As mentioned in the Sunday Papers yesterday, there has been some controversy sparked after remarks made by Gearbox’s Randy Pitchford to Maximum PC regarding Steam, where he stated that the digital distribution service from Valve was “exploiting a lot of small guys.” This was later countered by an article on Gamasutra where Tripwire’s John Gibson retorted, “Ask the Tripwire Interactive employees if they feel exploited, as they move into their new offices paid for by the money the company has made on Steam.”
Interested to see if there were other positions we spoke to 2D BOY and Zombie Cow, who have sold their games on Steam, to find out about their experiences.
Says 2D BOY’s Ron Carmel:
“Valve’s digital distribution agreement is the simplest and most developer friendly agreement I’ve seen so far, and we’ve signed over a dozen of those. Also, no other digital distribution service I know of, PC or console, pays a higher cut of the revenues out to developers.”
But before we get to that, let’s elaborate on the original Pitchford and Gibson quotes to provide context. Pitchford was explaining why he doesn’t trust Steam as a businessman. He says that “Steam helps” when it comes to distributing games, but continues, “As a guy in this industry though, I don’t trust Valve.” When Maximum PC point out that Gearbox have worked closely with Valve he adds, “I, personally, trust Valve. But I’m just saying, honestly, I think a lot of the industry doesn’t.”
The point of contention is Valve being a games developer, but also owning the distribution platform used by their rivals to sell games. Pitchford argues that Steam should be a separate company, and doesn’t mince his words.
“There’s so much conflict of interest there that it’s horrid. It’s actually really, really dangerous for the rest of the industry to allow Valve to win. I love Valve games, and I do business with the company. But, I’m just saying, Steam isn’t the answer. Steam helps us as customers, but it’s also a money grab, and Valve is exploiting a lot of people in a way that’s not totally fair. Valve is taking a larger share than it should for the service its providing. It’s exploiting a lot of small guys. For us big guys, we’re going to sell the units and it will be fine.”
There’s clearly two arguments going on here. The first is that Pitchford believes there’s a conflict of interest for Valve, not only creating and selling games but promoting and selling those of their rivals. The second is that Pitchford claims Valve is exploiting the smaller, perhaps independent developers, by taking too large a share of the money made. It’s this second point that has received the attention so far.
There are complications in investigating this. When a developer signs up to have their game sold by a digital distribution service they also sign a non-disclosure agreement saying that they won’t reveal the details of the deal publicly. This isn’t specific to Steam or Valve, but it does of course make it very hard for anyone on either side to definitively prove their case. It was this point that Gibson directly addressed in his article.
“So, is Valve exploiting independent developers? In short: absolutely not. Without pulling any punches, I can say with certainty that if it weren’t for Steam, there would be no Tripwire Interactive right now.”
He offers an example of the sorts of offers put toward them when first trying to get Red Orchestra signed for a publishing deal.
“We’ll give you a 15 percent royalty rate, take the IP rights to your game, and slap a $1.5 million administrative fee on top of your recoupment costs.”
Gibson goes on to explain that the contract from Valve was the most straight-forward he had seen, and describes the royalty agreement as “great”.
“We were able to recoup our development costs for our first game within the first week of sales, and sales were straight profit from that point on.”
He drives this point home by concluding:
“Ask the Tripwire Interactive employees if they feel exploited, as they move into their new offices paid for by the money the company has made on Steam. Or me, as I drive away from the company that was built from the royalties we made on Steam, in my sports car paid for by the royalties we make on Steam, to the home that I pay for with the royalties we make on Steam. If that’s exploitation, I’ll take a little more.”
We spoke to two other independent developers who have published their games via Steam as well as on their own sites, interested to find out if there were examples of the issues Pitchford raised. First we spoke to Zombie Cow’s Dan Marshall, who recently had their point and click adventures Ben There, Dan That! and Time Gentlemen, Please! added to Steam’s store. He replied to our query succinctly:
“Sorry, it’s not a very interesting story on my part. I’ve got nothing but positive things to say about Steam – the guys I dealt with were thoroughly charming and helpful, and I feel far from exploited.”
