Ubisoft VP says Steam's business model and revenue split is 'unrealistic'

[Polycount]

Steam has been under fire from all sides over the past few months. Fans criticize the platform for not doing enough to counter Epic's ongoing market expansion, and Epic itself has called Steam out for not adopting a lower, more developer-friendly revenue split.

Now, Steam is receiving even more criticism, this time from a company that is both a competitor and business partner: Ubisoft. As many of our readers will likely already know, Ubisoft -- despite selling its latest games on Uplay and the Epic Games Store exclusively -- has quite a few titles listed on Steam, including many Assassin's Creed games, most of the Ghost Recon franchise, and much more.

However, that's not stopping Ubisoft's Vice President for Partnerships and Revenue, Chris Early, from taking a few pot shots at Valve's business practices. In an interview with The New York Times, Early claimed that Valve's business model is "unrealistic," adding that it "doesn't reflect where the world is today in terms of game distribution." Early is, of course, likely referring to Steam's revenue-sharing model.

Apparently, the reason Ubisoft has not sold its latest games (such as The Division 2 and Anno 1800) on Steam has everything to do with Valve's refusal to modify said model and give developers (or, in this case, publishers) a higher split of the income. For the unaware, Steam generally takes 30 percent of a given game's sales, whereas Epic only takes 12 percent.

Whether that's true or not is tough to say. Epic has been known to offer companies lump sums of cash in exchange for store exclusivity, so even if Steam lowered its split, that money might still be tough for Ubisoft to pass up. This is speculation, of course, and it's possible Ubisoft hasn't received any such payouts -- perhaps Epic saves that strategy for smaller indie studios who can benefit more from less.

It remains to be seen whether or not Valve will finally do something to respond to increased competition from Epic, but as more companies like Ubisoft join in on the anti-Steam bandwagon, some sort of action seems inevitable.

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https://www.techspot.com/news/81655-ubisoft-vp-steam-business-model-revenue-split-unrealistic.html

 

[RaXoR]

Well, there goes another one.

 

[Evernessince]

1. Steam offers a tiered revenue share system that starts at 30% and goes down to 20% for higher selling games.

2. 3rd party marketplace sales equate to about 34% of all steam key sales. Considering that steam takes a 0% cut from all 3rd party marketplace sales despite the keys activating on steam, these companies are most certainly not paying steam's commission every time. In fact if you do the math it works out to be an actual rate of 13.2% for high grossing games at the 20% steam rate if you calculate 34% of all sales being at 0% into the 20% comish number.

3. All other major online software marketplaces charge a 30% fee so ubisoft is rather incorrect in it's statements. Given the tiered commission system and the inclusion of 0% 3rd party keys, steam is rather generous compared to other marketplaces.

4. Steam provides FAR more features then the EPIC store. EPIC doesn't even seem to be worried about it's lack of features either. I expected them to release major updates every month given their grand goals yet they seem content to bribe devs instead of adding useful features. Game devs aren't passing the "savings" (or lack thereof) onto gamers either.

5. EPIC imposes it's vision onto PC gamers. They have publicly stated they only wanted the best games but who is the judge of that? The same people who ditched the PC for console during the Xbox360 era? Steam is far more open to games from AAA to indie and it puts the power to approve games in the end user's hands.

IMO taking pot shots at Valve says a lot more about they type of company Ubisoft is, something most PC gamers are already well aware of. For AAA game developers it's argument is mostly meritless. Now for Indie devs I do wish that steam would lower the revenue share a bit.

 

[Lounds]

Epic games store and launcher is ****. Steam is a better platform and community. 30% pays for the servers and investment into the development of steam. Epic games is also a PLC, so it's valuation is totally wack. If it was based on its own income it wouldn't have a cat's chance in offering games on the store for 12% margin share.

 

[ShagnWagn]

I could really care less about any of these companies. All I want is a download and a drm-free launcher than can be played offline if single player. Basically a bare pirate version, but I pay for it at a much reduced cost.

I could really care less about any of this other fluff and bs. How about offer games at tiered rates? Want forum integration? Community? Free automatic updates? Each piece costs a little extra. Then we will see if the platform gives gamers anything they really want other than the actual game they paid for. I am being forced to pay for a bunch of junk that I don't use.

 

[hahahanoobs]

Everyone wants competition until they want a monopoly...

 

[Nero7]

The opinion of someone affiliated with Uplay is not interesting.

 

[Uncle Al]

Sounds like he's nailed the problem on the head. Steam is just being uncompetitive which drives the marketplace and the marketplace is continuing to go elsewhere .....

 

[Misagt]

Not alot of people know this but this was a major factor in EA making Origin. I'm not surprised devs want more dollars they are having a hard time getting them gamers and Epic is giving away money so why wouldn't Devs take more if they can get it.

