New Steam policies allow successful developers to keep more revenue (update)

Steam
Steam (Image credit: Steam)

Updated December 2, 2018: According to a report by VG247, Steam's new tiered revenue sharing system has drawn some backlash from smaller developers. Many titles on Steam don't cross the $10 million mark, so those companies will still have to give Valve thirty percent of their revenue. However, "AAA" developers hit $10 million without even breaking a sweat. Major publishers even cross $50 million without even thinking about it. Vlambeer Studio's Rami Ismail said that this new policy basically means "don't worry, big game productions, we'll happily subsidize your increased income with the broken dreams of aspiring developers that fell just short of making it because they have no leverage and we don't care. Just please don't launch your own store." This seems like an accurate interpretation because Valve has only made it more profitable for big companies to retain more revenue. It's still the same percentage for smaller ones.

Steam is an incredibly popular platform from Valve and accounts for the majority of PC games sales. According to a report by Eurogamer, the company is revising its revenue sharing tiers so that developers can keep more of the profits.

The report added that Valve used to take a roughly thirty percent cut of all games using Steam. This seems to be similar to how Microsoft, Nintendo, and Sony operate. However, from now on Valve will only charge 25 percent for revenue over $10 million, and then drop down to twenty percent once a game's sales cross $50 million. This allows developers — particularly "AAA" publishers — to keep more of their profits. This isn't helpful to smaller studios though unless they produce a game like No Man's Sky.

A Valve spokesperson posted the following statement on the Steam Community blog.

The value of a large network like Steam has many benefits that are contributed to and shared by all the participants. Finding the right balance to reflect those contributions is a tricky but important factor in a well-functioning network. It's always been apparent that successful games and their large audiences have a material impact on those network effects so making sure Steam recognizes and continues to be an attractive platform for those games is an important goal for all participants in the network. Revenue includes game packages, in-game sales, and Community Marketplace fees. Our hope is this change will reward the positive network effects generated by developers of big games, further aligning their interests with Steam and the community.

It's great to see that Valve will allow game makers to keep more money. In an industry which is plagued with rising costs, this is a great move. Maybe other platform holders will also follow suit.

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Asher Madan handles gaming news for Windows Central. Before joining Windows Central in 2017, Asher worked for a number of different gaming outlets. He has a background in medical science and is passionate about all forms of entertainment, cooking, and antiquing.

24 Comments
  • Funnily enough, Microsoft did do this years and years ago with Windows 8 app sales. They shut that down a couple years ago.
  • Does this have something to do with COD Black Ops 4?? 🤔
  • What do you mean?
  • This year's COD BO4 ignored Steam unlike previous entries of the franchise. This year, they used their own distribution platform aka battle.net so they can get full profits because Valve takes a share of profits if you use its own platform (Steam).
  • It's a trend followed by most publishers big enough to host their own digital rights platform.
  • Yeah, it's a trend for most big enough publishers. And there are more competitions on the way... e.g Tencent, Discord and others. xCloud (if it's what I think it would be)... has the potential to help XPA grew.
    * GamePass for PC (and mobile) is prob the byproduct of xCloud.
  • It's how the industry used to be before services like steam became dominant. You either brought the boxed set form a retailer like Target, or you brought the download direct. With some indie sellers who didn't have boxed sets the only way that you used to be able to buy was either direct.
  • Ohh I see, good point
  • Well of course. That's also why EA has Origin, Ubisoft had uPlay and CDProjekt has GoG. In order to have higher margins.
  • Steam thinking the trickle down economy works.
  • Not exactly the same thing whatsoever.
  • 1. That is not at all what this is 2. Trickle down economics is not the true term. The actual term is supply-side economics and the term trickle down has just been used by opponents of supply-side economics If you want to see the effects of "trickle down economics" try looking up studies from multiple sources about supply-side economics instead of the term used by people who are inherently hostile to supply-side economics.
  • I would have to disagree, we hear that phrase a lot on Fox, and they seem to support it.
  • Nope, it's more like a volume seller incentive. Some of the larger outfits are going over to their own platforms in order to avoid the percentage that Steam charges them. Meaning that instead of making 30% Steam make 0% of each sale. Steam is offering high volume sellers a discount as an incentive to stay on the platform. This isn't Trickle down because nobody is claiming that anything is trickling down. It's a blanket discount for high volume sellers and the savings go into the pockets of those sellers.
  • Personally I'm not sure it will make that much difference. A lot of AAA publishers can have 100% of the revenue by having there own store. It's about time Valve stopped taking 30% of everyone else's money and started making their own games again.
  • Yea like the company could ever make a game that served as a platform for industry changing mods again... I think they took to heart the quit while you're ahead philosophy. It's crazy to believe that a store for all of the mods for half life turned into a DRM power house. I guess that's just as crazy as a mod becoming one of the biggest FPS games that changed the genre just as much as unreal or quake.
  • Shouldn't it be the other way round and let smaller indy devs keep more of their income? This is stupid
  • I thought the same.
  • Steam is rewarding teams that make quality games while trying to lure more large publishers back to their platform or keep them. This is the correct way to do things. Small publishers don't have much choice.
  • They have some fixed costs that need to be covered too.
  • okay but they don't sell as much.
  • Steam works horribly for me. Can't stand how slow the application is or being forced to use it. Deleted it and don't miss it.
  • I guess it would be better for indies not having to pay maximum at all times.
  • There's only one reason for this, and it's because if you make $50 million revenue, and thirty percent of that goes to valve, that's $15 million. You can quite easily set up a decent competing platform for distribution with that sort of dough, and arguably be somewhat further ahead. After all, a lot of companies have gone this way with their own distribution platforms and AAA games are the bulk of the sales. I daresay that there are some strings attached as well, wouldn't be surprised that steam be the only distribution channel for this to apply.