Paradox Interactive: "The 70/30 revenue split is outrageous"

[Darkstorne]

Well the tax comparisons run reasonably deep here if you want to take them in that direction but of course every analogy has it's limits. Like in real life it's common to set up shop in other countries to dodge taxes, while in gaming it's more like "founding a new country to avoid paying taxes".

Steam starting at an 80/20 split and then getting worse for more successful games would drive large companies away, which is the exact opposite of what they were aiming for. They want to slow the bleeding of AAA games leaving the platform for publisher exclusive ecosystems. You've had EA leave, Bethesda flirt with leaving (this new revenue system may have been what convinced them to stay), Activision pulling it's biggest franchises off, and now uPlay leaving for epic deals (I maintain that this relationship will be turfed in the next 24 months for pure uPlay exclusivity on all major Ubisoft franchises).

It's not "fair" in a social mobility sense, but neither is any form of bulk discounts, corporate contract discounts, or other things that are only avilable to the well off.

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Per game though rather than pay company, so you can't get around that by setting up multiple companies. And if companies want to leave because they feel the "tax" is too high, then I do think that suggests the 70/30 split isn't working. And it's definitely not okay to bend over for the bigger companies by reducing the split as they sell more, and screwing over Indies who don't have the clout to complain. I know a lot of people hate EGS here, but there's a good reason so many devs are getting behind that store.

Maybe 80/20 starting split, reducing to 75/25 after certain sales figures are met, is the middle ground here. Heck, any kind of movement would be appreciated, even if it's a flat 75/25. And I mean from all stores there, not just Steam.

 

[Detail]

The whole EGS debacle is a very public demonstration of how many indie developers, publisher executives and game press writers are completely disconnected from the end users.

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I agree with this.

 

[thecaseace]

The whole EGS debacle is a very public demonstration of how many consumers are completely disconnected from the reality of working on and employing a team to work on an indie game.

It's truly astounding how many people are essentially wishing for a major platform holder to get more money over the people actually making the game.

 

[Mass_Pincup]

The whole EGS debacle is a very public demonstration of how many consumers are completely disconnected from the reality of working on and employing a team to work on an indie game.

It's truly astounding how many people are essentially wishing for a major platform holder to get more money over the people actually making the game.

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A consumers should only care about the value he's receiving (outside of problem like crunch, discrimination and the likes).

"It gives us more money" is a poor reason as to why consumers should accept a lesser service.

 

[Trup1aya]

Most of the things you list are sunk cost, and perhaps justify why Steam collected the same 30% cut as the console makers that actually had to make, market and support hardware.


You cannot be serious to list 'access to millions of consumers' as a feature deserving a large cut.



This is such a poor tone to take. Wtf is this?

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Why not? That's literally what they are selling to publishers... And publishers are buying this access because doing so adds value to their business.

Platform holders invest a ton of money to build up a player base worthy of attention from publishers. The 30% cut is the prospective return that investment is based on.

If platform holders aren't "deserving" of the 70% cut, Then they publishers should be able to maximize their profits w/o being on the infringing platforms. And this exodus would then force the infringing platforms to lower their rates. It's simple supply and demand.

 

[Pryme]

Big publishers should release their marketing budgets. I bet that this "30% is too much" would stop immediately once people see some big numbers of what publishers are spending in an attempt to sell their games. A service which Steam provides for free / included within that 30%.

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You mean basically the same storefront promotion that every other storefront does across mobile, console and PC? A symbiotic arrangement where promoted games are sold and net the platform holder lots of money?

I'm not even sure why you're focused on big publishers when the ones that are seriously in need of more generous cuts are the smaller publishers, smaller devs and indies. Those who more likely than not are unable to sell enough to get on the 80/20 split deal.

This is a weird take indeed.

 

[Lothars]

The whole EGS debacle is a very public demonstration of how many consumers are completely disconnected from the reality of working on and employing a team to work on an indie game.

It's truly astounding how many people are essentially wishing for a major platform holder to get more money over the people actually making the game.

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Well you are not really correct because we care about devs and publishers but if they don't care about the customer than we don't care about them. All the egs debacle has mainly shown is that a bigger percentage means nothing when the services in that platform is terrible and gives customers no reason to care.