 

[Johan S]

Well ubisoft own uplay store where they can sell with 0% cut...why they still bother steam ?
If they like epic percentage cut then put all ubisoft game at epic store rather than talk other store.

Gear of wars and GOW 4 are microsoft store exclusive and tim sweeney praise Microsoft Store so much lately. Today GOW 5 with 60GB installation listed on steam store. Does this mean Microsoft doing unrealistic business with steam ?

Amazon took unrealistic delivery cost where other can't compete with them...yet people still selling on Amazon.

 

[loki1944]

The important thing to remember is that they are all motivated by $$, neither Epic nor Steam, EA, Ubisoft etc. care one iota about being fair to anyone. Profits is the only thing they care about. The only thing they care about as far as the consumer is anything that threatens the bottom line. So loyalty to one over another is silly. None of them care about you. You are just a number to them.

 

[Pop Mihai Ioan]

That's one of the best joke ever, Ubisoft talking about others unrealistic business model, they are really mad.

 

[Johan S]

The important thing to remember is that they are all motivated by $$, neither Epic nor Steam, EA, Ubisoft etc. care one iota about being fair to anyone. Profits is the only thing they care about. The only thing they care about as far as the consumer is anything that threatens the bottom line. So loyalty to one over another is silly. None of them care about you. You are just a number to them.

As store they should care about profit, sales amount, and variety of the product. No one loyal to any of these store since all of them distribute in digital, however Steam simply ahead in every point of sales including price, item variety, function, review, chart, etc.

 

[Puiu]

Sounds like he's nailed the problem on the head. Steam is just being uncompetitive which drives the marketplace and the marketplace is continuing to go elsewhere .....

I'm sorry but "uncompetitive" is not the correct choice of words here. Being anti-competitive is what Epic is doing. Steam is just the biggest player on the market.

FYI I got most of my games I have in Steam's library from other stores which means that the devs used that little neat feature called "free Steam keys" where they don't pay Steam any money.

I currently have over 120 games on Steam and many many more in other places. But I have ZERO games on EPS just because I don't like to pay for the proliferation of cancer on the PC market.

 

[Nobina]

That's Ubisoft talking. Their business model is make a full priced game with all the "features" free to play games have like cosmetics and whatnot. Ubisoft is ****.

 

[Dosahka]

1. Steam offers a tiered revenue share system that starts at 30% and goes down to 20% for higher selling games.

To remind you how it works now:
30% cut up to 10 million sales
25% cut between 10-25m
20% cut over 50m
Do you really think this is real? not all indie devs are coding in full time, some are in their free/part time and would be better for them and the game if they develop in full time, but can't because of the high cut.
When an indie dev reach the 10 mil sold copies? like if some famous youtube picks up might be get 500k-1mil copies sold...this what killing good devs to stop their work and I've seen games failed by this scheme simply bc the 30% cut is too high and on a £5-10 game it really makes a difference. This should something other way around e.g: 5% cut up to 1 mil copies, 10% cut between 1m and 5m, 15% cut between 5m and 10m, 20% cut between 10 and 20 mil, 25% cut between 20m and 50m and 30% above 50 mil, this would be better than the current system.

not to mention the 30% cut for in-game purchase via Steam which is not tiered and fixed for 30%, so some F2P games simply direct you to their website to purchase something instead of via Steam.
I have most of my games on steam and it's the most convenient to use with friends, but soon it will change, because of big AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA games will not be released on Steam and ppl will either buy it or wait if and when will be available on steam which might be never, just to challenge steam.
Trust me it would make online marketplaces a better for (indie) devs, that's for sure.

 

[poohbear]

1. Steam offers a tiered revenue share system that starts at 30% and goes down to 20% for higher selling games.

2. 3rd party marketplace sales equate to about 34% of all steam key sales. Considering that steam takes a 0% cut from all 3rd party marketplace sales despite the keys activating on steam, these companies are most certainly not paying steam's commission every time. In fact if you do the math it works out to be an actual rate of 13.2% for high grossing games at the 20% steam rate if you calculate 34% of all sales being at 0% into the 20% comish number.

3. All other major online software marketplaces charge a 30% fee so ubisoft is rather incorrect in it's statements. Given the tiered commission system and the inclusion of 0% 3rd party keys, steam is rather generous compared to other marketplaces.

4. Steam provides FAR more features then the EPIC store. EPIC doesn't even seem to be worried about it's lack of features either. I expected them to release major updates every month given their grand goals yet they seem content to bribe devs instead of adding useful features. Game devs aren't passing the "savings" (or lack thereof) onto gamers either.

