Epic Games is creating a Steam rival and Valve should be scared

Valve should be drowsing poorly in this day and age. Steam continues to be king of PC gaming this present day, but it surely’s an more and more belabored kingdom beset on each side by means of would-be rulers. Nowadays gifts in all probability the most powerful problem but: Epic, flush with Fortnite money, will open its personal storefront within the close to long term. It’s cross-platform, cuts builders a a lot higher deal, makes a speciality of discoverability and communique from the get-go, and naturally ties in with Epic’s paintings at the Unreal graphics engine.

We’ve noticed various Steam competition over time, however that is the primary one I’d name a real danger to Valve’s dominance. I’m going to take a little bit to recap the tale because it stands, however if you wish to know the way this impacts you’re feeling loose to skip forward to “Section 2” the place we lay out what this implies for the long run.

Section 1: Conceitedness

Valve were given complacent. If you wish to know why Epic is a danger you want to know the way Valve’s fallen, and it begins with complacency. Each David and Goliath narrative wishes a proof and the reason this is that Goliath, in his vanity, stabbed himself within the foot.

Which is to mention: Income percentage has been a sensitive subject with Steam for some time now. For years Valve’s taken a flat 30 % reduce of all earnings earned on its platform, leaving builders with 70 %.

This made sense (of a kind) within the outdated days. It was once a greater reduce than builders normally earned from bodily retail, and Valve additionally labored to curate Steam, to ensure handiest the “very best” video games made it onto the shop. Between that, server prices, buyer fortify, and so forth? 30 % gave the impression justifiable.

Steam Library View IDG / Hayden Dingman

However then Valve stopped curating Steam. Steam in 2018 is a lawless deluge of rubbish jumbled together with a couple of implausible video games, and looking to distinguish between the 2 is like the use of a tennis racket to split salt from the sea. Finding new and fascinating video games on Steam in this day and age, particularly indies, is just about unattainable, and the query arose: What precisely is Valve doing to earn that 30 % earnings reduce?

Then the tale were given worse (for Valve) this week. It seems that fearing an exodus of huge publishers, a l. a. Bethesda locking Fallout 76 to its Bethesda.web launcher, Valve transformed its earnings percentage numbers—however in some way that handiest benefited the ones massive video games. It could nonetheless take a 30 % reduce of any gross sales as much as $10 million, then a 25 % reduce as much as $50 million, after which a 20 % reduce for the remainder lifetime of the sport. Indie video games, even the most important indies, are normally fortunate to earn $10 million ever, so the message was once principally “Huge publishers, please come again. Indies? There’s nowhere else so that you can cross.”

However there may well be someplace for them to head quickly.

Section 2: Pushback

Input Epic, who on Tuesday introduced the Epic Video games Retailer. And its main characteristic? A 12 % earnings reduce for all video games. It doesn’t matter what you are making, regardless of what number of copies you promote, you are taking house 88 % of earnings on Epic’s platform.

The deal will get sweeter. In the event you’re the use of Epic’s Unreal Engine, the accompanying five % license rate will get bundled in that 12 % for any purchases on Epic’s retailer. That suggests on Steam you’d be making a gift of 35 % of your earnings—30 % to Valve, five % to Epic—however at the Epic Video games Retailer you’d nonetheless handiest lose…12 %.

Epic Games Store Epic

That’s a lot of numbers, I know, but this is a huge deal. Unreal Engine is the most important third-party engine in the video game industry today. Some larger companies use their own homespun engines, e.g. EA and Frostbite, but generally Unreal is the default licensing option for games both big and small. Just this year, for instance, Unreal was used in games as different as Life is Strange 2, Darksiders III, A Way Out, State of Decay 2, Spyro: Reignited, and Bard’s Tale IV. It’s pervasive.

Let’s take a look at the publishers behind those games: Square Enix, THQ Nordic, EA, Microsoft, Activision, and (as of last month) Microsoft again. If they can earn 88 percent of revenue on Epic’s platform? And their Unreal licensing fees are bundled into that amount, further sweetening the deal? Suddenly Steam’s peace offering of 20-percent-once-you’ve-crossed-a-certain-sales-threshold looks even more paltry.

Not to mention the other features Epic highlights in its announcement: Developers having more control over their store pages, with no store-placed ads on game pages, no paid ads in search results, support for Unity and other non-Unreal engines, and the ability to message players or even email them if permission’s given. It’s a lot.

Bethesda.net IDG / Hayden Dingman

Other publishers have tried to divorce Steam, most of them unsuccessful.

Which is not to say that Epic’s going to win this war. It’s an attractive-sounding offer on paper, but we haven’t seen the store yet. Just last week I wrote about Bethesda.net and all the various ways it sandbagged the Fallout 76 launch, and recapped the mistakes other Steam competitors have made in the past. Historically, Steam’s competitors are their own worst enemy.

Part 3: The upshot

Epic has a lot of money though, and a lot of eyeballs. Fortnite is the largest game in the world right now and it’s not even close. At one point this year Epic touted 78 million monthly active users—for one game. By comparison, Steam in the same window had 90 million monthly active users across its entire library.

It’s not a perfect comparison. Epic’s users span three consoles and phones as well. But the point is, an Epic Games Store could reach a ton of people, many of whom might have gotten into gaming because of Fortnite. Those people have no Steam allegiance, and thus no reason to be wary of a competing launcher. The Epic Games Store could be their first exposure to a wider world of gaming, from big-budget fare like say Hitman 2 all the way to smaller indies like Celeste, Return of the Obra Dinn, or The Haunted Island.

Return of the Obra Dinn IDG / Hayden Dingman

Return of the Obra Dinn is one of 2018’s best games.

It could also mean cheaper games for you—or, more likely, stave off an increase in game prices. Development costs have skyrocketed this generation, and we’ve seen the results in expanded microtransactions, loot boxes, and other games-as-a-service “features.” There’s also been a commensurate call for the death of the $60 game price, with $70 or even $80 being cited as a new standard.

A price raise might be inevitable, but Epic taking a mere 12 percent of revenue (again, including Unreal licensing fees) could stave it off for a few more years. You won’t necessarily notice the change on your end, but it could make a difference regardless.

There will be growing pains, of course. I have over 2,000 games in my Steam library. More than most, I understand the investment some PC gamers have made in Valve’s platform, and why they might be reluctant to switch. I’ve seen plenty of Steam “competitors” arise over the years, and I’ve watched them fall, unable to convince players to break from their past investments.

Bottom line

But Epic doesn’t need to convince players, per se. It only needs to convince developers. EA’s storefront succeeded because it gave no alternative. You either play EA’s games on Origin or you don’t play them at all.

Epic doesn’t make a ton of games—but it’s made an attractive offer. If enough developers decide the grass is greener on Epic’s platform, we could see a slow trickle and then an eventual exodus. What would it take, for you? If Obsidian’s new game is exclusive to the Epic Games Store, would you switch? If the new Doom is exclusive, is that enough? What about the next Hitman, or Deus Ex, or Psychonauts 2? And how long until your Epic Games library is about the same size as your Steam library, until you start making purchases on Epic’s platform by default?

It’s not a given. Epic has a lot of work to do to make this future viable. But for once, it feels like Valve has some real competition—and that’s always a good thing for consumers.


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