Valve contribution to PC gaming with the introduction of Steam as a market place is undeniable. However, Steam is more or less the monopoly now when it comes to games sales. But, slowly over the years, grumblings have started rising about how Steam deals with developers and the cut they keep from games sales. Tim Sweeney, the co-founder of Epic Games and the man behind the Unreal engines, recently had this to say:
“The game market system is pretty unfair,” Sweeney said in a talk at Gamescom’s Devcom. “All of the app stores take 30% [of revenue per transaction]. That’s strange, because Mastercard and Visa can do a transfer for three dollars.” And this is applicable for both Steam and GOG.
“CDN [Content Distribution Network] Value is one percent of your revenue,” Sweeney went on to say. “It’s very difficult to see that app stores need more than seven to eight percent of revenue. I think you could quite easily run an app store on [a cut of that size] and still make a significant profit. They’re not really helping any more.”
Add to this the cost of marketing, and digital distribution no looks looks like the profitable option as it initially seemed to be.
“Top charts are dominated by games that are spending huge amounts on marketing. So we have to spend on user acquisition, we can spend on ads – companies are paying approximately three dollars per install. We have to acknowledge this as a market failure. Most of the money made goes to middlemen: app stores, social networks. This is broken. I don’t know how we can solve this.
“We should not accept this as a status quo,” Sweeney continues. “We should constantly be on lookout for better solutions. We should look for ways to cut past the middle men.”