Last week, the US Congress held an antitrust hearing with the CEOs of tech giants Amazon, Apple, Facebook, and Google. One of the topics of the hearing was the financial power of these companies and how they have come to be viewed as holding monopolies. Apple’s CEO Tim Cook, for example, was questioned regarding the App Store’s 30% revenue cut, and how that has remained unchallenged for more than a decade long. With the App Store’s cut being so high, many developers on the platform struggle to earn a living, and other companies struggle to find an opening to compete with Apple. With unsavory business practices like this, and their ever-increasing market shares, many have come to view these tech giants as possessing economy-threatening monopolies.
Now, as gamers, we don’t care too much about economics. We just want to play games. However, in the world of video games, there is a similar and ongoing debate regarding Valve’s Steam and Epic’s store. Recently, Engadget reported on the hearing, comparing Apple’s uncontested cut with Valve’s, because Valve has always had a revenue cut of the same value as Apple’s, and even before Apple’s. Epic CEO Tim Sweeney has periodically tweeted about how Valve’s 30% cut is having the same economically-devastating effect on video game developers, and how Epic’s store offers a lower cut to combat this dilemma, which has created some conversation among game developers and gamers across social media for quite some time.
But how true is this about Steam, really? Because, much like Amazon, Steam has played an important role in moving markets over to online / digital for the last ten years, and it serves as a one-stop-shop and powerful search engine for gamers of all kinds. For many years, many developers have been able to list their games on Steam and earn a living, as indicated by so many games on the platform receiving continuous updates and sequels over the span of years. Many developers still choose to sell their games only on Steam as well, even when Epic offers a lower revenue cut, because Steam’s market share is just that significant.
How Epic is currently choosing to compete with Valve is also a bit of a concern. Offering a reduced revenue cut is a great incentive to get more developers on their platform, but that is basically all they are offering. Over the last couple years, Epic has been using funds to invest in new games (which is a great thing, to be sure) and buy timed exclusivity deals with their developers to prevent new games from appearing on Steam and other platforms, and while that certainly does attract some gamers to Epic, it doesn’t attract anyone who sees the lack of basic store functionality that the Epic store currently possesses, not to mention all the other features and perks related to Steam and other platforms. Further, the drawback to this approach is that, once the timed exclusivity is over, the sales performance of the Epic store becomes clearer as developers port over their games to Steam and other platforms as soon as they can, which brings the effectiveness of Epic’s strategy into question.
According to Epic’s development roadmap on Trello, the company is hard at work at adding many of the missing features that still make Steam the more appealing platform to developers and gamers alike. Some of these include game achievements, a news feed system that allows users to follow certain games for updates, user reviews, and a shopping cart. If you haven’t yet used the Epic store and you’re reading about this for the first time, you might think, “wait, Epic’s store doesn’t even have a shopping cart, or user reviews?” and you would be completely justified in questioning that, because in this day and age, it really is absurd that they are missing these features. Nevertheless, they are working on adding these features, and I think it is safe to assume that the reason why is because they need to in order to compete with Steam.
These efforts aren’t enough, however, because there are still many features on Steam that they do not bother listing on their roadmap. One of the biggest is the customizable profiles on Steam. Steam’s profiles are a staple aspect of the platform that turn it into both a commercial storefront and a community site for gamers as well. Other features, like the forums, built-in mod support, and curators, only add to the community focus of the platform. Many tens of thousands of gamers on Steam engage with these features on a daily basis and many more customize their profiles and this activity creates a positive sense of community among everyone on the platform (indeed, without this aspect, Steam would have likely never made PC gaming a major competitor against console gaming platforms). Judging by Epic’s roadmap, it appears that they still have little to no interest in developing anything more than a commercial storefront, which is perfectly fine for the casual gaming audience, but for everyone else, it means that Epic’s platform will never come close to replacing Steam.
In my view, the competition that Epic is trying to ignite is not only an equivalent to the console wars for PC gaming, but it is, precisely for that reason, a dangerous and destructive one. Because, unlike consoles, which require the console manufacturer to get in touch with developers and work with them to bring new games to their platform for gamers (and even often fund them), on PC, developers and gamers can simply find each other on their own, and developers typically find funding on their own. Valve is hardly needed in the equation, especially now that they have already built Steam and its robust search engine features. So, on PC, this type of competition can’t possibly generate much value to gamers, because all it could lead to is having to install and use multiple clients to download and play games. Sure, the competition between Valve and Epic could result in Valve reducing their cut to match Epic’s, which in turn would put more money into the pockets of developers, but at the same time, will this really incentivize making better games? Doesn’t the artistic competition among developers already exist on Steam without different storefronts competing with one another to provide lower revenue cuts to developers? Shouldn’t it be the gamers themselves, the ones who are searching for, paying for, and playing the games, who should be the final judge on the matter of which developers are able to keep making games?
There are two features that I see Steam sorely missing, and at this point I will outline them, because I believe that if Steam were to release these features, there would be essentially no reason to have another digital distribution gaming platform on PC ever (unless that platform could provide everything Steam provides, while giving developers a greater revenue cut). These two features are:
- Paid advertising tools for developers, similar to what Amazon offers its sellers.
- A “Triple-A” tag / browsing category, similar to Netflix’s “Blockbuster Movies” category.
To elaborate, Amazon allows its sellers to run paid ads on its platform (the item listings at the top of search results with the little “sponsored” tag on it) and Netflix provides a browsing category which specifically narrows movies down to blockbusters, or highly popular and successful movies. Navigating Steam is an issue for many users, which is why Valve themselves have been recently developing new search tools for finding new games via their Steam Labs program, and paid ads is one extremely powerful tool that Amazon, Google, and other powerful search engines offer to alleviate that issue on their ever-growing platforms. Granted, those other platforms are much bigger than Steam, but with some kind of simple, rotating paid ad space worked into the platform (such as on the home page, search results page, category pages, curator pages, and so on, with users having options to customize what ads they see), developers whose games are doing well can ensure their games continue to do well on the platform. Having a “Triple-A” browsing category would make finding those games much easier for users — and considering that Microsoft recently captured four of the five top seller slots on Steam (screenshot below), it’s obvious to me that many Steam users would appreciate this category. With these features, the platform would continue growing, and in the best possible way for its users.
Image courtesy of Twitter user @KennyBirge
If we look at the situation on Steam, the real threat to customers at this time is not the 30% revenue cut for developers, but the difficulty of navigating the ever-growing platform, mostly due to the lack of tools for developers and marketers to make themselves stand out on the platform. The only developers who would have anything to worry about once those issues are better resolved would be the ones whose games simply don’t sell as much, in which case, they would have to turn to either focusing their creative efforts differently, or simply live with the sales they are able to obtain. The competition that Epic is currently imposing on Valve is not one that really caters to gamers, but only to developers, and with the current state of Epic’s store, catering to developers would not ensure any benefits to gamers in the long run.
So, in other words, while Valve may possess a monopoly in regard to digital distribution gaming platforms on PC, Epic’s solution is not one that will alleviate this issue. Valve’s Steam also places more power in the hands of gamers, making it the more democratic platform of the two. With the addition of new promotional tools in the hands of developers on Steam, the platform could potentially throw off any remaining issues that it possesses, meaning Epic’s efforts would ultimately be for naught.
But that’s my view. What do you think about the ongoing Steam vs. Epic debate? Let me know in the comments!