Join gaming leaders, alongside GamesBeat and Facebook Gaming, for their 2nd Annual GamesBeat & Facebook Gaming Summit | GamesBeat: Into the Metaverse 2 this upcoming January 25-27, 2022. Learn more about the event.
Fallout 76 and Call of Duty: Black Ops 4 are coming to PC later this year, but you won’t find them on Steam. Like Fortnite and Destiny 2, publishers are leaving Valve’s popular digital-distribution service behind for their own frontend platforms. Fallout 76 will debut on the Bethesda Launcher and Black Ops 4 will join World of Warcraft on Blizzard’s Battle.net, and you can expect these companies and their competitors to continue this trend in the future with more games.
Companies are feeling emboldened after the success of Fortnite and the surging popularity of the Discord communication platform, according to SuperData Research analyst Carter Rogers. That has these huge third parties looking for a way out from underneath the Steam stranglehold and its 30-percent cut on all purchases.
“Game publishers are rethinking their reliance on Steam and its sizable cut of digital revenue after the success of Fortnite Battle Royale, which only is available through Epic’s launcher on PC,” SuperData Research analyst Carter Rogers explained. “Additionally, the rising popularity of Discord, which hit 130M total users in May, means that gamers are no longer reliant on Valve’s platform for social interaction. Their main friends lists now live on Discord, not Steam.”`
So is this a problem for Valve and Steam? Sure. That service makes more money and is more appealing when it gets more big-budget games from beloved studios. But eight-or-so other services that all do exactly what Steam does isn’t a real threat to Valve’s business. Look at the Twitch app on PC. That service has its own store and game library, and last month it gave every Amazon Prime subscriber a free game every day throughout July. I now have a pretty impressive library on that service, but you know what? I don’t ever even think about opening up games from the Twitch app — let alone purchasing them through its web shop.
The 2nd Annual GamesBeat and Facebook Gaming Summit and GamesBeat: Into the Metaverse 2
January 25 – 27, 2022
Steam has integrated itself inextricably into the purchase-to-own model for PC gaming. Steam is the default for too many people, and getting them to switch and maintain a new, separate library of games is a monumental undertaking.
That’s why we’re seeing publishers start this process with the release of their own marquee titles. They can afford to run their own platforms, and they have the capital and scale to invest in the infrastructure needed to replace the services that Steam automated. They also have the brands that can attract players anywhere.
“Steam still provides a valuable platform for distribution and discover of small and mid-size games,” said Rogers. “Bethesda, however, is betting their brand is now big enough to stand on its own.”
The threat is what’s coming next
It hurts Steam that it won’t get Fallout 76 and Black Ops 4, but Valve can shake that off. The real threats that I’ve alluded to a few times don’t come from big publishers starting their own Steam-likes — they come from the Netflix-like model that seems like it will inevitably take over gaming .. and maybe from Discord.
Steam’s position is so secure because it has millions of users who don’t think twice about having it open all the time day after day. It is a part of our lives as gamers, and it takes a lot of work to build a store that can get to that position. I actively play games on Origin, Uplay, Battle.net, and more, but I always have to remember to open them first before I can get to those games. It may not seem like a major hurdle, but every point of friction is another excuse for people to keep their wallets closed.
Discord is one of the few gaming apps that has established itself as something that millions of people have open all the time day after day. The problem is that it doesn’t have a store, but it did recently introduce a new feature where you can get news and launch games. And it seems like the company could consider adding a store at some point in the future. Even so, it’s a long road between that and Steam numbers, but Discord has already done a lot of the hard work.
But it’s the Netflix-like subscription service that will create the next Steam. Most people don’t own music or movies anymore — instead, they subscribe to a service or two that includes an instant library of movies that you can stream (or sometimes even download) at your leisure. For around $10-to-$15 per month, you can get access to thousands of movies and television shows. That model is convenient and lucrative, and it should work for video games.
Hell, it already is working.
Microsoft has the Xbox Game Pass that has over 100 games including all of its first-party releases on the day that they go on sale. For $10 per month, you get Sea of Thieves, Forza Horizon 4, and the next Halo immediately the day they come out. Electronic Arts has had its own subscription service in the form of EA Access for a few years now, and sources have told GamesBeat that it had over 1 million subscribers. That $5-per-month EA/Origin Access program gives players a library of older games, but now Origin Access Premier let’s you play every EA release the day it comes out on PC for $15 each month.
The big difference between subscriptions for movies and games is that streaming is excellent for video, but streaming games isn’t wonderful. But this is less of an issue if you have the option to download games locally. Let’s also recognize that streaming video is still making sacrifices compared to owning a physical version, and people may be willing to deal with certain sub-optimal experiences for gaming to get the convenience of streaming for games as well.
That convenience means that a subscription service doesn’t have to deal with the same problems as a Steam competitor that is trying to build a store from the ground up. How many streaming video platforms do you subscribe to? I have four or five, I honestly cannot remember. If I don’t open one of those apps, they still get my money every month.
I also continue to subscribe because I want to have access to certain shows and movies in case I find some time to watch them. Gaming platforms can do the same thing with exclusives. I’ll keep Game Pass because I want to check in with Sea of Thieves at some point in the future.
Microsoft and EA see this future and they are going after it. Other publishers and platform holders will probably follow them into the subscription service-business, and soon — just like with movies and music — we’ll replace our personal libraries with $10-per-month memberships instead.
GamesBeatGamesBeat's creed when covering the game industry is "where passion meets business." What does this mean? We want to tell you how the news matters to you -- not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it. How will you do that? Membership includes access to:
- Newsletters, such as DeanBeat
- The wonderful, educational, and fun speakers at our events
- Networking opportunities
- Special members-only interviews, chats, and "open office" events with GamesBeat staff
- Chatting with community members, GamesBeat staff, and other guests in our Discord
- And maybe even a fun prize or two
- Introductions to like-minded parties