 

[Pryme]

A consumers should only care about the value he's receiving (outside of problem like crunch, discrimination and the likes).

"It gives us more money" is a poor reason as to why consumers should accept a lesser service.

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Consumers should care about the pipeline and the health of game studios.

Giving devs more money does not automatically translate to poorer services. I guarantee Steam would still be highly profitable if they fixed cuts at 80/20 for all, irrespective of sales figures.

 

[ThereAreFourNaan]

The whole EGS debacle is a very public demonstration of how many consumers are completely disconnected from the reality of working on and employing a team to work on an indie game.

It's truly astounding how many people are essentially wishing for a major platform holder to get more money over the people actually making the game.

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I'd love for developers to get more money in a vacuum, but if that's coming at the cost of games fleeing to far worse ecosystems with far fewer features then there's no incentive for me to support that. Practically, the vast majority of dollars funneled through a store front of any type will be from major games. Most money is spread out among the top 10-20 titles on a store, the vast vast majority of which are going to publishers not developers, and the (insert superlatively large number) of 3 person indie studios are making no dollars selling no copies, effectively.

I'd rather every store in the world charge 40% cuts and redistribute extra money to outright funding talented indie developers, compared to charging less, wherein most indies will still be making negative money on any given game developed except for the top 5 indie darlings that get major news coverage or blow up on twitch in a given year. Not that I expect this to be a practical policy, since everyone is here to make money, not act as wealth redistribution.

 

[Pryme]

If it's not "deserving" of the 70% cut, Then they publishers should be able to maximize their profits w/o being on the infringing platforms. And this would then force the infringing platforms to lower their rates. It's simple supply and demand.

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Yep. That's what they've been doing with their own storefronts, and with exclusive deals with EGS. How else do you think that forced Valve to compromise with an 80/20 split targeted at big developers or publishers?

That hasn't spared them from increasingly toxic levels of backlash from some vocal PC gaming enthusiasts, including some on this forum.

 

[Hamster Plugin]

I'd say that it's much worse that consoles are charging users to be able to connect online to game servers that are hosted by the game's publisher or developer anyway. So the publisher/developer pays all the hosting expenses and gets none of the Plus/Gold money.

 

[Hamchan]

I think I'll just look after myself as a consumer first, just like these developers are looking after themselves first. This industry feels more and more like no one gives a shit about you once they have your money.

Feel free to put your games on whatever storefront you want devs (even EGS exclusive without being moneyhatted if you really want to make a stand!) but don't expect me to follow you and hurt my own experience just because of your cut.

 

[Mass_Pincup]

Consumers should care about the pipeline and the health of game studios.

Giving devs more money does not automatically translate to poorer services. I guarantee Steam would still be highly profitable if they fixed cuts at 80/20 for all, irrespective of sales figures.

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And why is that? Consumers want a quality product at a reasonable price, how it's released and the inner working between corporations are irrelevant when it comes to that. Furthermore, changing the split would not change anything to the situation since every companies wants more money. Today it's 80/20, tomorrow 90/10 etc. It's a bandaid to a problem game developers failed to address. They need to market their game to find success, merely releasing a good game is not good enough.

Do you think going from 70/30 to 88/12 would change the situation for actual failing devs? I don't because that change will only truly be felt when you start to sell a good amount of copies. That's why I'm not surprised that Paradox, one of the most sucessfull PC publishers, who's routinely acquiring studios in quest for growth, is saying that the split is outrageous.

 

[Thorrgal]

70-30 is a disgrace.

I'm glad Epic is helping change that, and of course so are developers.

 

[Deleted member 1055]

Do you think going from 70/30 to 88/12 would change the situation for actual failing devs? I don't because that change will only truly be felt when you start to sell a good amount of copies. That's why I'm not surprised that Paradox, one of the most sucessfull PC publishers, who's routinely acquiring studios in quest for growth, is saying that the split is outrageous.

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It is a significant difference regardless of your level of succes.
All things being equal, going from 70/30 to 88/12 would mean an almost 26% increase in income and would likely also mean the difference between failure and merely struggling for any number of indie developers. To put it another way, it means having to earn $1.14 for every $ invested to break even, instead of having to earn $1.43 for every $ invested. All of the above is before taxes.

