• David Manser

Valve versus The World

Updated: Feb 24, 2019

A new challenger approaches...


For 15 years Valve’s Steam has held the top position for digital games distribution on PC practically unchallenged. New challengers are appearing on the horizon for Steam as both Discord and Epic Games stores have now launched. The question

hanging in the balance is, “How will Valve respond?”


Old Dog?





Steam has been a sanctuary for gamers over the years. The platform conveniently facilitated: the ability to purchase and install games in one place, automatic updates, friend management, server services, multiplayer services and the periodic but legendary Steam Sales.


Amazing games, for ridiculously low prices. What gamer could ask for more? Life's is pretty great and Steam has been our trusted companion for many years, why should we care if Discord or Epic release a new game store?


There have already been several competitors to Steam over the past decade including: Good Old Games (2008), Uplay (Ubisoft, 2009), Origin (EA, 2011), Blizzards Battle.net. (2013) and many more besides.


Ready Player 2?


Should Valve be concerned by Discord and Epic’s digital distribution offerings? Both Discord and Epic Games are in good positions to significantly eat into Valve’s market share.


Discord created a chat and social platform, tirelessly building a community for gamers. Building on that success, they’ve launched a way to monetise this community via their games store.


Epic Games are leveraging their unique position in the market to cash-in on digital distribution, much like Valve did many years ago. Firstly as a games developer, secondly as a game engine and platform developer. Therefore, their obvious next step is to also step up as a distributor.


Presently Stream takes approx 30% of all revenue per sale on software sold on their platform. By comparison the Epic store takes 12%. This is across the board as demonstrated by their release materials below.



The revenue breakdown for the Epic Games store. Epic Games.


This therefore makes Epic’s store a very tempting place for developers and publishers to send new games and exclusives to maximise on profits.


Combine the strong brands of both stores with developers seeing an increased cut of the revenue and this makes both platforms potentially serious threats to Steam.


Until recently, I hadn’t taken too much notice of platforms other than Steam. However, Epic Games certainly caught my attention by offering exclusives, like The Division 2 and Metro Exodus. With exclusives like these, the potential to compete with Steam is game changing.


Alpha for a Reason!


Valve is unlikely to have a knee jerk reaction to these newcomers for several reasons.


Chief among these is user loyalty. The majority of populations are not ‘early adopters’ and therefore most people will stay with their favourite digital distribution platform. Additionally, there are the communities many of us have already established with our friends over the platform and, of course, the vendor lock-in.


Steam is currently the premier PC digital distribution platform. Developers and publishers will likely to continue to release on it due to the overwhelming number of users. Even with a potential loss of profit, due to higher distribution cuts, the potential loss of market penetration cannot be ignored.


As if to confirm this, Deep Silver who decided to exclusively release Metro Exodus for PC on Epic's store recently backed down due to massive backlash from gamers. The developer confirmed the PC exclusivity deal would end in 2020 and that the game would be coming to Steam.


As if to underline the fragility of these endeavours, the hardware manufacturer Razor is closing its’ own game store less than a year after it opened.


It is safe to assume that Valve have strong relationships with publishers and developers, that won't expire for some time yet, and will support their continued presence in the market.


Valve have a reputation for moving slowly and seem to carefully consider decisions that have a large impact to their business. It seems unlikely that they will immediately react to the potential threats from Discord and Epic Games.


Conclusion


I believe we'll see Valve's Steam remain at the top of the pile for longer than some people might think. I would suggest that the threats posed by Discord and Epic Games are greater than those they have previously faced.


Personally, I think Valve would do well to watch and be ready to act quickly to defend their market share...




Sources


Epic

https://www.unrealengine.com/en-US/blog/announcing-the-epic-games-store


Valve

https://partner.steamgames.com/steamdirect


Discord Store

https://discordapp.com/store

https://blog.discordapp.com/why-not-90-10-3761ebef4eab


Battle.net (Blizzard Entertainment)


https://eu.shop.battle.net/en-gb

Origin (EA)


https://www.origin.com/gbr/en-us/store


Good Old Games

https://www.gog.com


Uplay (Ubisoft)

https://uplay.ubisoft.com


Razer

Closing https://uk.gamestore.razer.com/lp/closure

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