5. EPIC imposes it's vision onto PC gamers. They have publicly stated they only wanted the best games but who is the judge of that? The same people who ditched the PC for console during the Xbox360 era? Steam is far more open to games from AAA to indie and it puts the power to approve games in the end user's hands.

IMO taking pot shots at Valve says a lot more about they type of company Ubisoft is, something most PC gamers are already well aware of. For AAA game developers it's argument is mostly meritless. Now for Indie devs I do wish that steam would lower the revenue share a bit.

I was gonna say 30% is quite hefty, but the way you laid out all the points, 30% is pretty reasonable. This is especially considering the install base that Steam has. These guys hardly have to do any marketing, they just put it on Steam and let Steam take care of selling their products.

 

[BSim500]

Game devs aren't passing the "savings" (or lack thereof) onto gamers either.

I'm still waiting for my $12 price-cut for those games sold simultaneously on retail disc (50% cut) and Steam (30% cut) but still priced $60 for both...

 

[Vrmithrax]

Isn't it funny how Steam started out as a questionable service and then became the defacto "smart" choice for game publishers to use. It was a bargain for the publishers, as it took a huge burden off them by removing the need to have physical media and all that entails - packaging, distribution, deals and arrangements for shelf space, it was all a process that had huge overhead. Going digital distribution for a title, and not even having to worry about server space, IT maintenance, etc. was a sweet deal - particularly since Steam was only charging what current distribution channels did, without the excess costs that the distributor deals did not cover.

And then Steam brought about the greenlight system, becoming Early Access, helping smaller or independent developers break into the market, giving them the same advantages afforded to the big publishers, and more. Plus coverage and exposure on a massively scale considering the size of the user base. It was the smart choice, and it made total sense - 30% of your sales for that kind of opportunity, exposure and support feature access is always more than 30% of zero if you can't even get started.

And then comes Epic, undercutting the market with ridiculously low margins and anti-competitive and anti-consumer practices like timed exclusives, that are really only possible because Epic has troves of cash they can throw at it, and can subsidize their store at a loss if they want to, based on their other sources of income. And just like that, suddenly overnight the Steam business model is "unrealistic" and excessive.

 

[Paul1979]

More games are going to continue to jump ship from Steam until Valve offers much better terms across the board for developers, Valve are making it easy for Epic to snatch game after game and that is going to continue to happen if nothing from Valve changes and with that, Epic can't lose because for every game that is on the Epic store, they get 12% cut that normally would go to Valve.

On another note, does anyone think when Rockstars RDR 2 does get released that it wont be on Steam? Rockstar are a greedy company, they already have the gaming brand and can by-pass Steam quite easy and I suspect they will this time, either by going on the Epic store or even it's own Social Club store, a 30% reduction in cost to either 12% or nothing would be a heck of a lot of money for them as they know sales will be high wherever the game is sold.

With that, RDR 2 and GTA 6 are likely not going to be on the Steam store as Rockstar have seen an opening to by-pass Steam and make a lot more money.

 

[Capaill]

More games are going to continue to jump ship from Steam until Valve offers much better terms across the board for developers, Valve are making it easy for Epic to snatch game after game and that is going to continue to happen if nothing from Valve changes

Even if Valve matched Epic's 12%, the publishers would still choose Epic because Epic are paying them millions for the timed exclusives.
First let's agree on one thing: Epic and Steam are not the same thing. Epic has only a game store. Steam has a game store, community forums, user game reviews, mod hosting and so much more. Don't Steam deserve a little more % for that?
Personally (and I've said it on TS before) I think Steam should reverse their payment model: lower % for smaller developers or low volume sales and larger % for AAA companies or high volume sales. A range of 15 to 25% would be generous.

 

[Evernessince]

I'm still waiting for my $12 price-cut for those games sold simultaneously on retail disc (50% cut) and Steam (30% cut) but still priced $60 for both...

Unfortunately companies rarely pass savings on to the customer. It makes sense from a company's perspective to do so. If people are accustomed to paying a certain price and they continue to purchase product at that price it makes no sense to lower the price and hurt your margins.

 

[Evernessince]

To remind you how it works now:
30% cut up to 10 million sales
25% cut between 10-25m
20% cut over 50m
Do you really think this is real? not all indie devs are coding in full time, some are in their free/part time and would be better for them and the game if they develop in full time, but can't because of the high cut.
When an indie dev reach the 10 mil sold copies? like if some famous youtube picks up might be get 500k-1mil copies sold...this what killing good devs to stop their work and I've seen games failed by this scheme simply bc the 30% cut is too high and on a £5-10 game it really makes a difference. This should something other way around e.g: 5% cut up to 1 mil copies, 10% cut between 1m and 5m, 15% cut between 5m and 10m, 20% cut between 10 and 20 mil, 25% cut between 20m and 50m and 30% above 50 mil, this would be better than the current system.

not to mention the 30% cut for in-game purchase via Steam which is not tiered and fixed for 30%, so some F2P games simply direct you to their website to purchase something instead of via Steam.
I have most of my games on steam and it's the most convenient to use with friends, but soon it will change, because of big AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA games will not be released on Steam and ppl will either buy it or wait if and when will be available on steam which might be never, just to challenge steam.
Trust me it would make online marketplaces a better for (indie) devs, that's for sure.

