Steam Lowering Its Cut of Developer Revenues… for the Richest

First, some good news for game developers as a whole: Valve is lowering its cut of developer revenues on the Steam network.

For those developers with Steam-related sales between $10 million and $50 million, Valve’s cut will shrink from 30 percent to 25 percent. For games that rack up more than $50 million in sales, the cut will shrink still further, to 20 percent. “Sales” include not only the games themselves, but also any in-game items and fees.

Which brings us to the bad news: If you’re an indie developer whose games don’t rack up more than $10 million in sales, you’ll continue to pay Valve 30 percent of your earnings. But don’t worry! According to Valve, you’ll still benefit from rich developers getting richer.

“The value of a large network like Steam has many benefits that are contributed to and shared by all the participants,” Valve wrote in a posting in Steam’s community forum. “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.”

Translation: trickle-down economics will work! Just you wait and see!

Indie developers haven’t reacted to these new developments with glee, as you can imagine. In a much-circulated Tweet thread, for example, developer Greg Lobanov wrote that Valve’s move won’t keep the community healthy: “Games that aren’t already popular are also disfavored by the [Steam] algorithm. So people at the bottom literally get less, and now, pay more.”

This is clearly a move to entice big developers such as Electronic Arts and Activision Blizzard, who have their own sales channels, to place games such as the ultra-popular “Overwatch” on Steam (or keep their existing games on the platform). In the process, however, Steam risks alienating all those developers who sell their games on the platform, but aren’t racking up tens of millions of dollars in sales per year.

Although Apple’s App Store is a closed ecosystem (something that’s triggered a highly publicized court case), PC users have a variety of channels for downloading their favorite games. While Steam might lend some much-needed visibility to titles, developers no longer interested in marketing via the platform can sell via their own website. Steam claims that the new revenue-sharing breakdowns for gaming’s biggest creators will help everyone in the industry, but indie developers might not feel the same way—and it’s easy to imagine at least a few leaving the platform over the rich getting richer.

Update: Epic Games has announced a storefront of its very own, with all developers taking an 88 percent split of revenues. Will this persuade Valve to change course? 

Related