• Hey Guest. Check out your NeoGAF Wrapped 2025 results here!

Can someone explain Valve's business model to me?

why does it have to be dislodged in the first place?
Because with Steam around any chance of a content delivery system that costs a game developer nothing more than cost of operation is doomed to failure. Its the same reason why people stick with the 360 after having gone through 10 bad ones. The nature of Steam is to get the consumer to become dependent on it. Steam is its own platform and once in you cannot take your games and find a competitor.
 
im sorry but i dont give old record producers much credit for the work of artists either.

No no you're right its not as if George Martin was at the very least just as responsible as any of the individual members of the Beatles for their success and acclaim.

Its not like he contributed to defining their sound and their evolution as a band, and he sure as hell didn't compose, arrange, and conduct almost all of the orchestral arrangements in their songs.

Valve, just like George Martin, are just abusive corporate scum who ruin the artistic intent of the original creators.
 
(1) In the recent past, was Half-Life 2 and Steam's development entirely funded by sales of Half-Life 1? Did that single game provide enough profit to fuel such colossal development?

(2) What do we think Valve's reasoning is for the "Great Gift Pile", giving away hundreds of thousands of games for achievements? Is it to encourage the fanbase to actually play their games, or to set up a model of Steam achievements establishing rewards of substance? Something else entirely, perhaps?

(3) Can someone explain to me how on earth the Team Fortress hats translate into a profit, I've read interviews but still feel none-the-wiser.

(4) Is this understanding of the situation accurate or a misconception: Valve take a portion of the cash spent on every game on Steam. This constant supply flow of cash gives them a stability and freedom that other developers lack, and all of their free games and sales and DLC and such are simply the consequence of passionate game developers that don't need to chase traditional profits and audiences - is this accurate or am I being naive?

1. Newell was already a millionaire before he worked helped create Valve. He worked for Microsoft for years and was a producer on Windows. Obviously HL1 sales helped fund HL2, Steam, and keep Valve in business, but they already had a strong start to begin with. Plus, HL1 wasn't their only game. They also had Counter-Strike, Team Fortress Classic etc. And Steam was not the giant it was in 2003. People threw a shitfit when they found out that they had to run Steam in order to play HL2. Plus, Steam frequently crashed and had major problems (thank god those days are over amirite).

2. Valve knows that people will buy games JUST to get the achievements so they can have the slim chance of winning more games or the mack daddy prize of them all: every Steam game. It's not about being nice (although it is nice), they are getting a major profit from this game.

3. The TF2 economy is a strange beast, but hats are rare enough to warrant people wanting to purchase them outright instead of spending the time and effort getting them for free. Honestly don't think about it too much because it doesn't make sense, it is an anomaly of the universe.

4. Pretty accurate. Valve doesn't have to churn out games in order to stay afloat. They could probably never make another game again and still be profitable for a long time. Hell, when Valve released the Christmas update for TF2 a few weeks ago, they literally made thousands of dollars almost instantly due to people buying Christmas keys, new weapons, hats etc. OFF AN UPDATE OF A GAME THEY MADE FOUR YEARS AGO.
 
Was submitted 4th November
Steamsub.png


But they do reject quite a lot of indie games, it's pretty hard to get in.

Was To the Moon made with an RPG maker of sort, I don't think Steam accepts games like that. Lets hope the positive buzz though can change there minds.
 
I think Feep said earlier in the thread they crashed from where they were after the sale.

/edit get it straight from the horse's mouth a few posts up

So what would be preferable? Content delivery with a 30% cut or content delivery with a cut only necessary to run the system?

You still have to take into account ease of accessibility for consumers across the different platforms, yeah?
 
Because with Steam around any chance of a content delivery system that costs a game developer nothing more than cost of operation is doomed to failure. Its the same reason why people stick with the 360 after having gone through 10 bad ones. The nature of Steam is to get the consumer to become dependent on it. Steam is its own platform and once in you cannot take your games and find a competitor.

why does that have to exist?

That doesn't happen in any market...
 
I'd say it's been answered pretty clearly here. Valve is one of the seemingly few companies who put customer satisfaction and happiness above short term profits.

I don't think it's a coincidence that they're still a private company which allows them to do this.

On a more basic level, they get a cut from all steam sales from all publishers and they put a ton of effort into the new games they put out and their name generally guarantees quality.
 
i'm a steam fanboy, love the service.

now i don't know all the details, but basically someone with ~1000 owned games was recently banned because they made like 100 alts to farm the coal gift promotion.

yes, it's wrong/messed up, but basically all 1000 of her games are gone, she also had like 6000 screenshots in the cloud gone, and had comments from 2006 in her profile so she's used steam awhile.

she can't login and even play her games offline afaik (if she tries it'll just say you're disabled), so she basically lost all of her games. so she lost her 8k$ in games because a lapse of judgement on the internet.

i know it's in the steam agreement but yeah. really turns me off they couldn't just ban her from going online or something, and she could keep her games. basically valve can own you if they want /w no arbitration, judge/jury/executioner. obviously if you follow the rules there is no reason to worry, but it still turns me off very much.
 
