Valve explains its supple royalty system, and examines the platform's astounding growth
The revenue split between Valve and external developers who publish on Steam isn’t rigidly fixed, the company has told Develop.
But Jason Holtman, Valve’s director of business development, urged caution in reading into Valve’s elasticity when it comes to Steam royalties.
“Yes we are flexible, though I don’t want that taken the wrong way,” he said.
“My sense is, if we become highly variable with our revenue [split], that would create friction. And people wouldn’t use our service as much, so we have to always be fair and completely ahead of the curve.”
In a newly published interview with Holtman, it was suggested that Valve keeps Steam royalties supple for more practical reasons.
One theory is that smaller developers can, if times are tough, be offered an improved Steam revenue split to ensure the game and studio is supported.
Product discount deals would also possibly require negotiation. Rockstar Games recently cut the price of all its Steam games in a major promotion cleverly timed with the launch of Portal 2.
But the priority, said Holtman, is to make Steam attractive to all developers – something that a fair-for-all revenue split is essential in that goal.
“Our aim, to make Steam popular, is to have a revenue split that makes developers super happy with the cheques they get,” Holtman added.
Steam’s royalty share with external developers is not publicly known.
Conversely, Apple actively promotes its App Store revenue split – the iPhone owner takes 30 per cent and gives the remainder to a studio.
Asked in this light if Steam was competitive, Holtman said “yes we are, ask our partners”.
He added: “It’s so important to us that we are offering a good deal to developers. The moment we’re not competitive we’ll begin to lose.
“The point is, the PC is an open platform. If we start failing, people will find somewhere else to go.”
Steam has amassed 30 million customers since its launch in 2004. The platform boasts over 1,700 games to buy, Holtman said.
He admitted the platform’s rise to the digital heavens had come as a shock.
Yet he revealed the process of building Steam is done through the same Valve formula that is used with the Washington studio’s landmark games. The key is to edit, show, take feedback and edit again.
“We had actually, looking back on it, built the Steam business the same way we build games,” Holtman said.
“In that, we iterated, took feedback, tested it, and iterated again.
“So when we were small, when we were distributing Rag Doll Kung-Fu, we took what we learned from partnering with them and used that for our partnership with Tripwire.
“From Tripwire, we applied what we learnt to 2K and Activision, who were our first major publishers. I think the important thing is we are learning how to constantly improve and learn from our relationships.”
THE VALVE MANIFESTO
Valve’s comments are drawn from a new six-page feature in Develop magazine issue 116 (which arrives at games studios and on doormats from today).
The feature draws from interviews with ten key staff at the company. It is available online now, and throughout the rest of the week Develop will publish five separate Q&As with key studio staff.