Steam launched in 2003, five years before the debut of the App Store. Valve tried to streamline the process of updating its own games, especially Counter-Strike – with a pipeline for software solutions integrated directly into the client. Valve made Steam mandatory with the release of Half-Life 2 in 2004, and in 2005 the service began hosting a significant number of third-party games. In 2007, Steam had more than 13 million registered accounts and 150 games; In 2019, it had a billion registered accounts and tens of thousands of games. No other PC Hub could compete, and few tried.
The 70/30 revenue split has been part of Steam’s business model from the start. Neither Google nor Apple referenced Steam when they opened their respective app stores in 2008, but both launched with the same revenue-sharing model, with little criticism.
That rate is still the standard on Steam (and Apple and Google) today.
Recently, Steam’s revenue share model has come under public scrutiny, and only because a real new competitor has finally entered the market. The Epic Games Store went live in December 2018 and has billions of dollars on its back, thanks to cash from Fortnite, Unreal Engine, and investors, including Tencent Games. It launched with a bold promise for developers: an 88/12 revenue split.
Epic Games Store got a handful of exclusives, keeping these titles off Steam, sometimes forever and sometimes out of a limited window. In classic monopoly fashion, Valve did not respond.
Epic Games CEO Tim Sweeney openly challenged Valve to commit to a higher revenue rate for developers, saying: “If Steam were to commit to a permanent 88 percent revenue share for all developers and publishers With no further compromise, Epic would hastily organize an exclusive retreat (while honoring our partners’ commitments) and consider putting our own games on Steam. “
The valve did not respond.
This is SO COMPETITIVE that Apple has kept its 30% cut the same for a decade. So competitive
– DHH (@dhh) July 29, 2020
Today, Apple CEO Tim Cook answered questions about how the app store’s content is handled that could compete with Apple’s own services, and whether it handles all apps the same way. The developers, including Spotify, have filed complaints of unfair competition against Apple. Basecamp’s CTO and co-founder David Heinemeier Hansson recently went public with their problems with Apple after their email app, Hey, was rejected on the App Store for circumventing its integrated services for in-app purchases. After some flip-flops from Apple, Hey is live on the App Store without IAP and without a 30 percent cut.
“We treat all developers the same way,” Cook said during today’s hearing.
In response, Hansson tweeted, “I think this has to take the best cake for a lie so far?”
Responding to a question about Apple’s revenue sharing model, Cook said: “We have never increased commissions at the store since the first day it operated in 2008. There is a competition for developers just as there is a competition for customers. ” He then listed the App Store competitors as Xbox, PlayStation, Windows, and Android.
“Lol,” Hansson replied via Twitter. “Yes, we should have written HEY for PlayStation. That was our mistake.
This week Sweeney also called Apple and Google for having an “absolute monopoly” on app stores. Like Hey on the App Store, Epic tried to bypass the Google ecosystem, and its revenue division, entirely when it created the Android version of Fortnite Available outside of Play Store at launch. However, many gamers found the solution difficult to use and Epic was released. Fortnite via Google earlier this year.
Sweeney plans to eventually launch the Epic Games Store on Google Play and the App Store, but so far, that has been impossible.
“They [Apple] they are preventing an entire category of businesses and applications from being engulfed in their ecosystem by excluding competitors from every aspect of their business they are protecting, “said Sweeney CNBC last week.
Scott Miller is the founder of Duke Nukem’s 3D Realms studio and a longtime advocate of independent developers. He officially entered the video game industry in 1987, when Sweeney and Valve founder Gabe Newell were also starting their own careers in the industry.
“I used to have a higher opinion of Gabe,” Miller told Engadget last month. “But the fact that he is not adjusting rates in favor of developers is disappointing because he also has development experience. And Valve is a development company. Why aren’t you more pro-developer in the position you are in and at least reduce it to 20 percent?
Valve operates in secret, and has earned a reputation for being too cool a company to do what it wants, on its own schedule. With this strategy, he has gained a horde of die-hard fans. This, despite the fact that Valve hasn’t released a new game in most of its ridiculously popular franchises in a decade. Although he refuses to contact developers who are clamoring for more reasonable income deals. Although he has a habit of leaving some of his oldest communities.
Valve has not responded to Epic’s ultimatums because Steam, like the App Store, is safe. It’s big enough, with a fan base rabid enough to ignore the needs of developers, gamers, or economic competition.
