The video game industry is witnessing the death of the standard revenue split for distribution platforms. For years, stores like Steam have taken 30 percent of every sale. Valve, which owns and operates Steam, recently adjusted that. Then, last week, Epic launched its own store with the promise to only take 12 percent instead. Now, the communication platform Discord — which launched its store in October — is planning to only take 10 percent of each sale.
“Turns out, it does not cost 30 percent to distribute games in 2018,” reads a Discord company blog. “After doing some research, we discovered that we can build amazing developer tools, run them, and give developers the majority of the revenue share.”
Discord is going to make this change in 2019. Alongside that shift in revenue sharing, it’s also opening up its store to more developers.
“We are going to extend access to the Discord store and our extremely efficient game patcher by releasing a self-serve game publishing platform,” reads the blog. “No matter what size, from triple-A to single-person teams, developers will be able to self publish on the Discord store with 90-percent revenue share going to the developer. The remaining 10-percent covers our operating costs.”
Discord also says it may try to go lower than 10 percent if it can work with developers to discover new efficiencies.
Discord vs. Epic
Discord’s play here is to ensure that every developer and publisher wants to operate on its store. Indie developers are going to jump to get that cut, but a 90/10 split could potentially even tempt a publisher like Ubisoft that operates its own platform. And the point is that Discord has enough users, so if it gets enough games, it could still make a profit just from the sheer volume of sales.
This is where Discord has an advantage over Epic when it comes to battling against Steam for PC-gaming dollars. Discord has over 200 million registered users. That’s similar to the 200 million Fortnite players that Epic has. The difference, however, is that Discord is primarily a PC service, so the vast majority of those players are on the PC. For Fortnite, however, only a fraction of those 200 million people play on PC. And while you could argue that even on mobile you need an Epic account to play Fortnite, it would still take a lot of work to get a significant number of those people to then install the Epic store on PC.
The relationship economy
Discord is also a powerful word-of-mouth tool. While Epic does not seem interesting in offering many of those social tools, like forums, Discord is where gaming fans hang out online. This is where they talk to their friends about what new games are cool. It’s where I can see that eight of my friends are all playing the same game, so I should check it out. Oh, and Discord is going to make it easy for me to do that by putting a button to go to its store page right on my friend’s profile.
As more and more games begin to flood every market, developers are going to need to build a relationship with players. Or, they could partner with publishers that have a strong relationship with players. For example, indie publisher Raw Fury has its own Discord channel. Fans can hang out and talk about the games they’re playing, and then Raw Fury can start talking about its next when its ready to start selling it.
And Discord is emphasizing that direct relationship that it enables better than any other current platform.
“Discord has also brought game developers and their fans much closer together,” reads the company’s blog. “As a player, there is something amazing about jumping into a verified community server and talking directly to the developers who build the game you love.”
Subscriptions are better than free games
Finally, I think that Discord has an advantage over Epic because it has a subscription service. Discord Nitro gets you Metro Last Light Redux, System Shock: Enhanced Edition, and more for $10 a month.
On Epic, meanwhile, you get a free game every two weeks. Now, free is always better, right? But I don’t know if that’s true.
The Twitch app constantly gives away free games to Amazon Prime members, and few people seem to care. Now, “free for Amazon Prime members” isn’t the same as “free,” but considering 90 million American households subscribe to the service, it’s close.
Random free game giveaways don’t seem to do a lot to build loyalty for a customer, though. A subscription, however, does seem to have that effect. Just look at Netflix.
I’d rather pay for Netflix than deal with free Hulu
In the early days of Netflix’s subscription streaming service, it faced competition from a free, ad-supported Hulu. But no one cared about Hulu. The reason for that probably has something to do with people feeling a sense of ownership of their Netflix account. Hulu, meanwhile, just felt like TV networks putting their shows on the internet. And you had to catch the shows at a certain time or they would disappear. It was a hassle. With Netflix, however, you got the sense that your library of content was always growing in the background. And as long as you paid your money, you would have access to it.
It’s not a one-to-one comparison, but I think something similar is happening with games. If I pay my $10 each month for Discord Nitro, my library is growing on its own. If I want to grow my library on Epic Games Store, I have to check in every two weeks and go through the process to add the game manually to my account. And I may remember to do that every once in a while, but I would prefer to pay a monthly fee and know that I’m free to check in on the new games whenever I’m ready.
The future of game distribution
If you buy games, you have a lot of options when it comes to stores. Here’s what I have on my PC:
- Epic Games Store (OK, I don’t have this installed at the moment, but I will. I swear.)
- Bethesda Game Launcher
- GOG Galaxy
- GeForce Now
- The Twitch app
- Windows Store
I’m sure that I’m forgetting some.
But the story here is that competition is starting to cause a lot of change in distribution. And while Steam has dominated the last decade of PC gaming, that doesn’t have to last forever. And maybe Discord or Epic won’t supplant Valve’s service. I would even wager that it’s unlikely that either will overtake Steam as a store.
But this space is ready for disruption, and that could open the chance for something like a subscription service. Maybe Discord Nitro, Game Pass, or Origin Access Premier will do to gaming what Netflix and Spotify have done to movies and music.