So what would be preferable? Content delivery with a 30% cut or content delivery with a cut only necessary to run the system?

And none of the visibility, none of the market, all of the costs to run and maintain the DD service, the marketing, etc.

Pose your scenarios, but at least do so honestly.
 
No no you're right its not as if George Martin was at the very least just as responsible as any of the individual members of the Beatles for their success and acclaim.

Its not like he contributed to defining their sound and their evolution as a band, and he sure as hell didn't compose, arrange, and conduct almost all of the orchestral arrangements in their songs.

Valve, just like George Martin, are just abusive corporate scum who ruin the artistic intent of the original creators.
The Beatles were the biggest band in the world before they had a song with any orchestral arrangements.

He wanted them to record covers (as singles), the band refused and instead recorded their own material, and went to number one.

The Fifth Beatle he was not.
 
So what would be preferable? Content delivery with a 30% cut or content delivery with a cut only necessary to run the system?
You don't understand. Some kind of Linux-like content distribution system couldn't do for Sequence what Steam did. Valve's sales aren't charity; they earn insane, impossible amounts of money for both themselves and their clients. The Great Gift Pile and discounts led to me selling more copies during a 28-hour period than in the entire history of my Steam sales combined.

It's their success as a business that has brought the major players to the table, and its those major players that make Steam (walled garden as it is) a respectable and quality-assured platform, unlike, say, XBLIG. I don't care what percent they take. They do everything right by me.
 
why does that have to exist?

That doesn't happen in any market...
You are right. Such a thing is probably too good for this world. Much better to trade one pimp for another.

You don't understand. Some kind of Linux-like content distribution system couldn't do for Sequence what Steam did. Valve's sales aren't charity; they earn insane, impossible amounts of money for both themselves and their clients. The Great Gift Pile and discounts led to me selling more copies during a 28-hour period than in the entire history of my Steam sales combined.

It's their success as a business that has brought the major players to the table, and its those major players that make Steam (walled garden as it is) a respectable and quality-assured platform, unlike, say, XBLIG. I don't care what percent they take. They do everything right by me.

im sorry but i dont see the answer to my question here.
 
You still have to take into account ease of accessibility for consumers across the different platforms, yeah?
Well, according to water_wendi, this is the PC platform so everything the user wants to have/do should be separated by a degree of obfuscation or some hindrance. Mods should not be allowed to flourish as retail products with refinement; they should retain their jank. You shouldn't be able to have a service to conveniently browse and buy your games, especially smaller indie titles; they should be exclusively sold through the developers.
 
im sorry but i dont see the answer to my question here.
You're comparing Steam to an imaginary, magical non-profit organization that does everything that Steam does perfectly and yet takes a smaller percentage. Why not wish for fairies and unicorns? Why do you have something against a business that treats its clients and customers with nothing but respect and admiration?
 
i'm a steam fanboy, love the service.

now i don't know all the details, but basically someone with ~1000 owned games was recently banned because they made like 100 alts to farm the coal gift promotion.

yes, it's wrong/messed up, but basically all 1000 of her games are gone, she also had like 6000 screenshots in the cloud gone, and had comments from 2006 in her profile so she's used steam awhile.

she can't login and even play her games offline afaik (if she tries it'll just say you're disabled), so she basically lost all of her games. so she lost her 8k$ in games because a lapse of judgement on the internet.

i know it's in the steam agreement but yeah. really turns me off they couldn't just ban her from going online or something, and she could keep her games. basically valve can own you if they want /w no arbitration, judge/jury/executioner. obviously if you follow the rules there is no reason to worry, but it still turns me off very much.

I feel 0 pity for the assfucks who were pulling that shit. No pity at all.
 
CCP has or had one who studied the in game economy of Eve Online. They probably looked at the relationship between ISK and real money too as there was some official conversion between the two.

Interesting. I wonder what amount of data they took from that to cause such a ruckus with the pay items; no one with a sane mind could have pushed such an unforgettable item like the monocle at such a large price.
 
Because with Steam around any chance of a content delivery system that costs a game developer nothing more than cost of operation is doomed to failure. Its the same reason why people stick with the 360 after having gone through 10 bad ones. The nature of Steam is to get the consumer to become dependent on it. Steam is its own platform and once in you cannot take your games and find a competitor.

Sure you can, if a competitor arises that costs the developer nothing and offers better features, or offers such better features for the developer that cost to developer is judged worth it. I'm really not seeing the argument that putting your games on Steam locks you into Steam, other then "well developers who use Steam see such good business that they are unlikely to stop using it"

Jeff Vogel hasn't stopped selling his games completely DRM free on his website just because Steam finally picked his games up for distribution.
 
