The Steam Business Model

[76561198195293191]

Hi everyone!
Just wondering if anyone can explain to me how Steam make a profit? I'm doing a gaming related project at university and trying to understand who the main stakeholders in the industry are, etc. Then I stumbled upon Steam and realise that they are a major player, but I haven't yet figured out who pays who (if that makes sense...).

Any help is appreciated! :)
Lina

[supertrooper225]

They earn income just like any retail store earns it. By selling other publishers games and take a 30% cut of the total earnings for the games as well as certain cuts from the community markets.

Steam is a private company.

[Tux]

a required watch for all business majors

https://www.youtube.com/watch?v=t8QEOBgLBQU

[76561198195293191]

Thanks guys. So as I understand the pubslisher's have an interest in having their games published on Steam. What do they gain from using Steam as a distributor - do they use it mainly to access the steam community or to make payment easier? Are there any major developers who sell directly?

[supertrooper225]

Originally posted by linacamb:

Thanks guys. So as I understand the pubslisher's have an interest in having their games published on Steam. What do they gain from using Steam as a distributor - do they use it mainly to access the steam community or to make payment easier? Are there any major developers who sell directly?

Mainly it is access to the largest community for PC gamers. Steam has tons of people who use it.

There are publishers who sell their own games...Valve, EA, Ubisoft and Blizzard come to mind.

[jpcerutti]

Originally posted by linacamb:

Thanks guys. So as I understand the pubslisher's have an interest in having their games published on Steam. What do they gain from using Steam as a distributor - do they use it mainly to access the steam community or to make payment easier? Are there any major developers who sell directly?

Someone handles all the hosting, business transactions, advertising, and works as a buffer between the publisher/developer and the consumer. Like a literary or business agent combined with a bank for computer games.

You're going to pay the agent and the bank no matter what business you are in.

[Quint the Alligator Snapper]

You may find this interesting -- this is from an indie dev's perspective, not the distributor's, but it's still a nice series of articles.

http://gamasutra.com/blogs/DavidGalindo/20100724/87650/How_much_do_indie_PC_devs_make_anyways.php

That's the first one, there are six in total I think.

[76561198195293191]

thanks a lot for the clarifications and the useful links! I'll get reading...

Im particularly interested in games which are free to play and monetised with in-game purchases. I understand that the general attitude towards microtransactions is often a little negative, did I pick up on that correctly?

I'm also interested in hearing some opinions on whether Steam is (generally) considered safe? As I understand, you top up your steam account with a desired amount and use this money to buy games or make in-game purchases. Looking at Steam's enormous user base (and their market power), it makes me wonder whether they are subject to any regulation? They must be holding enormous sums of money in their user accounts - in a way similar to a bank with lots of (small) deposits!

[p-man]

Have you seen how expensive games can get and the share they need from marketable items. They always go the share way when someone else puts a game up. I also think they get some money from people buying steam codes, like me. They also do extremely good games, VALVe.

[Ishan451]

Originally posted by linacamb:

thanks a lot for the clarifications and the useful links! I'll get reading...

Im particularly interested in games which are free to play and monetised with in-game purchases. I understand that the general attitude towards microtransactions is often a little negative, did I pick up on that correctly?

If its Free 2 Play, many Devs don't understand the basic idea of what make a F2P game successful. And that is the ability to have fun, genuine fun, without being nickled and dimed... without paying a cent.

If that is the case, and the grind to get paid for items and services if fair.. you have a good F2P game.. one in which many people will spend money in, not because they feel they have to spend the money, but because they want to spend the money.

F2P can be more profitable than any other model, if you actually have a good solid and fun game as base. Unfortunately, most companies are more concerned with making money and forgetting the fact that fewer people will actually spend money if they aren't having fun.

Originally posted by linacamb:

I'm also interested in hearing some opinions on whether Steam is (generally) considered safe? As I understand, you top up your steam account with a desired amount and use this money to buy games or make in-game purchases. Looking at Steam's enormous user base (and their market power), it makes me wonder whether they are subject to any regulation? They must be holding enormous sums of money in their user accounts - in a way similar to a bank with lots of (small) deposits!

Steam isn't save and if you upload money into Steam and they are no longer solvent, though luck, there won't be a bailout.

While Valve promised they would try to make the service available offline, if they should go belly up, they also promised at one point or another to release Episode 3 and Halflife 3... so really don't expect it.

If Valve goes down, so goes your libary of PC games, considering you only got the license to use the games anyway.

[Lonne Prime]

they dont release half life 3 so people keep throwing money at gaben to release half life 3