For the last decade and change, Valve’s Steam has been the de facto standard for digital games on the PC. Want a game? Install Steam and download it. New launchers have risen to challenge Steam lately, but none have been so well-positioned to put up a fight as Epic.
There are a few different factors that can enable Epic to transition from a notable developer to a digital sales powerhouse. One, it already has an in with a massive amount of PC players via Fortnite. Two, players are getting tired of Valve’s lackadaisical attitude to its platform, and they’re finally ready (if not happy) to embrace a more fractured collection. And three, Epic is coming out swinging with a deal that partnering developers can’t refuse.
Fortnite Is Epic’s Trojan Horse
Steam began as an online platform for Valve’s multiplayer games like Counter-Strike. Initially, users didn’t appreciate the software running in the background and its baked-in DRM. Those are two things that are still annoying users to this day, at least on everything except Steam, since it’s proven to be reasonably easy and unobtrusive. Valve sold digital copies of its own games on Steam’s integrated store but didn’t begin accepting games from third parties until 2005, a couple of years after the platform began. Profits for digital games were much, much higher than retail sales, thanks to lower overhead and no need to share the money with retailers—third-party developer and publisher partners paid Valve instead.
Things took off in 2007 with the release of The Orange Box. The omnibus game bundle included the much-anticipated Half-Life 2: Episode 2, the instant classic singleplayer puzzle game Portal, and the surprise smash hit Team Fortress 2. Players could download The Orange Box digitally directly from Steam, but at the time conventional retail sales were still king, and Valve took advantage of that. Steam was installed along with retail copies of The Orange Box enabling its DRM and online multiplayer management, introducing millions of new players to the convenience of having your games tied to an online account instead of a physical disc.
The rest, as they say, is history. Steam became the dominant platform for PC gaming, digital or otherwise. Most of the new games you buy even at retail will activate via Valve’s system. Steam makes tens of billions of dollars a year in digital sales, and Steam activation codes are available from dozens of third-party resellers. Thousands of developers and publishers, from world-striding colossi like Ubisoft and Square-Enix to the smallest one-person teams, use it. It’s the Amazon of PC gaming. Valve is barely a developer anymore: they’re the de facto publisher and distribution platform for a huge portion of the industry.
If you want to complete, you need your own Orange Box, your own “killer app” to use an antiquated phrase. And if such an app exists, it’s Fortnite. Initially a fairly tame Minecraft-zombie shooter mashup, Epic pivoted the game’s focus following the success of indie hit Player Unknown’s Battlegrounds. They introduced a free-to-play Battle Royale mode, and while not the first or last of its kind, it’s become the dominant game on PCs, consoles, and even mobile.
Fortnite is inescapable this year, thanks to a fun aesthetic, simple shooter mechanics, a game world that’s constantly changing with updates, and a free-to-play model that doesn’t punish people who play for free. Across PC, PlayStation, Xbox, Switch, iOS, and Android, over 200 million people are playing the game. If you needed any evidence that Fortnite is dominating the gaming scene both in pure numbers an in hearts and minds, Valve released its own Battle Royale mode for Counter-Strike. It’s estimated that Epic has made over a billion dollars on Fortnite, and every single copy of it on PC is running Epic’s game launcher.
And now, those player are also running the Epic store. It’s a perfect (if obvious) avenue to challenge Steam’s dominance of digital distribution on PC. Epic is ideally positioned to make its next billion, and many more after that.
Players Are Tired Of Valve Blowing Steam
As a platform, Steam is reliable. That’s about as much as you can say for it: you can buy games, you can download games, you can use Valve’s multiplayer features on those titles that take advantage of them. But it’s impossible to ignore the fact that Valve has become a ghost in its own store: the company hasn’t had a major release since DOTA 2 five years ago, and the company’s only notable project since then has been Artifact. The collectible card game has been poorly received thanks to a particularly egregious microtransaction model that demands huge amounts of money and grind from players, a notable contrast to Fortnite.
Valve tried to make Steam a platform for in-home streaming. It’s functional, but hasn’t caught on as Valve wanted it to—they recently abandoned their remote streaming device. Valve tried to expand into virtual reality. Again, the system is functional, but hardly the revolution Valve hoped it would be. The company even tried to create its own gaming-focused Linux-based operating system, succeeding on a technical level but falling flat with flagging support from both hardware partners and game developers alike. Valve is making its own Steam.TV service to try to expand into Twitch’s territory, with results yet to be seen. Ditto for the Discord-style chat service. Steam is selling movies and desktop software now, too, and no one appears to care.
It seems the only thing Valve isn’t going to do to expand its platform is what made it catch on the first place: release its own games. One collectible card game and a few token updates to Counter-Strike do not a happy fanbase make. If you need a Half-Life 3 joke here, then pretend I made one.
Worst of all, players are simply bored and frustrated with the status quo of Steam. With hundreds of thousands of titles from major publishers down to indie shovelware, it’s never been harder to separate the wheat from the chaff in Steam’s online store. Valve attempted to correct its course on the growing quality problem, without any notable improvement. User reviews and curated suggestions are present, but just as scattershot, and often abused by players who are upset at individual developers. Put simply; it’s a mess.
