A new GamesBeat event is around the corner! Learn more about what comes next.
Ubisoft was one of the first major publishers to jump aboard both the Epic Games Store and Google Stadia streaming platform. And the company is embracing those alternatives to the Steam market in part because Valve’s game-distribution portal takes too much money, according to Ubisoft digital publishing boss Chris Early.
“It’s unrealistic — the current business model that [Steam] has,” Early said in an interview with The New York Times. “It doesn’t reflect where the world is today in terms of games distribution.”
Valve arguably defined the modern digital-distribution structure across all of gaming. But it is facing pressure to change now that the space is maturing.
For years, Valve took a 30% cut of every sale that developers made on Steam. That left 70% for other platforms, and that turned into the standard across the industry. The Xbox and PlayStation digital stores also take 30%, as do the iOS and Google Play mobile-app markets.
Three top investment pros open up about what it takes to get your video game funded.
But Valve has changed that model slightly. Once a game on Steam surpasses $10 million in revenues, Valve will take 25% of all additional sales. Then if a game hits $50 million, Valve will only take 20% of anything beyond that.
The company made that change in November, and it did so because of competition from Fortnite developer Epic Games.
Steam’s business model is realistic, but Epic is more realistic
In December, Epic launched the Epic Games Store that takes only a 12% revenue cut for all sales. This was a disruptive move that has led to an ongoing battle between Epic and Valve — but also between publishers (and indie studios) and the Steam company.
And the Epic store wasn’t offering simply a better cut. Chief executive officer Tim Sweeney was also promising to take Valve head-on. And it has spent the entirety of 2019 doing exactly that.
Since launching in December, Epic has made exclusivity deals to keep Tom Clancy’s The Division 2, Metro: Exodus, and more off of Steam. These time-limited “exclusives” often aren’t even really exclusive. For example, you can still buy any Ubisoft game that is on the Epic Games Store on Uplay as well.
None of this makes the Epic Games Store more “realistic” to a company like Ubisoft. But it does give the company a bargaining chip. The problem for Ubisoft is that Steam is clearly still a very attractive place to sell games.
Ubisoft still releases games on Steam
Each day tens of millions of people sign onto Steam. And these are consumers who are often looking to buy new games. Epic, however, is still in its early efforts to turn a Fortnite audience into a group that wants to shop for other releases.
And Ubisoft obviously doesn’t think that Steam has no value even if it’s going to take 30% of all sales up to $10 million. In 2019, Valve has released Trials Rising and Far Cry: New Dawn on Steam. You can’t get either of those on EGS at the moment.
Ubisoft is also probably not going to move its live-service games like Rainbow Six: Siege from Steam to Epic Games. You can get Siege on EGS now, but that game has certainly earned more than $50 million since launching in December 2015. So Ubisoft is now getting the 80% split for all of its microtransactions and season passes. It’s not going to give that up.
But that doesn’t mean that Ubisoft can’t try to pressure Valve to improve its terms even more. But Valve knows that it is still very appealing to a company like Ubisoft. And as long as Valve still has that leverage, it might continue holding off on drastically changing its revenue split once again.
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