You're comparing Steam to an imaginary, magical non-profit organization that does everything that Steam does perfectly and yet takes a smaller percentage. Why not wish for fairies and unicorns? Why do you have something against a business that treats its clients and customers with nothing but respect and admiration?

im comparing Steam to a theoretical service run by a cooperative of game developers. Its not really something that far out there.
 
The point of pimps is the prostitutes alone don't function as well, they need guidance and protection, and they pay for that.

Valve deserve lots of money, they're in a position literally no other service in the world is.
 
The point of pimps is the prostitutes alone don't function as well, they need guidance and protection, and they pay for that.

Valve deserve lots of money, they're in a position literally no other service in the world is.

Lets not exaggerate too much. Other sucessfull DD services do exist, even if they aren't offering the feature set of Steam
 
im comparing Steam to a theoretical service run by a cooperative of game developers. Its not really something that far out there.
It isn't easy to do what Steam does. They employ some of the smartest people in the world. Once again, it is incredibly doubtful that a non-profit could create a service even remotely close to what Steam provides. Look at all the other FOR profits that are having trouble matching them (except you, GOG!). And seriously, 30% is fine. They provide for transactions and payments, a support forum, bandwidth, delivery, easy patching and software updating, and more advertising than I ever could have achieved on my own. I would have given them 60% if they'd asked. (Attention, Valve, if you are reading: please don't take 60%)
 
The whole trading of pimps thing refers to getting rid of retail publishers that take a huge cut to a digital publisher that takes a smaller cut.

It isn't easy to do what Steam does. They employ some of the smartest people in the world. Once again, it is incredibly doubtful that a non-profit could create a service even remotely close to what Steam provides. Look at all the other FOR profits that are having trouble matching them (except you, GOG!). And seriously, 30% is fine. They provide for transactions and payments, a support forum, bandwidth, delivery, easy patching and software updating, and more advertising than I ever could have achieved on my own. I would have given them 60% if they'd asked. (Attention, Valve, if you are reading: please don't take 60%)
If 30% is fine would a lower % be better or worse?
 
Are you missing my replies to you or something? You're willing to say stuff like this in replies, why not actually discuss some of the points I'm bringing up?

It's water_wendi. Any thread where the bonbons come out for Steam, you can rest assured that water_wendi will be present to pop any balloons.
 
Lets not exaggerate too much. Other sucessfull DD services do exist, even if they aren't offering the feature set of Steam

I didn't mean to imply they had no peers in service, they have no peers in scope. They're the biggest pimp on the block. It's the widest spread, by a long way.
 
So what would be preferable? Content delivery with a 30% cut or content delivery with a cut only necessary to run the system?

30% cut. Only an inept moron would think that it's reasonable to run a massively coordinated online content distribution system with millions of consumers without some kind of major caveat, nevermind at the cost eliminating the most established player that have already been lauded non stop by the developers whose content they distribute. Yeah, some cooperative is going to run better than one of the most profitable, successful, and well-loved online digital distribution companies to date; are you on crack?

I won't pretend to be a mogul, but please stop talking if you're delusional enough to think that a well-run business can and should be replaced by an imaginary non-profit, all because you have some completely unjustifiable idea that content creators automatically deserves maximum returns on their products without accounting for cost of business..
 
The whole trading of pimps thing refers to getting rid of retail publishers that take a huge cut to a digital publisher that takes a smaller cut.

By your logic, every single B&M store in existence is inheriently bad. As is any other DD service. Or any retail service that isn't the company selling its wares directly from their warehouse to the company.

It shows a shocking lack of a basic understanding of commerce.

If 30% is fine would a lower % be better or worse?

Hell, why not +30%?
 
Companies like Steam. Consumers like Steam. Steam has been good for developers (bigger margins, lowered distribution costs, better customer relations) and good for consumers (easier access to games, excellent sales, a centralized client for games, standardized set of basic features for all games).

Sorry to tell you that your theoretical idea of a centralized, neutral client will never be bourn out, water_wendi, because customers and companies have both decided that they really, really like Steam. Any competitor is going to have be magnitudes better than Steam to dislodge them, and a consortium of companies are both going to have to put in the digital and physical infrastructure and agree on a standardized set of rules that benefit them all in order to get the process going...

or they can use the already-existing Steam.
 
By your logic, every single B&M store in existence is inheriently bad. As is any other DD service. Or any retail service that isn't the company selling its wares directly from their warehouse to the company.

It shows a shocking lack of a basic understanding of commerce.
And this shows a shocking lack of vision. The internet held great promise for gaming that has been pretty much pissed away.