Next we contacted 2D BOY, who garnered great attention and success almost a year ago with the release of World Of Goo. Ron Carmel told us,
“I know a lot of small developers who distribute their games via Steam and the only complaint I’ve ever heard is that they’re not always very responsive over email. I certainly have not heard anyone saying they feel exploited. My experience has been nothing but positive. Valve’s digital distribution agreement is the simplest and most developer friendly agreement I’ve seen so far, and we’ve signed over a dozen of those. Also, no other digital distribution service I know of, PC or console, pays a higher cut of the revenues out to developers. I think they deserve every penny of the revenue they get. They’ve invested a lot of money and effort building and supporting their distribution platform and every game that gets on it benefits from that investment.”
Clearly this is not a definitive survey, and only two more anecdotes. But the impression given is one of a service quite unlike Pitchford’s suggestions.
This of course only addresses the second point Pitchford makes. What about the other thought that there’s a conflict of interests?
Gibson addresses this in his article, acknowledging that Valve could exploit their position, but then explaining why he thinks they do not.
“Valve has a very unique take on this matter, and one that I think is smart business. Rather than say, “I don’t want to sell your game, because it’s a competitor to our game,” Valve says, “Our game is good, and so is yours, so let’s both make some money together.” The attitude is if the game is good, they’ll sell it. This is different than standard retail publishers and other digital distribution companies. GamersGate, for instance, refuses to sell games that require Steam because of the conflict of interest. And while they claim to be a better model for digital distribution because GamersGate is a separate business from their related retail publishing company Paradox Interactive, ask Paradox’s CEO if they would sell a game at retail that requires Steam.”
But of course the issue remains that they could. Perhaps if there’s something to take from Pitchford’s concerns it’s to ask questions about the position Valve is now in. They certainly did provide lots of promotion on Steam for Killing Floor – a game you could argue directly competes with Left 4 Dead – both are multiplayer co-op zombie survival games after all. Were the position being abused Valve could have taken their cut from sales while squishing the rival game from attention. However, they did not. (You might well point out that since they’re receiving a cut, it wouldn’t make sense to hide the game.) But they could have.
Since Valve wholly owns Steam, and Steam makes money from the sale of games made by rivals, Valve profits from the games made and published by their rivals. You can see why this may irk some in the industry. (You may also admire them for their moxie, and be rather impressed they’ve pulled this off.) But is it an issue?
Of course, if Steam were the only viable digital distribution platform (let’s say that Valve had patented the system, and no one else could compete) then this could clearly be an enormous issue. It would be a monopoly. But of course it’s not – there’s many others from the indie systems like GoG to IGN’s (and therefore News International’s) Direct2Drive. There’s GamersGate, Impulse and there’s Metaboli. Also, major publishers have their own non-independent online distribution services. The question is, how much of this market does Steam dominate? Is it viable for a developer or publisher to refuse their game on Steam?
The next obvious remark when considering conflicts of interest is: Microsoft? A games developer, and publisher, and owner of a console, and unique controller of its digital distribution. And of course the same goes for Sony, especially with the release of the digital download only PSPgo, Sony now also wholly controlling the sales of that platform’s content. If you wish to publish your game on either of these platforms you must first have it be certified by them, and of course pay a cut of your revenue to them for the right to sell your game on their machine.
Of course, finding parallels doesn’t justify anything. It simply puts the situation into a larger context. To borrow Kieron’s comment, because another country gives up its freedoms, should ours do the same? Steam, and of course other ubiquitous digital distribution platforms, could be argued to be the consolification of the PC. A console’s real purpose is a controlled sales channel from which the channel owner profits from everyone else’s access. So is it reasonable for Valve to run a business that sells and profits from the products of their rivals? While they appear to not be currently abusing this position, could they in future, and should something be done to prevent this happening? Or does the fact that games are sold on Steam at the independent discretion of the developer or publisher mean this objection is meaningless? Since the smaller developers who have spoken about the subject are so overwhelmingly positive, are Valve the right people to be in control of such a service? What do you think?
EDIT: Bit-Tech spotted comments from Garry “Garry’s Mod” Newman about whether Valve had exploited him at all. He said no. That’s either one hell of an NDA or they’re pretty decent to developers. You can read BT’s article here. There’s also details of the effect on Garry’s Mod sales from a Steam sale here.
