Paradox Interactive (Cities: Skylines† survive mars) seems to be getting tired of the “standard” 30% sales fee charged by Steam and many other gaming platforms. Speaking to a Gamelab panel hosted by GamesIndustry.biz last week, Paradox Chairman of the Board and former CEO Fredrik Wester called the turnout “outrageous”, adding: “I think the platform holders are too take a lot of money. Anyone in the press here, quote me on that.”
The 30% fee baseline, Wester argues, may have its roots in the home video economy of the 1970s, when studios like Warner Bros. negotiated similar fees with retailers selling early VHS tapes. “That was physical. It cost a lot of money,” he said. “It costs nothing. So Epic has done a great job for the entire industry because you get 88 percent. Great move. Thank you very much.”
Saying it “costs nothing” for stores like Steam to distribute and maintain a game is going a bit far. In addition to the simple costs associated with processing payments and providing download bandwidth, platforms often offer everything from multiplayer APIs to performance and leaderboard systems to anti-cheat services and a whole host of other useful features. The Epic Game Store, with its low cost of 12%, doesn’t offer many of these features so far (but the company does have a public roadmap to adding many of them in the near future).
Platforms like Steam can also take significantly less than 30% of a game’s total sales when you factor in the “free” keys that publishers often distribute through other means. Still, those platforms have to provide services even for the sale of games that don’t bring them direct revenue.
However, that doesn’t mean that a standard 30% platform fee is necessarily justified or sustainable. Epic CEO and Co-Founder Tim Sweeney recently said on Twitter that his company’s controversial strategy of buying up exclusive products for the Epic Game Store is a necessary step to break that market standard. The additional 18% of revenue publishers will get under Epic’s 88/12 split will lead to reinvestment and price cuts that will benefit the entire ecosystem, he argued.
“The 30% store tax usually exceeds the entire profit of the developer who built the game that is sold,” Sweeney writes in the thread. “This is a catastrophic situation for developers and publishers alike, so I believe the strategy of exclusive offers is proportionate to the problem. If the Epic strategy succeeds in building a second major PC game storefront with a revenue split of 88 /12, or even lead other stores to significantly improve their terms, the result will be a big wave of reinvestments in game development and a reduction in costs.”