Valve: we're more profitable per employee than Google, Apple

By on February 16, 2011, 3:41 PM
Speaking with Forbes, Valve co-founder Gabe Newell revealed that Steam represents between 50 and 70% of digital PC game sales. IHS Screen Digest analyst Ed Barton suggests that the wildly popular platform saw revenues in the high hundreds of millions of dollars last year -- an estimate recently mirrored by FADE.

Although Valve hasn't publicly confirmed those figures, Newell has acknowledged that the company is "tremendously profitable" -- more so than Google and Apple per employee, in fact. Industry sources value the company at $2 to $4 billion, which is pretty incredible when you consider the fact that Valve only has 250 workers.


Steam's success is partially attributed to its appeal to publishers who earn a gross margin of around 70% on Steam compared to 30% via retail stores. Newell mentioned that the platform could easily be used to distribute films and music, but Valve is more focused on improving Steam for PC gamers than expanding to other content types.

As of last October, Valve announced that Steam witnessed a 178% on-year growth in new users, pushing the total number of active accounts beyond 30 million with more than six million members logging in each day. The store offered more than 1,200 games for download and sales grew over 200% from the previous year.




User Comments: 21

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Guest said:

Awesome, I love it when the people with talent cut out the middle man. More profit to the developers = more money pumped into more PC games. Go steam!

w3b0n said:

Quality over quantity.

Activision needs to learn how to play in the game decently. Their fraudulent ways of taking advantage from the AAA Franchises will get them one day, but they can only see the greedy side of this awesome industry. I cant imagine the sales if MW2 and COD BO were perfectly coded to be fair and really tried to be hacker free, those billions of dollars could be easily duplicated, but again they just greed in with our money with naughty coded stuff.

GG Valve.

princeton princeton said:

w3b0n said:

Quality over quantity.

Activision needs to learn how to play in the game decently. Their fraudulent ways of taking advantage from the AAA Franchises will get them one day, but they can only see the greedy side of this awesome industry. I cant imagine the sales if MW2 and COD BO were perfectly coded to be fair and really tried to be hacker free, those billions of dollars could be easily duplicated, but again they just greed in with our money with naughty coded stuff.

GG Valve.

And hopefully portal will change the fact that their games have had the worst quality in the graphical and physics department since 2006.

Though gameplay>graphics so I'll always buy their games.

Guest said:

If they are making such a ridiculously large profit maybe they could lower the game prices a little more??

I heard that retailers hate steam because it cuts them out.

Guest said:

Do bare in mind Princeton that Valve develop their games based on their hardware surveys and currently most of the population of Steam at the moment have low-end PCs.

So they have made a correct choice in staying low to accommodate all users. They save money and can spend more time on the coding and gameplay aspect.

I think Valve are the greatest and deserve every last praise. Screw all these idiotic companies like Activision, just trying to make that extra buck.

TomSEA TomSEA, TechSpot Chancellor, said:

"If they are making such a ridiculously large profit maybe they could lower the game prices a little more??"

Are you serious, guy? What - you living off of pennies or something? Their Christmas sales were outlandish. I bet you could have ended up with the entire Valve catalog for $400 or less. Games that would have normally totaled $3000 - $4000 if you had tried to buy them individually from a retailer.

Don't look a gift horse in the mouth. IMNHO, Valve has the best software distribution model of any e-tailer out there. I don't begrudge them a bit for making a few bucks for both themselves and the developers while we get the benefit of excellent discount pricing.

Raswan Raswan said:

TomSEA said:

"If they are making such a ridiculously large profit maybe they could lower the game prices a little more??"

Are you serious, guy? What - you living off of pennies or something? Their Christmas sales were outlandish. I bet you could have ended up with the entire Valve catalog for $400 or less. Games that would have normally totaled $3000 - $4000 if you had tried to buy them individually from a retailer.

Don't look a gift horse in the mouth. IMNHO, Valve has the best software distribution model of any e-tailer out there. I don't begrudge them a bit for making a few bucks for both themselves and the developers while we get the benefit of excellent discount pricing.

Well said. You rock my world Valve.

Zecias said:

Guest said:

If they are making such a ridiculously large profit maybe they could lower the game prices a little more??

