Steam came out in 2014 and soon grew into a true monopoly, boasting over 150 million registered accounts and controlling a large portion of the video game market. Gamers learned to love the convenience it provided. Cloud saves, easy installation – just download the game and play it straight away – coupled with automatic updates, as well as a vast catalog of games, all in one place. All of the above helped Steam win over even the hearts of the platform’s most staunch opponents. The prevalent narrative became that of Valve and Steam being “friends of PC gamers.” It may not be exactly as it seems, though, since the lack of any viable alternative to Steam’s near-monopoly stalls sector competition that could yield more value for buyers. This hegemony may be in fact more detrimental than beneficial to customers and developers.
What Problems Might Customers Have with Steam?
Steam customers do not buy games, but rather licenses to use them. They cannot resell or give away their copies to anyone else, for example. It was once possible with Steam Gifts – the closest this platform ever came to a free market – but changes in Valve’s policy have greatly restricted their use and essentially made it completely impossible for resellers to operate on Steam. Additionally, users can easily lose access to their libraries if they receive a ban. And while this is only hypothetical and highly unlikely, Valve ceasing to exist – a scenario often explored by theorists- would be catastrophic for gamers. Without a backup option, all their collections would simply vanish.
Why Do Developers Need an Alternative to Steam?
While Steam gives indie developers access to the largest gaming community and is perhaps their best opportunity to self-publish their games successfully, the platform’s shortcomings are also very problematic for them. For example, it takes only a handful of negative user reviews to change the game’s overall rating to “Mixed,” which in turn results in lower sales. It turns out, however, that many of these reviews are in fact means of reporting a technical issue and not a reflection upon the game’s quality. Developers unfortunately lack efficient tools to manage user comments or remove those that violate the End User License Agreements (EULAs).
Another major drawback of selling on Steam is the regional pricing policy. Game developers can either accept Valve’s decisions on discounts, which can drastically reduce their income, or they can adjust the prices of their games manually, which is a convoluted and time-consuming process. Valve’s 30% cut of each sale is also generally considered unjust, as the company does very little to support the developers in the sales process or to resolve any issues.
Competitors to Steam: Origin, Uplay and More
Steam seems unchallenged. While the biggest video game publishers, such as Ubisoft, EA and Activision Blizzard, do not want to share their profits with Valve, their own content distribution platforms – Uplay, Origin and Battle.net, respectively – are closed to outside developers. This results in an oligopoly at best, where Steam controls the majority of the game market. New contenders are on the rise, though. For instance, Tencent’s WeGame seems to pose a threat to Steam based on sheer numbers. The service boasts a gargantuan user base – 200 million users in China alone. Once it expands to the rest of the world, Western publishers and developers might flock to WeGame, hoping to tap into the immense potential of the Asian market.
A Different Answer to the Steam Problem
It is worth noting that for developers and publishers it is often more profitable to generate keys in bulk and then sell them to wholesalers. When paid upfront, they can earn more money, even with a discount. This solution is often more financially viable than offering a game at a retail price and hoping for it to turn in a profit.
For customers, the above makes digital marketplaces a wallet-friendly alternative to Steam. Sellers on platforms such as G2A.COM or Kinguin can usually expect much better terms, and these platforms take lower cuts compared to Steam. Customers benefit from this, since sellers there strive hard to provide the best prices and customer services, so that they can achieve better sales. Unlike on Steam, what buyers purchase on marketplaces are digital keys, which means they are allowed to resell them or receive a refund as long as the keys have not been activated yet.
Valve strives hard to enforce their rule over the video game market. Unless an external regulator puts a decisive end to this, gamers can expect only worse. It will take years for Steam’s competition to seriously threaten the platform, but this will surely benefit the gaming community. There is much to be achieved here, ranging from lower prices to much better customer support. Steam will remain a major power, but more diversity will have a positive impact on both customers and developers.