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From Slashdot via Kotaku, Randy Pitchford’s response (apologies if this has been posted already):
“As a guy who reads, trusts and respects slashdot and the community here, I figured I’d take the time to clarify my position since my intent has been construed out of context. As a gamer, I *love* Valve’s games. Hell, I’ve *made* some of Valve’s games! As a customer, I love Steam. I like owning a credential that I can use from any terminal and I like the software. There are other things I like, too. As a businessman, I appreciate the access to Valve’s customers that they are providing with Steam. I think there’s value to that access. I’m really happy that the Brothers in Arms games are available on Steam and I think Steam customers are really going to dig Borderlands. I have been and hope to be a partner to Valve for many years. From an industry perspective of digital distribution on the PC, I think Steam is doing it the best right now. They’re in front and they’re really getting value out of their leadership position with digital distribution on the PC. From an industry perspective, I believe that Steam would be even better off if it were a separate company. Trust issues that result from conflict of interest could be mitigated if Steam were a separate company. Take that only as analysis. It doesn’t matter how much I trust Valve or how trustworthy Valve actually is – it’s just perception within segments of the publishing and development community that, I guess, no one is really talking about. I’m on record in this article saying how I personally trust Valve. I was attempting to comment on perception from some angles of the industry. I also believe that gamers and customers and anyone making games using 3rd party digital distribution systems would be greatly benefited if Steam had some viable competitors. Competition generally drives higher quality products and services at lower prices. I can’t see how anyone could argue against that point. If we love Steam, we should hope that as competition appears that it prompts the Steam folks to go faster and better towards improving the service and the pricing. In spite of the implication made in the original source article, I do not want Microsoft to control digital distribution on PC, but believe they (and others) could enter the space if they wanted to and help the competitive landscape and even, perhaps, help to standardize the landscape a bit. I believe that because Valve is a game maker that generally “gets it” I think there’s a lot of value to the position they have and I’m really excited about the risk they took and the foresight Valve showed in paving the way there. These are not mutually exclusive feelings and they are all honest and forthright.”
- Randy Pitchford on Slashdot
In passing, IS Steam a ‘pure monopoly’? The field of competitors and niche-focussed rivals would suggest not.
Certainly Mr. Smart’s comments seem to indicate otherwise… “a) Valve’s entry into the digital distribution scene actually helped INCREASE royalties paid to developers. I know this how? Because one site that I am with was taking a 50% cut for selling our games. Once we got on Steam and saw what their [smaller] cut was – we were able to have that other site match Valve’s cut or we would pull our titles from the service and not give them our new games. The end result was that we got an amendment with the reduced cut. So now ALL the sites that we have our games on are taking the SAME cut as Valve.”
Sorry, not really a business head, so I might need some explanation regards the use of the word ‘monopoly’ here.
I have to say on the whole I really like steam, its convenient, patches stuff automatically and generally a good experience. I have purchased loads of games on Steam for myself and my family, but there lies the problem…
…because of the single sign on mechanism employed, only one member of my family can play a game at once (unless you force offline mode by disconnecting the internet), otherwise whilst I’m playing Left 4 Dead, as soon as my partner goes on the laptop to play Peggle, or my son goes on Garry’s Mod, I get logged out mid game which is very frustrating.
It would be good, if the Steam software could detect if it is on a LAN and allow multiple people to play, even if they have to be different games.
Come on Valve please sort it, this will get worse as the games catalogue grows, maybe come up with a shared login mechanism or something.
Well I don’t think you’re supposed to be sharing accounts in the first place, even if it is in the same local network.
I see your point and I agree. However, the point that I was referring to is that, though Valve can be argued to be splitting dev from retailer, the claim of collusion between branches is possible. The issue of Valve/Steam subsidizing the other game studios is besides that point. So, whether Steam will release a game like Killing Floor is plausible IF Valve wanted to limit the visibility of the game- and attempt to make Left 4 Dead the most dominant zombie shooter.
Simply put, IF Steam becomes such a huge player in the Online Distribution game, nearly becoming a monopoly (if not a monopoly due to the diminished influence of competitors), than the argument can be made that Steam could choose not to distribute any game, finished or not, that conflicts with whatever market policy they have (which may include other zombie shooters).
Valve is a good company on a whole i mean if you wana complain about conflition look at EA they bought out dev companies in the 1990’s and had nearly became a monopoly they then started to exploit the customer and still nickle and dime us from time to time.
lesson to be learned dont look at the new guy on the block as your rival,look to him as if he were your ally and work together so as to not get absorbed by a company like EA/Microsoft/Sony its been happning way too much.
