Epic Games Store - 88% split goes to devs


#841

It wasn’t. It seemed to me the point was to say that the large number of storefronts spurred those large discounts while the games exclusive to Epic didn’t have a discount because it was only sold on one store. Yet Steam had deep discounts even when games were only sold by them, which is why I thought it was a flawed comparison.


#842

Wow, I wasn’t aware they allowed this. I must admit, that’s pretty damn cool.

https://partner.steamgames.com/doc/features/keys


#843

This is where nearly all arguments against Steam crumble. Shocking that people posting in the thread could be unaware of this…


#844

I disagree that’s meaningful competition. Valve currently allows it because they judge funneling people to the Steam client through other storefronts more valuable than trying to force people to use theirs, but they can just stop doing that whenever they want and strangle all those stores. In the recent past they started adding limitations to how many keys developers can generate and if the value equation changes they’ll get more restrictive as it suits their business interests.


#845

Is this the restriction you’re talking about, or was there another one that I hadn’t heard about?

Because yea… if you’re requesting tens of thousands of keys so you can make a few bucks off card farming bots, I think it’s totally reasonable for Valve to restrict that. Has there been word of Valve doing that for legitimate developers (not saying it hasn’t happened, but this is the only time I’m aware of)?

I’d argue that if they were going to be restrictive, it would have been when they had a bigger marketshare and they could throw their weight around vs when a dozen other storefronts are trying to compete.


#846

And they could also decide to start killing puppies, but I don’t see that as particularly likely either. Valve have been very consistent in being pro-customer and pro-developer for the past decade and a half.
(and before anyone throws out the “but they are greedy with their 70/30 split!”, that is the industry standard used by almost everyone, not Valve’s particular greediness)

The restriction of key generation was elaborated upon by LockerK and makes perfect sense.

Surprised you didn’t know about it, since it is such a big part of Steam’s value proposition.


#847

thats not a justification for the rate. it just means a better offer for devs has not been available.


#848

It has been available by smaller players (e.g. humble widget with its 95% split or itch), but indeed I was not justifying it. Just saying Valve should not be singularly blamed for something nearly everyone did the same, particularly when Valve worked for the split more than most (just compare feature set of Steam with anyone else). But, now that some “serious” competition showed up, we’ll see how things shake out.


#849

Yes, its quite shocking its taken us until now, as indie devs to realize that if all you do is re-sell steam keys…then why the hell are we paying you the same as steam? I guess there was some enthusiasm to encourage competition, but frankly none of them seemed to really compete in a meaningful way. You can’t compete with a store by selling keys that are ultimately only redeemed on that same store.
I think a lot will change in 2019


#850

I think this is a very interesting point. All the Steam key resellers have competed on the customer front, but not on the dev front. They’re able to offer better deals than Steam while pocketing the 30% precisely because they have minimal costs. They’re the ones who are potentially getting away with the most money in their pockets, and yet we’re not vilifying them…

At the same time, I wonder how the dynamics are really going to change. The market is what it is – there are near-infinite products that never disappear, and gamers have huge backlogs. Which is to say, small developers have very little actual power. The only pressure to buy comes from the latest products that go viral, and you see the difference in the pricing strategies between the products that went viral and those that didn’t. These are the market’s fundamentals, and a huge influx of money can only change that temporarily.

Aside from exclusives, is Epic going to be able to compete price-wise with Steam and its resellers (the ones really making bank), while keeping their tiny cut? Or are they just going to keep throwing their Fortnite money into it and take the hit while hoping the party never ends?Alternatively, is a true shifting of profit-sharing going to happen between devs and stores due to store competition? That seems unlikely to me simply because the number of games entering the market far exceeds the number of new stores. If anything, the stores have the power to demand even more of a cut, whether it’s fair or not.


#851

I think (and tim sweeney has confirmed by tweet) thats the actual costs of running a store amount to about 7% (and maybe lower), so its very profitable even at 12%, even if it does not take big market share.

Regarding devs having no leverage, I think its easy to lump all devs, or even all indie devs, in as having the same market power, but this is far from true. I suspect that if rimworld 2, prison architect 2, and whatever jon blow does next wanted to haggle for an exclusive, whether permanent or timed, i’m sure they can negotiate large guarantees or decent rates in this new market, whereas generic my-first-unity-project puzzle platform pixel art game #923 clearly has absolutely fuck-all leverage.

Or put another way, the top indie games don’t sell 10x the average indie game, but maybe 1,000x (or 10,000x), and have correspondingly more pull.

