[ThrowawayR2]

A few exclusives is more than worth breaking Valve's near-monopoly and 30% toll on game revenue. That 30% is coming straight out of gamers' pockets and HN usually hates middlemen; it's baffling to see so many people in support of Valve.

[Jach]

30% became the industry standard not just for video games for a reason. It costs money to seamlessly do business across n countries, and it's not like Valve does nothing else to try and earn that fee either.

Epic's play is to try and see if being a better looking deal for game devs will translate to being better for gamers or other groups (like linux users, open source advocates) too. We'll see. Valve has already demonstrated their goodwill towards all the groups multiple times, even if it's motivated by keeping their platform dominance.

[ThrowawayR2]

> 30% became the industry standard not just for video games for a reason.

Yeah, it became the industry standard because it rakes in mind-blowingly huge revenue for the app store owner, e.g. https://www.cultofmac.com/601492/app-store-google-play-reven.... From the article: "It’s no wonder Services — which includes App Store revenue — has become an increasingly important business for Apple as hardware sales have slowed.".

While you're correct that it costs money to run Steam, it's not _that_ much money.

[Jach]

There are probably economies of scale, sure, which is part of why Epic can get away with a lower fee for now. But it's also just business. They know how much it costs without economies of scale, and that sets a floor.

https://youtube.com/watch?v=stxVBJem3Rs Here's a talk from a very old indie company, there's one section talking about how they existed pre-Steam (and other stores they use since Steam's not exclusive) and appreciate what it's enabled.

[lapnitnelav]

With the right time : https://youtu.be/stxVBJem3Rs?t=1564

[learc83]

The only reason 30% is the industry standard is because network effects and walled gardens make competition very difficult. The cost to valve, Apple, and Google aren't anywhere close to that, which in an efficient market means that the price should go down as competitors enter the space.

Steam isn't so much better than the competition that no one can compete with them--they just got into the market at the right time and network effects have taken over.

[Jach]

What are the costs close to, and what are the costs of distribution if you did it yourself? Feel free to break it down into cost of business across n countries, cost of storage and bandwidth, some bare-minimum listing fee somewhere to at least enable theoretical discovery, and ignore all the other services the platforms provide.

I mentioned probable economies of scale in a cousin comment, but I don't think they offer all that much. Do you have a % in mind that you intuitively think could be knocked off from the stores of Valve, GOG, Google, Apple, Microsoft, Salesforce App Exchange, and Amazon Appstore, all taking around 30% before you get into the fine print?

[gamblor956]

The costs aren't 30%.

Assume a $50 game. 100,000 sales. 5 gigs.

Storage and bandwidth = $28,000 (per Amazon's calculator) Cost of doing business in N countries = use paypal = 2.9%+0.30/sale = approximately $1.75/sale = $175,000

Costs = $203,000 Revenue = $5,000,000 Ratio = 4.1%

So yeah, Valve is not the shining knight here and that 30% fee is unjustifiable. Even Epic's 12% share is still very much profitable for Epic.

The 30% fee is also nowhere comparable to wholesale pricing schema of the retail model (effectively a 40-60% fee), since that involved the sale of physical copies of goods, and the retailers had to deal with issues like shrinkage and the risk of unsold inventory.

[zlsa]

I don't have any numbers, but I would not expect the median sale price to be anywhere near $50. I'd expect there to be more sales of <$30 games, as a percentage of revenue, than >$30 games. And the cost of distribution goes up relative to the cost of the game as the sale price goes down.

[learc83]

Assuming the sale price of the game in the OP's example was $10, distribution still cost less than 3%, and paypal goes up very slightly because of the $0.30 base charge, but the main fee is percentage based so it doesn't change. So even for a $10 game we're looking at less than 9% in total.

This example is also using s3 retail pricing and paypal retail pricing, which already factors in profits for Amazon and Paypal.

None of the big marketplace's costs are anywhere near 30%.

[syshum]

It became and Industry standard because Apple is Greedy as fuck, not because it is hard to make a store

I hate Epic for their Exclusivity, but lets not pretend that 30% Fee is nothing more than a money grab by Apple, Google, Valve and the rest of these platforms

[saltminer]

Originally, Steam's 30% cut was a huge windfall for developers (retail stores could take 60%+). But I won't harp on that, just a historical note for why people (including developers) might still like the (existing) middlemen.

The 30% figure is a bit deceiving. If you sell a lot on Steam, you can get a better cut from Valve, but you don't even need to sell a single copy to get a 100% cut - Valve charges nothing for Steam key generation. You could sell keys on your own website and only pay payment processing fees, or get a decent cut from Humble, GMG, etc and not have to manage a storefront. One-third of all Steam game registrations are key activations [0], so this isn't some insignificant revenue stream.

What HN gets annoyed with is exclusivity and lies. Valve never required exclusivity and did not try to become a monopoly (you could sell on GOG, Origin, and any other storefront alongside Steam if you wanted), they just sucked less than the competition (GFWL et al) and developed consumer loyalty through their sales.

