Epic Game Store’s Tim Sweeney made a recent allegation regarding how Valve makes more and developers make less money from games sold on Steam. Is this actually true though? A Twitter user by the name of Mortiel analyzed the statement and posted the findings online, effectively exposing Tim Sweeny’s propaganda.
Just as a bit of a more in depth explanation to completely dispel @TimSweeneyEpic‘s allegation that developer’s make less profit than Valve on a game sold on @steam_games. Bottom line: My educated guess is that Valve makes 8% profit on a game sold on Steam. Let’s break this down
— Mᴏʀᴛɪᴇʟ ? (@Mortiel) April 22, 2019
Valve charges 30% off the top of a game purchased directly through the Steam Store, which accounts to about 66% of all activations on Steam. Remove the 33% of Steam Key activations and you end up with 19.8% made off a game available on Steam. Moving on…
— Mᴏʀᴛɪᴇʟ ? (@Mortiel) April 22, 2019
After that, you have Sweeney's own alleged 7% transaction cost per sale added to an estimated 30% OpEx cost off the top for personnel plus an additional 23% CapEx invested into R&D costs for the software itself. These are average annualized budget costs for any major company.
— Mᴏʀᴛɪᴇʟ ? (@Mortiel) April 22, 2019
If you do the math, that's a 60% overhead on making an average 19.8% per available game on Steam. That's not counting infrastructure costs, which tend to be based on volume (Google CDN charges $0.0075 per 10K requests, for example). I can't estimate Steam's throughput for that.
— Mᴏʀᴛɪᴇʟ ? (@Mortiel) April 22, 2019
That's also not accounting for bigger titles, which may have as low as a 80/20 revenue split per sale, something Sweeney always neglects to mention. Sweeney is a successful CEO, he knows these figures better than I, making his claims nothing more than deceptive propaganda.
— Mᴏʀᴛɪᴇʟ ? (@Mortiel) April 22, 2019
In fact, based on the 8% figure I quoted on a 19.8% per-game revenue, it seems like Sweeney knew this very well when choosing 12% as the revenue cut for Epic. That's the highest percentage Epic can charge that Valve could not match without going into the red.
— Mᴏʀᴛɪᴇʟ ? (@Mortiel) April 22, 2019
Then, claiming Steam's cut is excessive and based on a monopoly, Sweeney can justify bribing game publishers to exclusivity deals in order to hit Valve's bottom line. The vast majority of sales happen in the first six months, making these timed exclusives a coffin nail for Valve.
— Mᴏʀᴛɪᴇʟ ? (@Mortiel) April 22, 2019
He specifically points out and accuses Tim Sweeney of “deceptive propaganda.” He also addressed Sweeney’s underhanded method of competition which is to steal exclusives for Epic Games Store by bribing game making studios and profiting as much as possible within the 6 months of launch.
Couple this with the fact that Valve lets indie developers have all the profits after a $100 fee makes you realize that it’s not the developers who have issues, it’s the money, hungry AAA publishers.
We have regretfully defended Sweeney in the past regarding spyware accusations.
Another part of sugar coating in his message besides the blatant lying of caring about the consumer is the way he talks about developers. Developers aren’t the ones profiting off these Epic exclusive deals as much as the publishers themselves. You can take their own word for it over ours.
It’s mainly the publishers and companies behind these development teams that are actually making the big bucks. In most cases, the deals are even kept from the developers themselves in prime examples of miscommunication.
