3 min read

New PC game stores are not always 'competition'

There's this narrative building in the video game industry about Valve and Steam, and it's quite an odd one. That because it's the largest PC game platform, it somehow doesn't deserve its position, or even more stupidly that it is a 'monopoly'.

People seem to assume that the smaller players are doing things better, but the largest players are just abusing their position to remain on top. But in the market of PC game stores/platforms, I can't see that to be true with Valve and Steam.

I'll start with the stupidest claim: that Steam is a monopoly. It just isn't, by any measurement. It's the most popular by far, but a monopoly it is not. There's plenty of alternatives for consumers to choose from, developers are free to distribute elsewhere, some of the biggest games in the industry are simply not on Steam (they began and grew outside of Steam) and Valve does not employ policies which would incentivise developers to not release their games elsewhere.

In fact, they've publicly encouraged developers to release elsewhere too:

Valve’s Anna Sweet told us. “Whenever we talk to third-party partners, we encourage them to put their games in as many places as possible, including not on our platforms," she said. "Because we think that customers are everywhere, and they want to put their games wherever customers are."

Secondly, in terms of features offered, ecosystem, rate of development - there's no competitor that comes close to matching the breadth or depth that Steam offers. The best competitors have been able to offer are nicer looking clients and exclusive games.

However, this post isn't about how great Valve and Steam is, there's plenty they need to work on and they're often very frustrating in many ways. Instead, this post is about the narrative.

This narrative has been emboldened recently by the announcement and release of the Epic Games Store, which lead with a new revenue share system. The industry has largely settled on 30/70 split to developers, that's across games consoles, other PC game stores, iPhone, Android, etc, etc. Epic announced they'll be taking a smaller cut at 12/88 to the developers, with Unreal Engine 4 games getting further incentives.

This is cool, it offers more choice to developers and it's a good incentive. This is legitimate competition to Steam, it provides choice. No problems here. It probably played a big role in Valve's new revenue share system, in which the share Valve takes reduces to 20% for games which make over $50m in revenue. That's competition working as we hope.

The problems begin with Epic choosing to incentivise developers to not release their game on Steam. It has already happened with a few games and they've signalled it will continue to happen. Now, I'll be clear - Epic are well within their rights to do this - it makes business sense especially as you're starting out to try and grab some attention, it's also perfectly fine for developers to accept these deals.

But let's not pretend this provides competition for consumers. It does not, it does the opposite. It creates a situation where, if I want to play a particular third party game, then I don't have a choice. I can't choose to buy that game on a platform which offers the best experience. Stores buying exclusive rights to games they didn't create does nothing to improve the market for me as a consumer, it instead degrades it

I'm not a "Steam or no buy" person. I have all the other stores and launchers installed on my system, I buy games from platforms I think are bad, such as the Windows 10 Store, I'm happy to do so. But would I buy those games on Steam instead if they were there? Absolutely, because it remains the best platform.

Epic are well aware that their platform isn't as good as Steam from a consumer perspective, so they have to find ways to remove the choice of the consumer in order to force their hand into picking the Epic Games Store. I'm not going to accept the narrative that this is good for me.

I'm happy that Epic are entering this particular race, I think they could in the future offer a compelling alternative - but for now - they aren't and instead are just being mildly irritating.

It's worth noting that I think first party exclusives are fairer. I think it's less reasonable to expect companies to help grow competitors by releasing their own games on competing stores. Though, Valve did also release their games on Origin before EA pulled out of Steam.