Valve is far from perfect, but they're decent and aren't anti-consumer, so when Tim Sweeney starts handing out $2 million for exclusives [1] to undermine everyone else and lies through his teeth on Twitter, people get mad. Epic doesn't want fair competition or they'd focus on making a much better launcher and sell their platform on its merits rather than its exclusives. Tim doesn't care about introducing competition, because it already exists (GOG, Origin, UPlay, etc), and people are still happy to stick with Valve.

>That 30% is coming straight out of gamers' pockets

This implies gamers care about the cut like it's a tax, and that if Valve lowered their cut, games on Steam would be cheaper. I did a quick check and saw the new Watch Dogs: Legion can be preordered on EGS for $59.99. Logically speaking, if the 12% cut is priced at $60, buying from Ubisoft directly (where there's a 0% cut to EGS) should be even cheaper, but nope, it's the same price. The lower cut translates to more profits, and executives won't lower prices just because they're getting more money. The reason for this is that video games are intellectual property, not commodity goods where people can directly compare prices for equivalent products (that is, while I can pick and choose a generic paper towel brand over Bounty and get similar utility for less money, choosing Need for Speed over Forza will result in a very different experience, such that you can't really compare games on price).

Given that Tim wants to force everyone to use his crappy launcher with no intention of Linux support, I can see why HN would rally around Valve. Middlemen are necessary for distribution, server hosting, and dealing with scammers trying to chargeback thousands of transactions, so we might as well have a company that isn't actively hostile to consumers doing it. Valve could lower their cut, but it would do nothing unless they stooped to Tim's level and started paying for exclusives, and Gabe has made it clear he wants PC gaming to remain an open platform, making paid exclusives unlikely. Doing so would result in a race to the bottom, and Tim knows that although Epic has tons of VC money to fund such a race with, Valve's refusal to take VC funds over the years would result in them losing.

[0]: https://twitter.com/Mortiel/status/1120357602305560577

[1]: https://www.pcgamer.com/phoenix-points-epic-store-exclusivit...

[Jach]

Your reply on "coming straight out of gamers' pockets" reminded me of something. I wonder if there's an official term in economics for it. But it comes up when people discuss levying new taxes on various product categories (we might consider it in this thread as Epic raising their fee back up to an industry standard) and a counterargument would go something like "companies will just pass the cost through to the consumer". Except that's not what happens, what happens is the company just has to eat it and try to survive. The market has already priced the good and has reached an equilibrium. If a company could get away with raising the price to a new value, and even after accounting for a decrease in sales still end up with the same or higher profit within a static time frame, they would have already done it.

One can also look at the possibilities by modeling more than just the $60 game in isolation. Include the cost, it took $X to create, and each $60 sale chips away at $X by some $Y so that after enough sales over some time window breakeven is reached (and profit after that). A new tax means that $Y becomes smaller, so you need more sales than before to reach breakeven within the same time. Except you won't get more sales than before, because the price is the same. You have to eat the tax. You could try raising the price to say $70 or whatever is needed so that $Y remains the same, and now you only need the same number of sales as before, let the customers eat it. Except you won't get the same number of sales as before, because the increase in the product's price will result in a decrease in customer demand, you'll have fewer sales than before within the same time frame. Compared to the difference with $X, it's still the company who has eaten the tax and has to deal with its consequences on their continued existence.

[chc]

> Given that Tim wants to force everyone to use his crappy launcher

This is a pretty wild accusation to make with no lead-up or follow-through.

[mrguyorama]

The store does not have a shopping cart feature, and started flagging people for fraud for buying multiple games in a row during a huge sale

[ThatPlayer]

That's a problem with their anti-fraud not a problem with missing a shopping cart. And that's probably been fixed.

iTunes, Apple App Store, Google Play Store, even Amazon Kindle book store, all are missing carts. Because a one-click buy is way easier to navigate than adding to cart, going to cart, and then finally checking out.

[mrguyorama]

Does epic have one click buy? I also don't agree that one click buy is better for the consumer, as I like to see all the money I'm spending when buying multiple games, but that's opinion of course.

[chc]

Even if everything you're saying here is 100% true, I don't see how it would support the accusation that Tim wants to force everyone to use his launcher, which is what I quoted and took issue with. Can you explain how the lack of a shopping cart and some mistaken bans are meant to prove the accusation true?

[mrguyorama]

What I said does not support the that accusation. Are you saying a business does not want to own 100% of the market? Are you disagreeing with the "force" verbiage?

[chc]

Yes, I was disagreeing with the thing I quoted. Given that saltminer was contrasting Tim's desire to "force everyone" to use his launcher with Valve's wishes for the world, I don't think it was uncharitable to read it as an accusation of something more nefarious than run-of-the-mill capitalism.

[shultays]

You get a better cut if your revanue for a game is above a million $ or something. For majority of devs out there the cut is 30%

They are generous with giving away steam keys, I agree with that. However the alternative for them is people selling exe on their websites instead of the steam key and losing potential customers over it. Also giving away free keys like that allows them to force devs keep the price same as steam prices