 

[Mass_Pincup]

It is a significant difference regardless of your level of succes.
All things being equal, going from 70/30 to 88/12 would mean an almost 26% increase in income and would likely also mean the difference between failure and merely struggling for any number of indie developers. To put it another way, it means having to earn $1.14 for every $ invested to break even, instead of having to earn $1.43 for every $ invested. All of the above is before taxes.

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Still as I said it wouldn't solve the actual problem. Look at this quote from GDC last year:

"So here's the thing. In February, around 850 games launched on Steam, which is about 40 a day," said Mike Rose, the indie publisher behind downhill biking game Descenders. "About 82 percent of those didn't even make minimum wage ... by this I mean, the money that came out of 82 percent of the games that came out on Steam would not support a singular person on American minimum wage, which I had to Google.

According to Rose's estimates of sales on Steam, once he removes "the crap"—games he thinks never had a chance of selling at all—the average game on Steam will sell about 2000 copies and make $12,500 in revenue in its first month. The average game will make $30,000 in its first year.

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That's not going to change no matter the split.

 

[Trup1aya]

Yep. That's what they've been doing with their own storefronts, and with exclusive deals with EGS. How else do you think that forced Valve to compromise with an 80/20 split targeted at big developers or publishers?

That hasn't spared them from increasingly toxic levels of backlash from some vocal PC gaming enthusiasts, including some on this forum.

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Sure. My point is that it this isn't a matter of what is "deserved". It's a matter of all parties seeking to maximize their ROI. Platform holders are just as "right" to do this as the developers or the publishers.

I'm very curious to see if EG can grow their platform enough to make it most attractive to publishers w/o subsidizing the revenues publishers would otherwise lose by skipping out on Steam. Only then could they realistically change the status quo. For your average game that isn't picked up an exclusive, skipping Steam isn't going to be worth it, even with a higher cut from EG. And console platform holders currently have no pressure to change at all. For your average consumer knowing EG lets publishers keep more $ isn't a compelling reason to prefer EGs store.

 

[EloKa]

You mean basically the same storefront promotion that every other storefront does across mobile, console and PC? A symbiotic arrangement where promoted games are sold and net the platform holder lots of money?

I'm not even sure why you're focused on big publishers when the ones that are seriously in need of more generous cuts are the smaller publishers, smaller devs and indies. Those who more likely than not are unable to sell enough to get on the 80/20 split deal.

This is a weird take indeed.

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No. If you think that for example the Steam marketing-eco-system is the same as a simple mobile storefront or the console counterparts then you have absolutely not a single idea of what you are talking about. Also especially the smaller Devs have often no (or small) marketing budgets and therefore often rely on some of the special marketing variations which Steam offer for "free" within those 30% like the social or viral marketing aspects.

I understand why half of the posters were already arguing with you and were trying to correct your hot takes. It doesn't seem that you know a lot about the stuff you're talking about. Damn and I just took the bait and replied to such nonsense.

 

[Deleted member 1055]

Still as I said it wouldn't solve the actual problem. Look at this quote from GDC last year:

That's not going to change no matter the split.

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On the contrary, changing the split would obviously change the amount of money that these developers make and hence decrease the percentage of developers not making minimum wage (in America), if that is the standard we want to judge success by. Going from 70/30 to 88/12 would, for example, change the average income of not-"crap" games from $30k per year to $37.7 per year (or $21k to $26.4k, if Steam's cut was not accounted for in those $30k), which is a substantial difference. Does it mean that every developer would make bank or even make minimum wage (in America)? Obviously not, but it would lower the bar for success.

 

[Mass_Pincup]

On the contrary, changing the split would obviously change the amount of money that these developers make and hence decrease the percentage of developers not making minimum wage (in America), if that is the standard we want to judge success by. Going from 70/30 to 88/12 would, for example, change the average income of not-"crap" games from $30k per year to $37.7 per year (or $21k to $26.4k, if Steam's cut was not accounted for in those $30k), which is a substantial difference. Does it mean that every developer would make bank or even make minimum wage (in America)? Obviously not, but it would lower the bar for success.

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It would marginally improve the situation but the problem stays the same. Let's even remove the Steam cut entirely here and developers still barely get by. The problem is not the cut but the amount of games released. Developers struggle to make themselves seen because of the sheer amount of competition they face. No split will change that.

