if it gives competitors room to undercut them. That seems in part how Epic has found ground to take part of the market from Steam, that and maybe paying for exclusivity.

OK.

It's still better than Tencent-Epic Game Store.

Wow, so many butthurt herms in here.

I feel there will be a parade for the 1st steam exclusive game here.

Man this place has turned into an Epic humpfest.

Funding AA games is an excellent idea instead of wasting millions on timed exclusivity for games already finished especially ones that are multiplat at that if they truly wanted to do the opposite of Valve "killing PC gaming" then they could revive and fund PC games and developers in need of it. For example GSC World are in the early stages of making STALKER 2 and could sure use the funding. STALKER 2 would definitely be a killer app and they could keep it completely Epic Store exclusive since they're basically the publishers for it and people wouldn't have as much of a problem with it being exclusive since without Epic funding it the game wouldn't exist or be as good without their funding. Similar to how the Bayonetta series doesn't get flak for going Nintendo exclusive. They could also offer to help co develop some games if they're using the Unreal Engine. A good idea of could be for example helping Piranha Games develop MechWarrior 5. They could help implement better destruction with their new Chaos physics and destruction engine which would greatly help it be a much better immersive and authentic game. Game can also be used a showcase of it being accessible in a real game and not just a demo of what it potentially can be. Epic are already doing this with an upcoming Chinese mobile MMO called Project SU. Epic could become like a 1st party publisher for PC gaming.

This would save peoples' money more from the risk of investing in a possible crowdfunded/early access version of the game that goes haywire due to a lack of a publisher/investor keeping them in check or the funding turning out to not be enough. They could also save potential games that failed to meet their crowdfunding and are barely surviving through other means. A good example would be Heavy Gear Assault, their kickstarter campaign flopped because they focused on making the game a F2P Esport title with an emphasis on microtransactions instead of providing a traditional single player campaign and multiplayer mode. By the the time they added episodic single player to their crowdfunding goals/plans the kickstarter was over and the game fell into irrelevancy on Steam early access. Epic could help revive the game to provide funding for a proper single player campaign and multiplayer and help polish up some aspects of the game like destruction and graphics.

Not only that but they could fund the PC ports of games that aren't on PC and/or show no sign of coming to it any time soon, especially games that skipped PC last generation because it seen as an unprofitable market. For example they could the get first Red Dead Redemption ported to PC and other games such as Dante's Inferno, Persona series, Metal Gear Solid 4, Ni No Kuni 1 and basically the remaining third party Japanese console exclusives.

These type of tactics are much more likely to get Valve to take action and make games people want again.

It's pretty obvious that every gamer defending the Epic Store and hating on Steam that aren't consolites or corporate slaves are just salty fans mad that they aren't getting sequels to Half Life, L4D and Portal. Even though Steam has done much more for PC gaming than those games ever could they don't care. They don't really care much about the Epic Store either but see it as an opportunity to push Valve to make the games they want again. FFS they're defending a store doesn't even have something as basic and essential as a SHOPPING CART!

What else is new? Better then SW talking about Xbox One or Nintendo Switch.

@davillain-: oh man, the X1 stuff was hella old

As an Epic hater, Epic missed a golden opportunity here.

There was a lot of excitement amongst consumers, including myself, when they first revealed their revenue sharing. I can clearly see that it was very much needed for particularly 2nd tier developers and indies, also a kick in the butt Steam needed.

But when we realises we consumers figures NOWHERE in their plans besides being cash cows to be milked, my feelings turn 180.

Barebones store, NO FORUMS, NO USER FEEDBACKS, UNRELIABLE REFUND POLICIES, NO MOD SUPPORT NOR WORKSHOP, POOR SECURITY ETC.

We get the feeling that we are just a hassle. They only want us to fork over money and thats it, f off with your game and be thankful. Statements like "studios will determine the storefront battle, not consumers" made it clear that Epic wants to wrest control and influence away from consumers from determining the market.

I cannot support that. And any gamer who have a bit of self respect as a legit consumer shouldnt support such a business that thinks lowly of you and only cares about your money, not your satisfaction or your needs.

This is the most ridiculous claim ever. At least coming from a South East Asian. Before Steam came, game prices in the Philippines were 3x to 4x. And most resulted to piracy. Heck, even my rich console gamer friends go to bootleg shops to modify their consoles so that the can play their pirated cds and dvds. They only bought legit games they really like, like those FFVII, MGS and their basketball games.

youd be mad too if Gaben chained you up in his basement to make 200$ CSGO skins and dota card games all day.

There are so many things that I have already talked about in regards to Epic/Steam in multiple posts over the years. Here I would just like to talk about one thing.

If we assume that everything the twitter guy and you said is true. How does this benefit me as the consumer? Also 5% cut or even 12% is not not possible. From Epic's own mouth there are many payment providers/gateways that charge as much as 10-12% hence they pass it to the consumer. So how do you cover these costs apart from the costs of running the platform as big as Steam with dedicated servers and all those kind of services? Resources aren't free.

Discord/Epic is in extremely initial stages of product development. They haven't even analysed the market or all the scenarios yet. They are beating their chest with 12%/10% cut based on very narrow view of just the US market, they haven't even done their research yet. Steam has been in this space for a very long time and worked around most of these kinks to have a sustainable business model. Epic/Steam don't even know how they want to approach the rest of the world and when. They just saw they can provide a service for 12% based on just US data.

@davillain-: same

I have two games in my epic games library and both are free games.

Unreal tournament and The Witness.

Gotta admit some of there upcoming games that arnt on steam are looking worst buying.

Good thing he's a former Valve employee. Wouldn't want idiots working with Valve.

@Litchie: Yep it quite clear why he is an ex employee, probably thought he was hot shit when he worked there.

@ten_pints: all the good valve employees left years ago, anyone whos left just makes micro transactions