I do believe at anytime any 3rd party game on steam can be removed on the developers reqest cant do that with EA can ya nope because you BELONG to them…
I’ll add on to the comment-frenzy here: I think the issue is digital distribution lock-in. Like I want to be able to buy on D2D but have my games served to me on Steam, and if I was on some other solution I’d like to be able to buy from Steam and have the game served to me on my platform of choice. The arguments that Steam should separate business units to alleviate conflict of interest are bogus: Digital distribution platforms are often meant as brand unifiers and vendor lockin (see GWFL bogus-ness). That Valve hasn’t done this yet is a tribute to their acumen as gamers and not businessmen. And, as was pointed out, their market position doesn’t keep them from being more businessman-y if they should say.. do a public offering. Platform lock-in is the defense of this, but good luck convincing all the parties of this, for now they have captive markets in their little domains and the artificial profit inflation that results is too tasty in the short-term.
Steam has proved its worth to me outside of playing videogames, with the ingame chat, friends, and community functions. Being able to hit alt+tab and bullshit with a friend without interupting my game is a glorious feature that, at this point, I just couldn’t live without. I reinstalled Shadowman a few months ago, and was heartbroken to find that it runs in such an old version of DirectX that the Steam Overlay can’t run with it. HEARTBROKEN.
I add every game I have in Steam. If it’s on Steam, I buy it there. If not, I add it to my games list. I’m willing to buy games through other services when there’s a good deal (for example the Penumbra series for $5 on Gamersgate a few weeks ago), but it all still ends up played through Steam. It really is at this point as ubiquitous and necessary to my computer as Xbox Live is to a 360, and I’m OK with that.
Anyone is free to complain about bias if they want.
Honestly, I don’t give two shits about whether developers are exploited or if Valve are the devil with their evil business plans. All I know is that I can get awesome games on Steam, fast, for a fraction of the price of getting it in a store. If that means Valve gets to laugh all the way to the bank, fine with me.
Oh, and lol @ Valve being threatened by a game made by someone else. Seriously, they know they have the best shit in town, they’re not worried about cannibalizing their own market or whatever.
I can understand in principle the hesitation many industry people would feel towards a single game developer owning the dominant digital distribution platform that publishes the biggest games on the PC.
If that company was Microsoft, or Apple, or EA, I’m sure people would be ALOT more hesitant, and alot more critical of the service.
Valve has, however, proven themselves as a trustworthy bearer of this big responsibility.
Pitchford is right to bring this scrutinizing attention on the developer, as an eye should always be kept on them. But his comments did seem a little bit tinged with an undeserved vitriol – because Valve have done an amazing job so far. Maybe Gearbox games haven’t been selling too well on the platform? With the over-saturation of so many WWII shooters on Steam, it wouldn’t shock me to hear that Brothers in Arms did poorly compared to other AAA titles.
Personally, Steam is the centre of my PC gaming life. It isn’t perfect, but it’s far better than any other service available – including hard copies of games.
There is a huge article in pc gamer from a year or so ago about the issues with steam.
they stem from having no set standards for which to accept or decline games for steam. so they can turn down any game they dont want on it for any reason they feel. alot of indie devs are trying to get on steam, but steam keeps saying no and wont give a reason to them.
There are shades of Google here. Google similarly has a dominant position or near-monopoly on various internet media channels (loosely defined) that could be worrying. However, both Google and Steam built their success on providing a good service, listening to customers and being trustworthy. They both honestly seem to want to be the best, nicest, most convenient, most likeable company they can be, and people like them for it. Google has acknowledged it, by adopting “Don’t be evil” as its unofficial motto; Valve hasn’t said as much directly, as far as I know, but you can see the same principles at work in everything they do, from the reportedly fair profit margins that go to developers from Steam sales, to the way they dealt with the L4D2 boycott.
What they surely understand is that a dominant market share in an internet-based market is no guarantee of future success. If gamers started to dislike Valve and/or Steam, they could shift to a competitor in a millisecond. It’s tougher for developers, but ultimately, if they weren’t getting a good deal they would be loathe to use the service, and it would suffer as a result.
The current state of mutual trust and good service between Valve and customers, and between Google and internet users, needs humility, good intentions and wisdom from the company to be maintained. As long as it lasts, though, everybody benefits.
What they surely understand is that a dominant market share in an internet-based market is no guarantee of future success.
@Andre
Any particular reason to parrot exactly what the other guy said 2 months ago?
Thank you!