Some interesting industry news for you here. Epic Games have announced a change to the revenue model of the Epic Games Store, as they try to pull in more developers and more gamers to actually purchase things.
I’d argue it makes more sense for digital distribution, once the sale has been made in a physical store, there’s no ongoing cost for them.
A digital storefront has the ongoing cost of downloads and updates, as well as the distributed storage costs (Steam has many copies of games all over the world to mean downloads are quick)
Data transfer costs back in the mid 00s mean that every install of a game like HL2 cost them a dollar or so (A quick Google suggests they might have paid a couple of cents a gigabyte, but they may have had a better deal given the volume of data). If a user ever uninstalled and reinstalled more than a couple of times (a lot more common back then with the limited storage everyone had), and couple that with ongoing update transfer costs then most of the profit from a full price sale could easily be gone, let alone if the game was bought with a discount as is very common. If they never made any profit from the sales, Steam never makes it past its awkward years.
Data transfer is definitely cheaper these days, but then games are bigger and they probably spend a lot more on datacenter space than back in the day
The sheer data transfer happening is insanely costly and is not something people think about. Valve could certainly tweak their cut for small developers in sone way, but they arent just pocketing 30%.
A physical storefront has to deal with asset depreciation however. A product can sit on the shelf and reduce in value as it ages, there is no such thing with digital distribution.
Based on estimates, and various reports, leaks etc. since they aren’t a public company… Steam makde an estimated $10.8 Billion in 2024. They made $780,000 per employee as of 2018 based on an internal report, more than nearly every other company on the planet. They’re not spending anywhere near that on operations.
Surely the sales are an equivalent there? Both ultimately mean the total price goes down and the store’s cut goes down accordingly.
Don’t get me wrong, they’re definitely profiting these days. $11bn is a massive amount of revenue* for a company with the number of staff they do. But Steam are going to have disproportionately high datacenter costs compared to most other companies. As a rough comparison: Watching an hour of netflix at HD quality is about 1GB of transfer or so, Call of Duty is something like a quarter of a terabyte. Someone who downloads call of duty once would have to watch 250h of netflix to cost them the same—and Netflix is funded by subscription.
Then remember they’re likely paying their staff very well, I would not be surprised at all if well over half of their revenue just goes to operational costs before any reinvestment.
I’d argue it makes more sense for digital distribution, once the sale has been made in a physical store, there’s no ongoing cost for them.
A digital storefront has the ongoing cost of downloads and updates, as well as the distributed storage costs (Steam has many copies of games all over the world to mean downloads are quick)
Data transfer costs back in the mid 00s mean that every install of a game like HL2 cost them a dollar or so (A quick Google suggests they might have paid a couple of cents a gigabyte, but they may have had a better deal given the volume of data). If a user ever uninstalled and reinstalled more than a couple of times (a lot more common back then with the limited storage everyone had), and couple that with ongoing update transfer costs then most of the profit from a full price sale could easily be gone, let alone if the game was bought with a discount as is very common. If they never made any profit from the sales, Steam never makes it past its awkward years.
Data transfer is definitely cheaper these days, but then games are bigger and they probably spend a lot more on datacenter space than back in the day
The sheer data transfer happening is insanely costly and is not something people think about. Valve could certainly tweak their cut for small developers in sone way, but they arent just pocketing 30%.
A physical storefront has to deal with asset depreciation however. A product can sit on the shelf and reduce in value as it ages, there is no such thing with digital distribution.
Based on estimates, and various reports, leaks etc. since they aren’t a public company… Steam makde an estimated $10.8 Billion in 2024. They made $780,000 per employee as of 2018 based on an internal report, more than nearly every other company on the planet. They’re not spending anywhere near that on operations.
Surely the sales are an equivalent there? Both ultimately mean the total price goes down and the store’s cut goes down accordingly.
Don’t get me wrong, they’re definitely profiting these days. $11bn is a massive amount of revenue* for a company with the number of staff they do. But Steam are going to have disproportionately high datacenter costs compared to most other companies. As a rough comparison: Watching an hour of netflix at HD quality is about 1GB of transfer or so, Call of Duty is something like a quarter of a terabyte. Someone who downloads call of duty once would have to watch 250h of netflix to cost them the same—and Netflix is funded by subscription.
Then remember they’re likely paying their staff very well, I would not be surprised at all if well over half of their revenue just goes to operational costs before any reinvestment.
*Checked the figure was revenue and not profit.