 

[deadman322]

so a publicly traded company wants more money for their shareholders.

 

[Razgriz417]

If the rumors about how Stadia being around is killing the console 70/30 split, then yeah I don't see steam being able to keep the status quo for long either

 

[eonden]

If the rumors about how Stadia being around is killing the console 70/30 split, then yeah I don't see steam being able to keep the status quo for long either

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what rumors?

 

[Razgriz417]

what rumors?

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Heard it on the bombcast and I think their e3 couch interviews that Stadia entering the market has allowed publishers to challenge the console revenue split. I remember someone mentioning they heard from an exec that the current split is dead and that stadia is a great tool for them to negotiate better terms

 

[AmFreak]

Heard it on the bombcast and I think their e3 couch interviews that Stadia entering the market has allowed publishers to challenge the console revenue split. I remember someone mentioning they heard from an exec that the current split is dead and that stadia is a great tool for them to negotiate better terms

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I don't see how Stadia would kill the 30% console share.
Stadia isn't competing on a console, you are either agreeing on the 30% of that console or you are out.
And no one wants to be out.

 

[Trup1aya]

On the contrary, changing the split would obviously change the amount of money that these developers make and hence decrease the percentage of developers not making minimum wage (in America), if that is the standard we want to judge success by. Going from 70/30 to 88/12 would, for example, change the average income of not-"crap" games from $30k per year to $37.7 per year (or $21k to $26.4k, if Steam's cut was not accounted for in those $30k), which is a substantial difference. Does it mean that every developer would make bank or even make minimum wage (in America)? Obviously not, but it would lower the bar for success.

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So you think these publisher savings would "trickle down" to the developer?

Nah, they'd go to the shareholders.

 

[Sandersson]

I don't see how Stadia would kill the 30% console share.
Stadia isn't competing on a console, you are either agreeing on the 30% of that console or you are out.
And no one wants to be out.

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I dont know, if they decide to shell out a shit ton of cash for 3rd party games to subsidize for the loss of revenue for pubs.. though the amount of money you need for anticipated titles would propably be astronomical.

It would marginally improve the situation but the problem stays the same. Let's even remove the Steam cut entirely here and developers still barely get by. The problem is not the cut but the amount of games released. Developers struggle to make themselves seem because of the sheer amount of competition they face. No split will change that.

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Yeah, thats a very weird argument. Getting a smaller split doesnt give the struggling developer more negotiating power.

 

[Deleted member 1055]

So you think these publisher savings would "trickle down" to the developer?

Nah, they'd go to the shareholders.

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I think that most of these games are self-published, but I'd have to do a bit of data-mining to confirm or deny.

 

[thebishop]

I don't see how Stadia would kill the 30% console share.
Stadia isn't competing on a console, you are either agreeing on the 30% of that console or you are out.
And no one wants to be out.

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Maybe Stadia is "competing on a console"...

 

[AmFreak]

Maybe Stadia is "competing on a console"...

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Maybe console vendors shoot themselves in the foot after ramming a knife in their back ...

 

[Hero]

So you think these publisher savings would "trickle down" to the developer?

Nah, they'd go to the shareholders.

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You realize that not all developers/publishers are publicly owned and traded, right?

 

[Stone Ocean]

It would marginally improve the situation but the problem stays the same. Let's even remove the Steam cut entirely here and developers still barely get by. The problem is not the cut but the amount of games released. Developers struggle to make themselves seem because of the sheer amount of competition they face. No split will change that.

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Yep yep yep. Game development has never been more accessible, from no royalties on easy to use, high end engines to cheap publishing fees, and 1~3 extra dollars per sale you're not having because costumers have limited time, attention and money is not changing anything as stores get flooded with legit good games.

 

[ArnoldJRimmer]

You realize that not all developers/publishers are publicly owned and traded, right?

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It's those developers that most benefit from rich ecosystems that have been invested in, like Steam. It's the big publishers that see diminishing returns in stores like that.

If they'd have their way, you'd download an uncrackable, DRM'ed version from their servers with no other features for $75 and that'd be it. If they need something like multiplayer support, they have the money to use existing infrastructure or built out one. They couldn't care less about all of the other features Steam users get, and are openly hostile to some (like user reviews).