Please read the last bit of my comment, I do make a statement specifically on how the cut is too high for indie devs.

Do you have any source on In-Game purchases not getting reduced with total sales? I can't seem to find anything on google that talks about them being excluded.

 

[Paul1979]

Maybe so but Valve needs to react because at the moment Epic have it easy because Valve are not doing really anything to counter it and that is in the long run only going to mean Epic gaining more market share.

In any case, most of the real saving comes from that reduce cut and it's quite a lot of money if games sales numbers are good, so much so that in many cases it ends up being higher then the budget cost of the game it's self.

Even thought I agree with you about Steam offers more then what the Epic store does, will that be the case in say 2 years as Epic are adding a lot more as well? also, a lot of gamers don't care about this, they just want the game and nothing else, as well as that, there is no way that all that extra service needs a 30% cut, 30% cut over half a million, a million or 2 million sales ends up being a lot of money and in a lot of cases is bigger then the entire budget of the game.

I also feel smaller developers should catch more of a brake, they are the ones that tend to be more creative but Valve messed up on that one with that tier cut system that favours big publishers over smaller development teams and I suspect that is pushing many of the smaller ones to the Epic store.

Valve doesn't have to match Epic like for like of 12% but they need to offer something that is much closer, 15% or maybe even a blanket 20%, that might be enough to keep a lot of the games that are jumping ship.

As it is fot now, there is a clear advantage in having your game exclusive to the Epic store, paying 12% will leave a lot more money for the developers which they can either use towards that game or other games or they can pass on the saving to consumers, bribes that Epic are offering is just another incentive for this to happen but even without that, that 12% cut is enough incentive in it's self and it gets even better if they use the Unreal Engine as that reduces it by another 5%

 

[Evernessince]

Maybe so but Valve needs to react because at the moment Epic have it easy because Valve are not doing really anything to counter it and that is in the long run only going to mean Epic gaining more market share.

In any case, most of the real saving comes from that reduce cut and it's quite a lot of money if games sales numbers are good, so much so that in many cases it ends up being higher then the budget cost of the game it's self.

Even thought I agree with you about Steam offers more then what the Epic store does, will that be the case in say 2 years as Epic are adding a lot more as well? also, a lot of gamers don't care about this, they just want the game and nothing else, as well as that, there is no way that all that extra service needs a 30% cut, 30% cut over half a million, a million or 2 million sales ends up being a lot of money and in a lot of cases is bigger then the entire budget of the game.

If EA's and Ubisoft's store are anything to go by, I doubt they get much of anywhere feature wise, let alone comparable to steam's feature set.

Companies like Ubisoft are paying the 20% cut and that's only for keys sold through the game store. Keys sold through 3rd party marketplaces give steam a 0% cut. I should point out that 30% is standard for software marketplaces. Both Apple and Google charge that rate and they don't have a tiered system that gives higher grossing devs more cash. Big difference being is that steam provides far more features then either of those two.

Valve doesn't have to match Epic like for like of 12% but they need to offer something that is much closer, 15% or maybe even a blanket 20%, that might be enough to keep a lot of the games that are jumping ship.

As it is fot now, there is a clear advantage in having your game exclusive to the Epic store, paying 12% will leave a lot more money for the developers which they can either use towards that game or other games or they can pass on the saving to consumers, bribes that Epic are offering is just another incentive for this to happen but even without that, that 12% cut is enough incentive in it's self and it gets even better if they use the Unreal Engine as that reduces it by another 5%

As I pointed out in my original post, if you include 3rd party sales your effective revenue share with steam is already lower then the one your proposed. Don't want to pay steam store revenue share? Do a better job of selling your product on 3rd party marketplaces or your own website. Steam is not stopping you. That's the great part about the platform, choice. What's the advantage for EPIC here exactly? If you go on steam you can sell your games on the worlds largest game platform at a tiered rate or you can sell your game on 3rd party marketplaces that will sell your game keys and avoid the steam rate altogether and still maintain all the features of the platform. By allowing devs to sell their steam game keys on 3rd party websites they are essentially asking others to bring on the competition.