I heard that retailers hate steam because it cuts them out.

if you really want to save money you can wait for a year or so and get games worth $50-$60 for $1-$5. u can get great games like bioshock for $2 and u want the prices to be cheaper?

Timonius Timonius said:

Guest said:

If they are making such a ridiculously large profit maybe they could lower the game prices a little more??

I heard that retailers hate steam because it cuts them out.

The article mentions:

"Steam's success is partially attributed to its appeal to publishers who earn a gross margin of around 70% on Steam compared to 30% via retail stores."

Of course retailers are going to get 'steamed' over loss of in store sales. If I were an independant developer/publisher I'd go to Steam first as I would get better profit and most likely better return on my investment given the large amount of potential buyers and also I would be able to cut out manufacturing costs (cutting out one of the middle men). As far as pricing goes, games usually go on discount during a sale/promotion as they mature. I find that 90% of the games out there are not worth purchasing right away due to various factors.

Guest said:

@ Guest who said: "Awesome, I love it when the people with talent cut out the middle man. More profit to the developers = more money pumped into more PC games. Go steam! "

The middle man is still not "cut out" and the money doesn't go to the developers. No, instead the true middle man, the publisher, decides the price and receives all the dough. It is up to them and their internal contracts in deciding how much of it goes to the developer studios.

Mushroom said:

it's hard not to love valve, their sales are orgasmic and they really seem to "get" the PC community....also, hat fortress 2 must be a gold mine.

princeton princeton said:

Guest said:

Do bare in mind Princeton that Valve develop their games based on their hardware surveys and currently most of the population of Steam at the moment have low-end PCs.

So they have made a correct choice in staying low to accommodate all users. They save money and can spend more time on the coding and gameplay aspect.

I think Valve are the greatest and deserve every last praise. Screw all these idiotic companies like Activision, just trying to make that extra buck.

Scale UP. I don't understand why valve doesn't get this. Nothing is stopping you from including both low res and high res textures and models. This article clearly shows that financial resources is no problem.

Guest said:

ok valve this is all very nice but..

WHEN ARE YOU GOING TO FINISH HALF LIFE

Stupido Stupido said:

Guest said:

ok valve this is all very nice but..

WHEN ARE YOU GOING TO FINISH HALF LIFE

+1 to that!

Guest said:

Never? That's what it looks like at least. Why finish a trilogy when you clearly don't have to (Financially speaking of course) or they ran out of ideas for dear old Mr. Freeman.

ajd007 said:

I think you mean "Dr. Freeman". He does have a PHD

emmzo said:

Guest said:

ok valve this is all very nice but..

WHEN ARE YOU GOING TO FINISH HALF LIFE

As a gamer I totally agree with you, but if you look at the facts from their perspective, finishing Half Life means closure for their most celebrated title, so unless they can pull off more new great ids to live off from that's not going to happen. Sure you can say: "what about Left4Dead or Portal?" and yes, they're ok, but there's no comparison here. Also, the fact that the 3rd episode would heavily rely on the same obsolete source engine makes it even more difficult to compete with today's shooters. Or just, maybe their priorities switched entirely to distribution, who knows... I fear this will turn out into a Duke Nukem Forever thing, minus the drama.

Guest said:

Valve, ftw. My favorite game developer/publisher/company by far. I mean, a company that actually cares about the customer? Who would have thought...

jobeard jobeard, TS Ambassador, said:

Woopie!!! While profits drive stock prices and option values higher,

profitable per employee(PFE) does not say anything about value delivered to the customer.

PFE only says whatever you do is cheaper than then next guy. Really nice for your stock holders,

but that too says nothing about long term growth or value added.

Pure Business 101 guys . . .

SNGX1275 SNGX1275, TS Forces Special, said:

Everyone was hating Apple when they had high profits. Why is this different?

gingerbill said:

Valve are a great company , love there games and find steam very good . I honestly think the retail shops (at least in the UK) only have themselves to blame . They had no clue about games and made no effort . My brother who works for a toys'r'us was surprised when cataclysm wasnt for sale in his shop , he enquired with head office about it and they said " whats world of warcraft?!" . Someone responsible for ordering games for a massive international retailer hadnt ordered and had never heard of world of warcraft . No wonder retail sales have plummeted compared to digital.

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