Small devs benefit from all of the services steam offers, including their global market place reach, because they lack the resources to build them out.

 

[Hero]

It's those developers that most benefit from rich ecosystems that have been invested in, like Steam. It's the big publishers that see diminishing returns in stores like that.

If they'd have their way, you'd download an uncrackable, DRM'ed version from their servers with no other features for $75 and that'd be it. If they need something like multiplayer support, they have the money to use existing infrastructure or built out one. They couldn't care less about all of the other features Steam users get, and are openly hostile to some (like user reviews).

Small devs benefit from all of the services steam offers, including their global market place reach, because they lack the resources to build them out.

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None of this has anything to do with the fact that not all companies are evil and there are tangible benefits that would impact the average developer if more money was available to hire more employees or invest in better technology.

 

[ArnoldJRimmer]

None of this has anything to do with the fact that not all companies are evil and there are tangible benefits that would impact the average developer if more money was available to hire more employees or invest in better technology.

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Companies don't work that way. They don't say: Well, we stand to make more money, let's hire more employees and invest in better tech!

They say, great, we can get more money and NOT have to invest in more employees and better tech?! Great, our CEO needs a new yacht.

Investment on technology and employees tends to be made based on demand and competition. Not on handouts. I'm not saying all companies will just pocket the money, but most will.

I think a sliding cut like Steam is currently doing is best, so long as a good portion of those funds is being reinvested in the platform. Because then ultimately everyone benefits, the consumer, the publisher, and the developer, at least in the long term. and I think most smaller devs know and understand this, while larger corporations tend to look for short term gains vs long term ones.

 

[Trup1aya]

You realize that not all developers/publishers are publicly owned and traded, right?

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Absolutely, but a change in status quo isn't going to come on the back self-published games, which tend to have smaller reach.

Its the publishers who have the most marketshare and who need to reach massive numbers of people to achieve acceptable ROI for their shareholders. It's the publishers who have the majority of career developers on their payroll. The publishers aren't going to completely leave these 70/30 markets, unless consumers do first.

Will self-Publishing developers stand to make a bit more? Sure.

 

[BrutalInsane]

The truth is big companies go to Epics store and enjoy more money. Smaller devs have no other choice than Steam because Steam sucked up the whole player base on PC. Stores likes GoG and Co. are mostly irrelevant.

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"Enjoy more money" indeed. And who pays for that?

My eyes weep for the smaller devs :(

 

[LordBaztion]

I hope Microsoft reduces their revenue split

 

[Dreams-Visions]

I see we're still waiting on someone to post actual numbers to provide any sort of evidence one way or another that 30% is or is not a fair split.

Is it asking too much for a position either way to be supported by numbers if you're going to arrive with a strong position for or against?

Continued posts saying it's too much, and it could be. If you think it should be lower, explain what data points you're basing that opinion on. "It's too much" without any supporting numbers is worthless. Paradox starting the discussion without any details or context does a disservice to the community. Blindly agreeing is shallow.

The premise of this thread is that it's not a fair split. We need to see someone's work that confirms that position. How can we have a meaningful conversation without necessary cost insights? How can anyone propose to strongly agree with the thread premise while operate from a position of complete ignorance?

 

[Skyfireblaze]

Do you? Can you tell us more about how much all of these hosting and distribution services cost monthly in order to serve tens of millions of people?

You can't right? And that's the problem with this conversation. People seem to think these services are free or close to it so why do they even get 5%? These data centers, provided features, security and services are damn near free, right? And further that providing direct access to the audience Steam offers has no value to be considered either, right?

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That's where I'm at too. I won't claim I have any insight in the reality of the market or any knowledge about the actual cost but purely going by common sense, the server-hardware and bandwidth Valve has to pay for each month really can't be cheap considering they have thousands of terrabyte of data to handle worldwide.

 

[Shodan14]

I'd love to see how they'd manage their tens of yearly tiered DLC packs per game without a competent platform to sort it and keep track of it.

 

[BlueOdin]

I see we're still waiting on someone to post actual numbers to provide any sort of evidence one way or another that 30% is or is not a fair split.

