Taking a Nibble out of Steam

The big news in early December was that Epic Games was going to create their own online digital games storefront to compete with Steam.

Steam is big.  Big enough that no competitor is going to show up and hit them with a single knock-out blow.  EA couldn’t do it.  GoG certainly couldn’t manage it.  Amazon might have a shot via Twitch some day.  There is Discord gamely trying.  The Microsoft store persists out there, if you want the non-Java Minecraft of the remastered version of Age of Empires.  And recently Apple has been talking about a Netflix-like “games as a service” service.

And, despite its dominance, Steam is not unassailable.  Steam is vulnerable on a few fronts where an upstart could steal part of their pie.  There are viable markets to be invaded in the Steam portfolio.

Because who wants to be Steam anyway?  Is somebody else itching to be the top purveyor of Hentai themed Minesweeper knock-offs?  Let Valve remain king of their garbage heap.

Still, Steam was clearly their target.

Back when the Epic Store was announced, their big play was aimed at the development side of the equation, where Epic was planning to take only 12% of the sales price… and waive the fee for their Unreal engine… compared to Steam’s 30% cut.

Look how much more Steam takes

This prompted some questions.

This silliest was asking if Steam “deserves” a 30% cut.

As Clint Eastwood said in Unforgiven, “Deserve’s got nothing to do with it.”  What made this especially silly was that this came from the developers, who honestly ought to know better.  That is the same group that howled over every possible barrier to entry that Valve set up for Steam, because being on Steam was their only chance at success.  Well, 30% was the cut when they were on the outside desperate to get in, but now that they’re in that cut is too much.  It is as if people just complain about everything… which they do. (I also feel like pointing out the cut that studios got back in the brick and mortar retail days.)

Still on the silly side of things were people wondering if prices might be lower on the Epic Store given the smaller cut Epic planned to take.

As if.  I bet the devs complaining about Steam’s cut would argue vehemently against this.

There is a stubborn ignorance out there that still assumes that cost and pricing are somehow linked.  The two are not, save for cost represents the floor above which most companies would like their pricing to remain.  But a year back we had a long discussion about how much it costs to make video games, at least top tier AAA games.  So one might argue that video games is an industry where that floor isn’t even part of the equation.

Pricing is based on what the market will bear and what your competitors are charging.  We pretty much know the price of any big name game coming from EA or Activision before they announce it.  It is going to be $59.99.  Do all those games cost exactly the same to make?  Or is there just an industry price beyond which studios believe they cannot stray lest it have an impact on sales?  I think you know the answer.

More on point were end users in touch with reality asking why they should care about the studio’s cut if prices remained the same.  If you’re already invested in Steam and have a big library there, what would Epic’s store offer besides the inconvenience of another login to manage?

Well, we got the answer to that.  Exclusives!

It is the console wars all over, writ small.  How do you get somebody on to your platform?  Offer something that the competitor doesn’t have.  Epic already had Fortnite, so that was a given.  But they needed something else.  They needed titles that Steam wouldn’t have.

When they managed to snag The Division 2 back in early January, that was news.  That gave Epic a big title that Steam would be denied, though UbiSoft would still be selling it directly as well.

This past week though fewmets hit the windmill when it was announced that publisher Deep Silver would be selling Metro Exodus on Epic’s store.  That catch here was that Metro Exodus had already been available for pre-order on Steam.  That availability was turned off with the news.

Note from Steam – When You’re Number One You Never Name the Competition

While Deep Silver said they would honor pre-orders, this got people to howl, and all the more so because the price on the Epic Store was $10 less. (You might be tempted to claim this as evidence that there will be a benefit to consumers on the pricing front, but I’d as soon bet that Epic offered additional incentives to get Deep Silver on board and at a lower price.)

That is how you get the market to take you seriously.  So seriously though that people were talking boycotts and such and Deep Silver eventually had to clarify that Metro Exodus would be available on other platforms come February of 2020.  At least you know it will be cheaper by then I guess.

This sort of thing isn’t going to turn the Epic Store into a full fledged Steam competitor.  But I don’t think they want that.  This will make Steam take them seriously though, as it takes money straight out of Valve’s pocket.  Metro Exodus was going to be worth more to Valve than a few thousand more indie titles cluttering its store front.  And given the persistent rumor that the only reason Epic has a storefront is because their parent company, Tencent, is to hit back at Valve for going into the China market with Perfect World Entertainment rather than them, and it seems to make a bit more sense.

Anyway, I don’t think Steam is going anywhere.  Valve is too entrenched to be moved quickly.  Epic will be another minor player, taking a bit of the riches from Steam.  There is a temptation to compare this to what is happening with video streaming services these days, where Netflix has lost its grip as every major player has decided to open up their own service.  I suspect that will shake itself out on its own when people vote with their wallets and a bunch of those services find they were doing better just licensing to Netflix or Hulu.  But on the video game front it is different, as there is no subscription to pay… at least until Apple shows up… just some logins and front ends to manage.

Some players are always going to be big enough to roll their own.  EA’s Origin, for example, is less the Nordstom storefront they promised and just them having their own online store so they don’t have to share with a competitor.  You don’t even need it for all of their games.

Likewise Blizzard has their launcher-and-store combo, which Activision, lacking their own, has decided to use as well.

Others, like UbiSoft or Paradox, play both sides of the game, listing on other storefronts while maintaining their own as well.

And Steam abides.

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4 thoughts on “Taking a Nibble out of Steam

  1. Asmiroth

    As I’m not going to talk about it, I can ask about it.

    Origin, Blizz, Ubi, Arc, etc… all sell games that they would otherwise publish. Even GMG isn’t really a retailer, since most of the time it includes a Steam code.

    In that respect, isn’t Epic an actual competitor given that it’s selling games that it would not necessarily publish?

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  2. Wilhelm Arcturus Post author

    @Asmiroth – Well, I said “full fledged competitor,” with the intent to imply that mean being all that Steam is now. Epic hasn’t really stepped in that direction. It is a competitor in that it is taking some cream off of the top of Valve’s market. But it isn’t trying to take all of Steam’s business or build up the things that make Steam valuable beyond just being a storefront.

    Not yet anyway.

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  3. Azuriel

    Yeah, I also believe that Epic offered something on the side to get Deep Silver to bail at the 11th hour. Otherwise, why not just sell at both places and let nature take it’s course with the $60 vs $50 price-points? Deep Silver gets $2 more per copy sold on the Epic store, but losing even one Steam sale to someone not willing to download a new storefront will require 22 sales to make up for it. Maybe they’ll get those extra sales at the $50 price-point, but we’ll have to see.

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  4. Klyith

    @Azuriel – afaik one of the things Valve requires to be on their platform is equal pricing. So you can’t sell your game for $10 on steam and $8 via your own website (or someone else’s store). That’s why when other publishers have left steam they’ve pulled out completely.

    Personally I’m totally willing to buy games from the Epic store, I’m not weird about requiring everything to be on my Steam list. But only if they’re DRM-free or don’t require the Epic launcher to run. (Or if epic is giving them to me for free.😉) Sure they’ve got Fortnight money *now*, but that won’t last forever. I still remember when my GFWL games stopped working.

    Rebel Galaxy Outlaw is now an Epic exclusive and will be a day 1 buy for me, that will be DRM-free.

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