I’d certainly seriously consider a timed exclusive for Democracy 4 at a higher rate than 70%, for example.


#852

That definitely depends on the volume of sales as well as pricing. Considering that most volume is sold at discount, that margin shrinks significantly. The Steam resellers are competing fiercely with each other, and yet it’s rare that one of them is able to get a massive discount on a title that isn’t followed up closely by another reseller, which suggests to me that the margins cannot possibly be what Sweeney is describing, even for the resellers who have minimal costs.

Another point is that Steam constantly invests into added value. I’m not saying that they’re not getting fat off the profit - they clearly are - but just as an example, their work on Proton/Wine is making it so Linux is soon going to be able to run every game in existence. If you’re a Linux gamer, Steam is your savior. Meanwhile, Epic isn’t even willing to invest in forums.

Right – the titles/companies that go viral have all the power. And yet, nobody (AFAIK) has been able to negotiate better rates from the resellers for some reason. Here’s the thing – I don’t know if Epic is acting like a rational actor, or if it’s high on the fumes from its massive cash infusions. I think it’s a somewhat better time to be an Indie dev for sure, since the market, such as it is, has been so very cruel, but I wonder what would happen if the Fortnite well were to dry up. Nevertheless, it’s definitely a time for devs to try and flex their muscles, though what I would prefer seeing is a union of sorts of Indie devs who have proven themselves – one that negotiates terms for the smaller ones as well and makes it a little less scary to live the dev life once you’ve proven yourself on a title. If stores had to negotiate rates with such an organization, we wouldn’t need this exclusives nonsense.


#853

Reading the key guidelines linked above, it sounds like this is contractual - at least between offers from the reseller and Steam:

I would imagine this is either part of other resellers’ contracts, or decided to be a good business decision by each publisher - if they’re willing to offer a discount on their game with no quantity restriction, it makes sense to offer that discount to every storefront since they all end up on Steam anyway.


#854

I’m not sure that’s actually true. In my (admittedly non-software) company, a project isn’t even considered unless we expect to get 15% profit. By investing in a store making 5%, Epic is missing out on other higher return investments with that money.

I’m not really trying to second guess them – I’m sure they’ve got good reason for doing the store. It’s just not obvious to me that it’s the best thing they could be doing with their money.


#855

But the 5% isn’t the return on invested capital here. You can’t use that number for any claims about how there must be better investment capital.


#856

There’s a lot of synergy going on there. For one, they wanted to run a store to evade the 30% just for their own games in the first place. Obviously you need more infrastructure to support other developers’ games but some of the work has to be done either way.

Also, combined with the engine, it helps position them as a “one stop shop” for the game development process. Use their engine to build and their store to sell/promote.

As a result, evaluating the financial success and viability is a lot more complex than just royalty math. There’s a lot of long term value in simply becoming ubiquitous even if that requires low margins for a long time - just ask Amazon.


#857

In my company, we’d sell a business unit that was only making 5% profit and use the proceeds to do something with higher margins. On the other hand, considering where our stock is today, that may not be the best strategy…


#858

Your numbers sound realistic, but you’re talking about a different thing. Your company invests, say, 100M into a new business and expects to create at least 15M profit out of this until the end of the year, while maintaining all other value.
Epic invests a certain budget to create a store infrastrucure, to oversimplify things a bit. We neither know how much Epic is willing to invest nor do we know their timeframe.
The 12% (or 7% cost + 5% profit) we’re talking about are their share for every single transaction, and they plan on selling many million units of mixed product. If you add up all these small 12% pieces and deduct the investment for ramping up the business, only then you can compare it to your mentioned 15% profit. It’s entirely possible the Epic store can make 1000% profit per year for Epic if it reaches critical mass. If Epic can successfully convert 10% of their Fortnite players to repeat buyers on their new storefront - an unrealistically high number IMHO - , their ROI will be much highter than 1000%.


#859

But the 5% is not the margin. It’s also not the return on the invested capital. Making decisions based on that number would be idiotic.

Visa and Mastercard take a mere 2% cut from transactions. They’re fabulously profitable businesses, despite needing to pay for the costs of CC fraud.


#860

Do anyone know how Movies Anywhere works? It’s described as a digital locker. Many studios participate in it, and a few do not. It’s owned by Disney; they do not own all the studios and most the large storefronts participate in it. This works with digital purchases and disc with digital.

I find it hard to believe they all jumped into bed with Disney just for the fun of it.

And for those that use it, like me, FandagoNOW joined it this year. they were not participating for some time.