JackWagon

I want to give my thoughts on the Valve/Steam monopoly discourse from two perspectives: -someone who has been using Steam for 11 years -someone who is trying to build a company tldr; Valve has 75% of the PC game distribution market and Epic Games CEO @TimSweeneyEpic has been going into psychosis on twitter about how this is unfair. Very few people agree with him and there is a pattern of those who do. This is going to be a bit of a brain dump because I think there isn't any compelling discourse to be had as it is unbelievably unnuanced. I just want to share some of the thoughts that bridge the gap on this between company building and gaming for people who are in one group but not the other. Quick background, Steam (made by Valve) is a platform where you can buy games as a consumer or sell them as a developer. As a consumer, Steam handles downloads, updates, social networks, game data syncing and more. Though, rarely used, you can even use Steam to voice call with people. It does everything. I can't really think of something that it doesn't do related to gaming at least for my own purposes. Epic Games Launcher(EGL) handled downloads and some friending features, but their overall ecosystem is much less developed compared to Steam. Steam takes a 30/25/20 cut of sales from games sold on their platform, based on sale volume. Via Steamworks, Steam also helps developers set up social networks (linked to a players existing friend network), matchmaking for multiplayer games, servers, authentication and more. They take a HUGE load off of developers backs if they need the help. Steam also have recently added a disclaimer that must be used to say if your game is developed using AI-assistance and this is what set off Tim's and co. recent meltdown over Steam (He has been tweaking out about Steam since before 2017 lol) EGL takes 0% and then 12% based on sale volume. Tim is very outspoken about this and claims that Valve robs developers, and his employees and friends agree with him. There is a debate as to whether or not they are right and it is never ending. We could spend hours talking about the argument: 1. Steam has 75% market share, so not publishing on Steam kills your game 2. Steam being an effective monopoly on the market makes it so that it is virtually impossible to convince those 75% to move anywhere else, causing Steam to not be incentivized to lower the 30% cut they take Counter argument is that Steam reserves the right to charge whatever they want because the customer base they provide is the source of revenue for the developer. Notice how above I was mainly talking about the developer experience/power balances on the platforms.. In an almost laughable exercise of corporate soulessness, Tim and co. have forgotten that the gaming industry generates revenue entirely from CONSUMERS. Img #2 is a tweet from @JNavok, who until today I did not know was a person, QRTing a post from @kiaran_ritchie (an ex-EG employee who's post got community noted on this discourse for being objectively wrong) saying it was a harassment campaign, insinuating that Valve is doing this to protect Steam's image. This is moronic. If given 5 seconds of thought, he might realize that, on X, a large consumer social media platform, where gamers go to see news and talk about the games they play, that when you espouse complete nonsense about games and the platforms people play them on, the people that you sell to will call you out. Just because you disagree with the VOLUME of people calling you an idiot. *Mobs on twitter are not often right, but when the mob is your customers... you should listen because they pay your bills Unrelated, JNavok who worked in corporate strategy at Square Enix, one of the largest developers in the world also notorious for crushing consumer rights. *Japanese consumer rights for gaming are very weird and unfriendly towards consumers. Huge issue and an entirely other topic. So, we have corporate game devs covering their ears going lalalalala trying to "defend" devs when the writing is on the wall as to the dissatisfaction with their opinion and takes on the market. As unfortunate as that is to small game developers who could benefit greatly from lower % cuts, there are two major facts about this that is being left out. First point: Valve's monopoly over PC games distribution has actually been one of the greatest things to ever happen to the gaming industry. Due to their literal golden goose of the steam store they have reinvested tons of $$ into the industry: -Bankrolling developers of cross platform gameplay systems like Proton -Bankrolling Wine developers to improve Linux/Windows compatibility -Bankrolling graphics drivers developers -Funding x86-to-ARM work Counter-Strike, one of the must successful game series EVER was literally created because Valve hired two modders. This shaped esports massively and the FPS genre... This list doesn't even begin to scratch the SURFACE of what Valve does for the gaming ecosystem. EG has done serious work as well. Unreal Engine, one of the most used tools for game development ever is funded/created by them, but most of EG's support is for closed-source projects... *Tim Sweeney is a huge conservationist he's spent hundreds of millions in the US to conserve nature and this is very awesome but not related to his shit takes on the gaming industry lol. The point I'm trying to make here is that Valve's monopoly allows them to invest in open-source projects that better the gaming ecosystem, and they continue to do this all the time. Also, this gives them a easy dunk in 5% of gamers (linux users) as no other platform has this level of support for linux. Also, this development work that is targeting this 5% ends up being used/and adapted in other works and improving the experience for everybody. ALSO, this goodwill just improves the perception of their platform overall. Epic doesn't even have 0.01% of the community goodwill that Valve does. I know this is a lot but stay with me it will all tie together: My steam account has over 200 games in it. One of my favorite games ever, CS:GO, was developed by Valve. I have years of friendships stored in my Steam friend's list. Steam has 75% market share for a variety of reasons and one of them is undoubtedly switching cost. If I switched to Epic's Launcher (EGL), I have to re-friend people, all my games are not in one place, and many other issues. HOWEVER Epic Launcher, when I last used it 1 year ago or more.. f*cking sucked. It also sucked 6 years ago. Not even with the bad, UI, slow booting, poor UX way, but an issue I've had for years with EGL is just downloading games! I used to have to wait 24 hours on 100 Mbps internet just to INSTALL AN UPDATE. Epic's game distribution and downloading code was just broken. It would sit at 0Mbps download for