In a “surprising” turn of events, Epic Games CEO, Tim Sweeney, has expressed his to bringing the popular game Fortnite to Steam, but with one concession – for Valve, the owner of Steam, to make significant changes to its revenue model.
According to Sweeney, Valve needs to omit the “ridiculous” commission fees the platform charges for listing games.
Valve, through its Steam platform, currently employs a baseline commission fee of 30% on sales. This rate scales down for higher-earning developers – those earning $10 million are charged a 25% rate, and for earnings over $50 million, the rate drops to 20%. Despite this tiered approach, the 30% base rate has been a point of contention, with developers, in particular the smaller ones, feeling that it is excessive.
We’ll compete, and we’ll also put Fortnite on any serious store that gives all developers an awesome deal. Steam, Microsoft, OneStore, anyone: give all developers an awesome deal and we’ll support you. The end of these ridiculous 30% fees is near. pic.twitter.com/0sxTYJdkP4
— Tim Sweeney (@TimSweeneyEpic) December 12, 2023
Sweeney’s criticism of Steam’s fee structure is not new. Epic Games has previously clashed with tech giants like Google over similar issues, leading to antitrust lawsuits. For what it’s worth, Epic’s own store, the Epic Games Store, has adopted a more developer-friendly model in recent months, taking only a 12% cut from sales and offering programs where 100% of the revenue for the first six months can go to developers who agree to exclusivity on the Epic Games Store.
Sweeney’s condition before agreeing to bring Fortnite to a competing platform is a reflective of a broader sentiment among a growing number of developers within the industry about challenging the leading revenue-sharing model. His stance is that a reduction in these fees would be more equitable and could foster greater competition and innovation in the digital distribution space.
In contrast, Valve’s approach with Steam is based on providing a comprehensive platform that includes various services such as universal controller support, investment in Linux gaming, the development of anti-cheat systems, and, overall, a much better consumer experience. Valve’s strategy also involves selling the Steam Deck at loss-leader prices, promoting affordability and accessibility in the handheld gaming market. This comprehensive investment in the gaming ecosystem is part of what justifies their fee structure, according to Valve and some industry observers.
However, critics of Valve’s model, including Sweeney, argue that while Steam’s services are beneficial, the fee structure is a huge burden on smaller developers. These criticisms suggest that Valve’s market dominance allows it to enforce fees that would be unsustainable in a more competitive market.
The debate over Steam’s fees also touches on broader industry trends. With the rise of alternative distribution platforms and the increasing popularity of subscription-based services like Xbox Game Pass, a traditional revenue-sharing model like the one championed by Valve is facing scrutiny. Developers and publishers are looking for more favorable terms, and platforms like Epic Games Store are capitalizing on this demand by offering more competitive rates.
As the industry evolves, the pressure on Steam to reconsider its fee structure is likely to increase. Sweeney’s condition for bringing Fortnite to Steam is symbolic of this broader shift. It represents a challenge to the status quo and a call for more developer-friendly practices in digital distribution. Whether Valve will respond to this challenge remains to be seen, but it has sparked discussion regarding the changing dynamics within the industry.
As the debate continues, it will be interesting to see if Valve responds and how, which is a move that could ultimately shape the future of digital game distribution.
Speaking of Epic Games Store, one of its best exclusives, Alan Wake 2, is currently available for nearly half its retail price.