Valve isn’t doing itself any favors as the proverbial head of its household. A confusing position on adult content, errors in algorithms that pushed smaller developers to the side, and scams and malware hidden in a few games are a few of the recent controversies. When Steam makes headlines in its own right, the news is rarely good.
Steam isn’t in immediate danger of losing its position at the top of the PC gaming totem pole. Despite attempts from Activision-Blizzard, EA, and Bethesda to create their own walled gardens, most players still prefer to have all their games available in the same place, and Steam’s dominance means that isn’t changing soon.
But those alternate launchers from big publishers are persistent thorns in Valve’s side. The more big-name titles like Battlefield, Overwatch, Fallout, Destiny, and Anthem (and oh yes, Fortnite) require their own publisher-focused launchers and stores, the less insistent Steam’s massive user base will be that every game is available in its familiar interface. And as annoying as it is to need half a dozen different game managers on your gaming PC (see the fragmentation of online streaming video services for a similar malaise), it’s fast becoming the norm once again.
Other game stores are offering juicy carrots to attract players. GOG has a huge backlog of older titles, a decent selection of new ones, and a DRM-free commitment that’s admirable. Amazon-owned Twitch is offering tons of freebies for Prime members who install the launcher, and EA’s Origin has freebies and a surprisingly valuable subscription model, too. After a decade of dominance, the honeymoon between Steam and PC gamers is over. Valve’s in a much less secure spot than it was a few years ago, and it has no one to blame but itself.
Developers Can’t Wait To Drop Steam
All of these puzzle pieces are important for the rise of a new competitor. But with Steam remaining at the top of the heap, developers need a compelling reason to offer their games on another platform exclusively. It means losing a huge and easily-accessible audience, which means losing sales, which means losing money.
What does Epic have to offer to tempt developers away? Well, to be blunt, money. Game makers who sell their titles via the Epic store will keep 88% of the sale price of their games, giving a 12% cut to Epic for the platform. Compare that to a 20-30% cut for Steam, depending on the specific distribution setup and the amount of revenue generated. Games that sell more, keep more—something that isn’t making smaller indie developers happy.
In a hyper-competitive industry, ten to twenty percent extra revenue on each sale can make the difference between a developer earning enough to make its next game or shutting down and joining the game dev bread line. It doesn’t hurt that, as a new store sharing space with a comparatively tiny amount of games, developers will get more exposure in Epic’s storefront versus Steam. And plenty of them already have a relationship with Epic, since the company sells and maintains the popular Unreal gaming engine.
Developers are indeed taking notice. In addition to Fornite, Epic’s game store has also secured exclusive distribution for notable indie titles like Super Meat Boy Forever, Hades, Ashen, Rebel Galaxy Outlaw, and Satisfactory—games whose developers are movers and shakers in Steam’s indie circles. Some are coming to other platforms including Steam after a period of exclusivity or early access, but the crucial launch sales will be on Epic’s storefront—an epic win for a platform that’s punching above its weight.
Developers won’t be the only winners. With a more generous revenue split, devs will be able to discount their games more deeply and more often, giving competition even for Steam’s legendary digital distribution sale events. Epic is already taking a page from EA in this regard: the platform is offering one designated free game every two weeks, with Subnautica leading the charge later this week.
Aside from Fortnite, Epic doesn’t have a huge, AAA exclusive, something to rival the gigantic tentpole games from EA or Activision. But its library is growing quickly, and a few successes will grease the rails for even more developers to hop on board. Perhaps the most ringing endorsement for Epic’s game store and more generous attitude to revenue sharing comes from Super Meat Boy creator Tommy Refenes, who shared in the sequel’s discord channel that Epic’s game store is “desperately needed to get Steam to give a shit.” Super Meat Boy Forever will come to Steam in 2020, after a year of sales only on Epic.
Epic’s Store Needs Work, And Steam Can Fight Back
Steam currently has a lot of advantages over Epic, aside from its massive user base. Epic has nothing in the way of user reviews or curation, and its mod support is years behind Steam’s integrated Workshop. There’s no automated system for game submission or approval, so developers need to deal one-on-one with Epic at the moment. (Though given the shovelware issues with Steam Greenlight and Steam Direct, not to mention the general stigma of early access, that could be a good thing too.)
Epic’s consumer tools leave a lot to be desired: at the moment there’s no automatic refund system, with a cumbersome manual approval process holding the door for an improved system with no ETA. There doesn’t even appear to be a wishlist system in place, and you can’t buy an Epic gift card. Of course, the Epic store is brand new, and Steam wasn’t built in a day. But every feature Steam has and Epic doesn’t is another reason for developers and gamers to stick to the devil they know, at least for the time being.
If this battle is going to be a price war, then Valve can afford to fight. There’s nothing stopping Steam from modifying its revenue split to meet or beat Epic’s 88%, and Valve can court bigger players than Epic can at the moment. Publishers might be eager to distance themselves from Steam, but the promise of a few extra million bucks and the world’s biggest audience for PC gamers would do a lot to repair those relationships.
That means that, whether they court a new industry player or put the screws to an old behemoth, developers are getting more options and making more money. And that generally means they’ll be better-suited to find new customers, too—customers who might also be seeing lower prices. Developers, publishers, and gamers win when platforms compete. The only potential big loser here is Valve. Maybe it’s finally time to make Half-Life 3, huh?