Is it asking too much for a position either way to be supported by numbers if you're going to arrive with a strong position for or against?

Continued posts saying it's too much, and it could be. If you think it should be lower, explain what data points you're basing that opinion on. "It's too much" without any supporting numbers is worthless. Paradox starting the discussion without any details or context does a disservice to the community. Blindly agreeing is shallow.

The premise of this thread is that it's not a fair split. We need to see someone's work that confirms that position. How can we have a meaningful conversation without necessary cost insights? How can anyone propose to strongly agree with the thread premise while operate from a position of complete ignorance?

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Yeah, I see that similar. While I think the split should be discussed there are a lot of people weighing in that don't have the expertise or data to voice an opinion in the matter. Be that posters here, people who write for game sites or even some (indie) developers. Yet many are quick to call it unreasonable.

 

[Hero]

I see we're still waiting on someone to post actual numbers to provide any sort of evidence one way or another that 30% is or is not a fair split.

Is it asking too much for a position either way to be supported by numbers if you're going to arrive with a strong position for or against?

Continued posts saying it's too much, and it could be. If you think it should be lower, explain what data points you're basing that opinion on. "It's too much" without any supporting numbers is worthless. Paradox starting the discussion without any details or context does a disservice to the community. Blindly agreeing is shallow.

The premise of this thread is that it's not a fair split. We need to see someone's work that confirms that position. How can we have a meaningful conversation without necessary cost insights? How can anyone propose to strongly agree with the thread premise while operate from a position of complete ignorance?

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You constantly being a contrarian and asking people to show work when you haven't done any of it yourself certainly isn't progressing the conversation either.

 

[BlueOdin]

You constantly being a contrarian and asking people to show work when you haven't done any of it yourself certainly isn't progressing the conversation either.

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Normally it works the way that the people with the thesis ("70/30 split is unreasonable" in this case) come up with the supported arguments first. That's at least how I was taught it.

 

[Burai]

Consumers should care about the pipeline and the health of game studios.

Giving devs more money does not automatically translate to poorer services. I guarantee Steam would still be highly profitable if they fixed cuts at 80/20 for all, irrespective of sales figures.

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I guarantee if Valve changed their split, Epic would change theirs to keep the undercut which would make Valves new cut seem unreasonable again. Epic aren't here to be nice to developers/publishers, they are here to disrupt the market with the intention of eventually dominating it. That developers/publishers are seeing a windfall because of that, it's simply a bonus but it won't last. It can't last.

 

[PepsimanVsJoe]

If you're all really that concerned about smaller developers, then my advice is to buy more of their games, and talk about how great they are on social media.

The split isn't going anywhere, especially considering that dozens of new indie developers are popping up every week on Steam.

 

[Deleted member 10551]

The bigger publishers could force better terms for themselves, as they always have.

Another thing that can help smaller devs is buying games directly from them, and letting them keep 100% instead of 70%. Paradox does this themselves.

 

[Hero]

Normally it works the way that the people with the thesis ("70/30 split is unreasonable" in this case) come up with the supported arguments first. That's at least how I was taught it.

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This isn't an academic or professional setting. We are responding to information coming from a developer that has an opinion and people are free to agree or disagree with him. One poster constantly quoting people and going 'show your work!' doesn't add any value to the discussion.

 

[voOsh]

Publishers complaining about the split is so strange to me considering they are not forced to sell their product anywhere. They choose where to sell. They also choose what price to sell their games at. This is all in their control. Hell go make your own first-party launcher with your extra 30%. Oh wait Paradox already tried that with GamersGate. Paradox is not struggling, they just want to continue increasing profit. Steam and all the other 70/30 stores do as well but again they are not forcing Paradox to sell anywhere.

 

[Hero]

Publishers complaining about the split is so strange to me considering they are not forced to sell their product anywhere. They choose where to sell. They also choose what price to sell their games at. This is all in their control. Hell go make your own first-party launcher with your extra 30%. Oh wait Paradox already tried that with GamersGate. Paradox is not struggling, they just want to continue increasing profit. Steam and all the other 70/30 stores do as well but again they are not forcing Paradox to sell anywhere.

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Consumers complaining about publishers choosing where to sell their games is strange to me considering nobody is forcing them to buy their game. Nobody would get mad at that, right?