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Valve creates new revenue sharing tiers to give big sellers a break

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41–50 of 190 posts

Re: Valve creates new revenue sharing tiers to give big sellers a break

#41
post #32

I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission. I mean, it's obviously possible because it's reality, but it's nonintuitive. I wonder if it will continue to be that way. For iOS, you don't really have a way to install apps outside the app store without jailbreaking, but you do for macOS, and I've seen a number…

Monopolies often charge around 30%. Google ads, App store, Play store, cell phone billing for subscription numbers, etc

Re: Valve creates new revenue sharing tiers to give big sellers a break

#42
post #32

I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission. I mean, it's obviously possible because it's reality, but it's nonintuitive. I wonder if it will continue to be that way. For iOS, you don't really have a way to install apps outside the app store without jailbreaking, but you do for macOS, and I've seen a number…

The reason Google and Apple are able to command such high commissions, it's because they are monopolies in their own markets. Most people who want iOS can only buy iPhones and use the app store. Most people who want to use Android, tend to buy Android phones and don't switch to iPhones.

As such, Google and Apple's app store's don't really have strong competition against each other. Plus, most developers pretty much have to build apps for both anyway. Their respective markets are huge enough.

Steam, on the other hand, although it had its own monopoly of sorts in terms of "central gaming repository", it's always had high competition from game developers releasing their games outside of Steam, and more recently GOG has become a direct competitor, and EA and a few other huge gaming companies started their own central repositories and keep their games off of Steam.

This is what forced Valve to make this move now. Competition virtually always favors the consumer (the companies, too, in the long term, as they are forced to improve their products, but that's another issue and most companies are too short-sighted to see that by themselves), and we're seeing yet another example of that.

Re: Valve creates new revenue sharing tiers to give big sellers a break

#43
post #39

So Valve is giving breaks to the big developers/publishers that don't even need them?

Maybe not need them, but want them. EA and Ubisoft both launched their own competing platforms, so they have a lot of leverage to negotiate with.

Then they should lower rates across the board. There used to be a time when "just being on Steam" justified the high cost to smaller developers, but the market is over saturated now because they don't curate anymore that it isn't the case.

Re: Valve creates new revenue sharing tiers to give big sellers a break

#44
post #32

I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission. I mean, it's obviously possible because it's reality, but it's nonintuitive. I wonder if it will continue to be that way. For iOS, you don't really have a way to install apps outside the app store without jailbreaking, but you do for macOS, and I've seen a number…

>>> I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission. What makes you think that they have high margin? It's not like each game creators could run a worldwide distribution and payment operation with just a few percent more of revenues.

"It's not like each game creators could run a worldwide distribution and payment operation"

You mean like a website? I think it's more fruitful to imagine multiple merchants competing to sell devs wares and lessor commissions as a result of competition.

Re: Valve creates new revenue sharing tiers to give big sellers a break

#45
post #32

I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission. I mean, it's obviously possible because it's reality, but it's nonintuitive. I wonder if it will continue to be that way. For iOS, you don't really have a way to install apps outside the app store without jailbreaking, but you do for macOS, and I've seen a number…

> I am surprised that ... are able to command as high a margin as they do for sales commission. Yep. Me too. I’ve long thought that Steam charges way too much considering the platform. There would seem to be tons of room for a competitor to undercut Steam. I’m excited about Discord’s new store. Revenue share is a killer for a business, especially as one as volatile as computer games. Any game needs to be 25% better t…

There's a GDC talk about this (up on YouTube, can't remember the title) about the cost/difficulty going alone vs going through steam.

The tldr is that valve apparently knows exactly how much it costs you to run this apparatus yourself, and the rev share reflects that reality. The numbers are apparently really close.

The catch is that as you sell more units, the cost of the apparatus starts to diminish as a percentage of revenue, so running your own marketplace starrs to make sense when you get into the blockbuster territory.

This pricing update apparently takes that fact into account, which means that when companies start running the numbers on their new game launch, the justification for building their own marketplace starts to go away.

Re: Valve creates new revenue sharing tiers to give big sellers a break

#46
post #32

I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission. I mean, it's obviously possible because it's reality, but it's nonintuitive. I wonder if it will continue to be that way. For iOS, you don't really have a way to install apps outside the app store without jailbreaking, but you do for macOS, and I've seen a number…

> I am surprised that ... are able to command as high a margin as they do for sales commission. Yep. Me too. I’ve long thought that Steam charges way too much considering the platform. There would seem to be tons of room for a competitor to undercut Steam. I’m excited about Discord’s new store. Revenue share is a killer for a business, especially as one as volatile as computer games. Any game needs to be 25% better t…

> Any game needs to be 25% better

Actually, 42.86% better with the 30% cut, and 33.33% better with the 25% cut, and 25% better with the 20% cut.

Re: Valve creates new revenue sharing tiers to give big sellers a break

#47

Earlier quoted context omitted.

>>> I actually am surprised that services like Steam, the Apple App Store, and Google Play are able to command as high a margin as they do for sales commission. What makes you think that they have high margin? It's not like each game creators could run a worldwide distribution and payment operation with just a few percent more of revenues.

"It's not like each game creators could run a worldwide distribution and payment operation" You mean like a website? I think it's more fruitful to imagine multiple merchants competing to sell devs wares and lessor commissions as a result of competition.

You realize that it takes a lot of work to make a website to accept payment from a hundred countries in dozens of currencies and handle customer support and chargeback and fight fraud?

You can try to run your own website, to save 10% fees on a minuscule userbase, it simply doesn't cover the costs.

Re: Valve creates new revenue sharing tiers to give big sellers a break

#48

So Valve is giving breaks to the big developers/publishers that don't even need them?

People who bring in more sales are worth more money it's not shocking that they get a better deal. It's like saying capital one gives air miles to people who don't even need them. Well ya. It's not a gift it's purely mercenary.

Re: Valve creates new revenue sharing tiers to give big sellers a break

#49
post #45

Earlier quoted context omitted.

> I am surprised that ... are able to command as high a margin as they do for sales commission. Yep. Me too. I’ve long thought that Steam charges way too much considering the platform. There would seem to be tons of room for a competitor to undercut Steam. I’m excited about Discord’s new store. Revenue share is a killer for a business, especially as one as volatile as computer games. Any game needs to be 25% better t…

There's a GDC talk about this (up on YouTube, can't remember the title) about the cost/difficulty going alone vs going through steam. The tldr is that valve apparently knows exactly how much it costs you to run this apparatus yourself, and the rev share reflects that reality. The numbers are apparently really close. The catch is that as you sell more units, the cost of the apparatus starts to diminish as a percentage…

I'm pretty sure it's not the talk you're thinking of, but Jeff Vogel (who has been mostly-successfully making indie games consistently since 1995) mentions it in this GDC vault talk: https://www.youtube.com/watch?v=stxVBJem3Rs

They were able to stop paying a third employee when they went to Steam. That's a lot of value to the business.

Re: Valve creates new revenue sharing tiers to give big sellers a break

#50

Earlier quoted context omitted.

"It's not like each game creators could run a worldwide distribution and payment operation" You mean like a website? I think it's more fruitful to imagine multiple merchants competing to sell devs wares and lessor commissions as a result of competition.

You realize that it takes a lot of work to make a website to accept payment from a hundred countries in dozens of currencies and handle customer support and chargeback and fight fraud? You can try to run your own website, to save 10% fees on a minuscule userbase, it simply doesn't cover the costs.

Can't something like Stripe + Braintree provide the same at a fraction of the cost?
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