hours despite troubleshooting restarts etc. Steam did not have this issue. This was exclusively an issue with me when I was trying to play Fortnite in early high school and a bit over a year ago. This take may be severely out of date, but this was a lasting impact on my experience with the launcher. Second Point finally!!: As a consumer... Steam just works! It works, there are very few, if any, issues and everything I could ever need is there. The reason this matters is as consumers we do not owe any company our business. You have the right to chose what service you use, and even if you give me free $60 games every month, if I can't download them why would I care?????? Gaming is a really really really unique industry where feedback is everywhere and very vocal. People are LOUD. A lot of it is noise but there is mountains of data on player retention, game enjoyment and even just general sentiment online about how people are liking games. Gabe Newell, CEO of Valve: “People are happy to pay money if they're getting what they perceive as a great product delivered on their terms.” This pretty much sums up the problem. From his beautiful forests in North Carolina, Tim (and his friends) have lost touch with the people he is selling to Because his wallet is perceptibly affected by the absolute mogging that Valve does with Steam, he has made the problem about how he + developers feel. Once again, it is an unfortunate reality, but developers are not owed business by consumers, even small ones. Ok now does this make any sense or how is it relevant to startups?? First, as a company you can either be loved or hated for a variety of reasons, or mixed. When my cofounder and I @kejerial were working on trying to build software for real estate for 3 months, we learned about Yardi, RealPage and others. These companies are hated. The UX sucks, switching costs are high. There are literally job listings for Yardi specialists because the software is so convoluted. These companies exist because without the software real estate management would collapse overnight. There is basically zero choice for large players to switch. Building in spaces like this is hard, as RE companies are quite literally life lined by these software tools. Steam has a high switching cost because instead of hooking up your company to a parasitic software, you as a young pre-teen or teenager have sentimental value and convenience tied to a platform that has treated you abundantly well. Sale after sale, improvement after improvement, strong support and more. When I was in a bad financial spot in high school with my family, steam sales were a huge deal! Instead of pirating, I'd wait for the sale cause I knew they were always coming and would let me play with my existing friend group, AND I could download the games... Stripe, Ramp, and other rockets of my time (as a 21 yr old) are LOVED by the people using them, and they continue to see growth and success. These guys entered the complicated world of accounts management and payment processing, and built an amazing product and now dominate the field. If you can build a better UX for the people paying and doing the work, and won't kill their company by switching them, you can win. EG has not done this. The consumer experience on the EGL objectively sucks. *They tried to vibe code a better UX, made a tweet saying their launcher opened faster than Valve's, and then got dogged because it was buggy and ugly. Valve has payrolled artists for god knows how much money to make Steam a 3 Michelin Star UX. Epic's strategy was "claude make this less ugly" It is written in bankruptcies and tears of failed companies. Tim has misunderstood this for 26 years. Tim wrote a public letter in 2000 saying profitability was the core to a succeeding game studio as the explanation to a game studio shutting down. In the consumer space, the $$$ signs coming into a business are tied with the # of people that you can make happy with your product. If that number is too few, it is not necessarily a profitability issue, it is an ICP issue.. I know for a fact Tim and co. understand this core fact, but they have lost the plot in decision making. You can offer developers the best terms in the world, because you are a developer and want the best for them, but the money still comes from the gamers!! If the marketplace is falling apart, ugly, and you can't even walk out with your items (download them)... no one will buy in your marketplace, even if high dollar items are FREE. There is a galactic difference between customers who are hostage versus customers who are free to go wherever they want. The pattern of misunderstanding here stems from literal caricatures of the corporate world not understanding what their customers actually want, but look at quarterly earnings and stakeholders meetings as the most important metrics for success Personally, with my current venture, it has become very easy to laud and sell my product because I know and dream that this will be extremely useful to people. If you have to cry about monopoly or incumbents or anyone upstream of the payer getting shafted, your priorities are wrong. I can not imagine trying to convince someone that, for some reason, they should use my, in every way, inferior product because... the other guy they use is too good?? Anyways. This is random, but in the first 2 weeks when Kevin and I were sitting down with a mentor at Neo, I asked if I sat in a basement and found the cure to cancer but never shared it, if that was valuable. Her answer was "No". If no one can use it or benefit from it, it is not valuable. This is extremely simple and generally drives our economy. If your value delivery machine is ugly and slow and broken... no value is created and no one will use your products!! This brain dump is filled with generalizations. For example, a company can make people happy by giving away free money, but this will not mean they are a good company. I am not trying to write a lean-verifiable argument of how this works. End of the day, all I want to do is share with some people how ridiculous it is that a billionaire game studio developer is arguing with consumers about how they should or should not enjoy the thing that they pay for. Also, I can't confirm, but I don't think a single Valve employee has commented on this at all lol. ALSO, I didn't cover it much but basically Valve added a AI disclosure, and Tim thinks this is unfair to small devs and is similar to disclosing the political party of the developer... He is trying to construct a moral argument in favor of devs so that the negative attention of AI in some circles is not forced on to them.. Valve, saw people in the Steam user base wanted to know if something used AI to make it, so they added it as it also aligns with their values. Customers win again!