Hell, why not +30%?
It is my opinion that game developers should get as much money as possible for their creations.
 
The whole trading of pimps thing refers to getting rid of retail publishers that take a huge cut to a digital publisher that takes a smaller cut.


If 30% is fine would a lower % be better or worse?
I'm not going to continue to argue with you. It's like saying, "Coke is the most delicious soda on the market. But wouldn't it be better if it were MORE DELICIOUS?"

Yes, it would be better for me, but it is not a feasible scenario to envision a company that takes a lesser percentage while continuing to provide what Steam provides. Take a poll of developers and see what percentage are completely happy and satisfied with Steam. I'd imagine it's a very high number.

You seem to have some irrational hatred of Steam, and maybe above that, for-profit business in general. I'm happy, my customers are happy, and everyone is winning.
 
By your logic, every single B&M store in existence is inheriently bad. As is any other DD service. Or any retail service that isn't the company selling its wares directly from their warehouse to the company.
I don't think you can just apply the rules established in traditional commerce to the trading of bits over the internet. The surrounding conditions are different.

I don't think water_wendi is being irrational, just ambitious.
 
And this shows a shocking lack of vision. The internet held great promise for gaming that has been pretty much pissed away.

*looks at the incredible explosion of indie content on a multitude of platforms over the past few years*

...pissed away?
 
And a content provider that hosts their game for unlimited downloads, a promotional splash upon release, a featured slot if you're selected, all-but guaranteed slots for either daily or larger event sales that spike interest and revenues in ways that selling directly or even through retail never could, all while taking less than the traditional retail model would have gutted out isn't enough to take a 30 percent cut? Why is that number a sticking point?

I've asked you that several times. You even replied to a post that I was quoted in. What's wrong with 30 percent?
Its 30% more than 0%.
 
I'm sure that in a few years more competitors to Steam will pop up and take a smaller percentage of revenue. I would have a hard time believing that the 30% being taken by Steam wouldn't be a growing concern, but right now it does seem appropriate. You do get a lot of services for that price.
 
i dont like companies that have little to do with the artistic creation of something getting credit. At least with music the recording artist gets headline. In gaming, the artists are nothing more than some small letters on a screen most players wont even see.

The music industry is a terrible comparison to make here.
 
I'm sure that in a few years more competitors will pop up that will take a smaller percentage of revenue and they'll make all game developers even more happy. I would have a hard time believing that the 30% being taken by Steam wouldn't be a growing concern, but right now it does seem appropriate. You do get a lot of services for that price.
As time goes on Steams grasp only grows tighter. You can see this in the shocking "Steam or nothing" behavior thats emerged the last couple years.
 
I'm happy, my customers are happy, and everyone is winning.
That is what ultimately matters.

The publishers are going to push back on Steam over time, EA took their first steps this year, they will all follow depending on how that goes, but all it's going to do is weaken the industry. I am not going to have a bunch of Steam clones on my PC. I can tolerate Battle.net because it's within SC2. But I am not getting Origin, or anything the rest of them make, and I think lots of people will feel the same.
 
And this shows a shocking lack of vision. The internet held great promise for gaming that has been pretty much pissed away.

Except the vision has been realized. It's offered new life to the PC gaming industry. It's allowed customers a much more varied shopping experience. It's offered unprecedented consumer power. It's given rise to hundreds of successful developers. Frankly, you vision isn't even that great. Ignoring the day-to-day realities of operating a game development studio (or any business, for that matter) you still want each company (or a co-op) to set their own pricing.

Ignoring the blatantly obvious fact that this would lead to less exposure for individual studios that aren't EA/Blizzard/Bethesda, and thus higher prices for the consumer. You can't cut your own products down 75% when the visibility is much lower. You don't get the bulk sales. Thus, the consumer would not wield the power they do now.

You want companies to make the most from their creation, but ignore the fact that they're making more money with Steam than without it. You don't want the customer to have the deals they have now. Who benefits from your scenario?

I don't think you can just apply the rules established in traditional commerce to the trading of bits over the internet. The surrounding conditions are different.

I don't think water_wendi is being irrational, just ambitious.

The surrounding conditions may be different, but the result is the same. People still shop in the same way they did before, and gravitate toward convenience, pricing and customer service above all else.

It's one think to think there is a better way. It's entirely a different thing to say the way millions of people are happy with is shit, compare them to sheep and offer up only the vaguest ideals as a replacement - all the while continuing to ignore facts that fly in the face of those ideals. It's extremely irrational.
 
where's the money coming from for this imaginary service to exist?
i understand that 0% is not feasible to run a service. i seriously doubt that it takes all the money Valve makes from other developers games to run Steam. So if a service like Steam could exist but be non-profit where the developers themselves had a stake in it with the cost for maintaining the service below a 30% cut that would be preferable.
 
Top Bottom