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The PC Store Wars – What Next?

The PC Store Wars – What Next?

Earlier this week, I took at look at the current state of play with regards to The PC Store Wars. We’ve gone from a situation where, despite repeatedly shooting themselves in the foot, Valve have had little, to no, real competition in the online PC store space. Then, all of a sudden, Epic turned up with their own store. What happens now?

The Fortnite Effect

Epic made no bones about it when they launched their new store front. Their ability to launch it with such a developer friendly revenue split was thanks to the runaway success of Fortnite: Battle Royale. In 2018, the free-to-play title that was spun away from the premium (for now) Save the World variant, made upwards of $2.4 billion for Epic.

That’s right, analysts have calculated that one simple free-to-play game has made Epic more in one year than the GDP of several countries. Fortnite has had a drastic effect on the landscape of popular culture, let alone the game industry. It has been so successful, that Epic don’t even advertise it on their store. They just know people will have it, if they want it.

The phenomenal success means that Epic have a war chest, which means they can readily afford to take a hit on their revenue splits compared to the industry standard, thus enabling them to score exclusives like The Division 2 and Metro: Exodus.

What if the bubble pops? 

While the success of Fortnite so far can’t be denied, it isn’t the only free-to-play game making mega-bucks, let alone the only battle-royale title that is pulling in the money. DOTA2 is Valve’s own baby, while PUBG might be considered a has-been compared to Epic’s hit, but still pulls in over 800,000 users on an average weekday.

Looking at the Steam stats, there is one venerable oldie still standing tall. That, of course, is Counter-Strike: Global Offensive. Still going strong, this won’t trouble Fortnite in the revenue stakes, but shows that there is a healthy appetite among gamers for non-Fortnite games.

But might the bubble pop? EA and Respawn only released Apex Legends back on the 5th February, but has already knocked up over 25 million users. How many will stick around for the long haul, and turn into money makers for EA, we can only wait and see.

Those players though must be coming from somewhere. Yes, Fortnite has gang-buster player numbers, but something like Apex Legends would fit right in the wheelhouse of some of those users. It might not be a mass exodus, but if the Fortnite userbase crashes, or more importantly, those who are spending money on the game move on to something else, where will that leave Epic?

If there is a drastic drop in revenue from Fortnite, it won’t happen overnight. I fully expect Epic to have contingency plans already in hand, and will be playing the long-game, knowing they can build a loyal audience on their store moving forward.

Valve’s Resilience

 Valve might have made some self-inflicted wounds when it comes to Steam, but they’ve been at this game for a long time. They survived EA departing their store, and have stood firm in the face of Fortnite. Epic launching their own store is unlikely to scare Valve too much, indeed, it might force them to sit up and pay attention to events taking place beyond the end of their nose.

They will likely make more blunders, but with a strong user base (just look at the numbers playing DOTA2, CS:GO and PUBG), why should anyone expect a rival store to suddenly destroy the rolling monster.

Indie game developers might be unhappy with their revenue splits, but are they more likely to make strong sales figures on a platform not solely dominated by one hit? On a platform where they won’t run the potential risks of seeing their game given away, with an unknown reward at the end?

I can see Valve improving their revenue splits, and Ts and Cs for those selling on the platform, but I don’t envisage an immediate emptying of the store from regular big hitters like Sports Interactive, SCS Software or Paradox Interactive.

Indeed, Valve haven’t even turned their back on game development like many people cry out. No, we are unlikely to ever see Half-Life rise from the grave, but DOTA2 and CS:GO are still very much supported, while something like Artefact is sure to undergo changes to push it to rival the Hearthstone’s of the world. That isn’t to forget In the Valley of the Gods.

Closing Thoughts

Competition is ultimately good for business, and good for consumers. Maybe not in every instance, as the splits between Netflix, Amazon Prime and Disney’s upcoming venture are sure to show. But rival stores like Steam, Epic, Origin and Uplay should only drive companies to offer better user experiences, with better deals for the developers who sell through them.

Steam won’t be going anywhere soon, and Epic have the might of Fortnite to keep them going. The nature of some games becoming exclusives to Epic is frustrating for some, but what harm is there in buying Metro from another store (or even somewhere like Game or Amazon), while The Division will route its online component through Uplay.

People aren’t losing out at the moment with this shakeup to the PC landscape, and I think in the long-run, we will see benefits to these changes.

The PC Store Wars – The Story so Far

The PC Store Wars – The Story so Far

The PC Store Wars have been in a Cold War, pretty much ever since Valve launched Half-Life 2 with the requirement that users ran it through Steam. The Humble Bundle, GoG and more recently, Discord offer their own alternatives with distinct twists. Meanwhile EA, Ubisoft and Blizzard have stores primarily to promote their first party games.

They have all been efforts to break the monopoly of Steam, though without any obvious impact on Valve’s money-making machine. Most of Valve’s problems around their storefront have been self-inflicted PR gaffes.

The present…

I talked about their regular problems around Steam back in June, though my prophecy for what the future would hold was, with the benefit of hindsight, not quite how things have played out:

I don’t know what the best way forward is for Valve, but I feel that the European Commission investigation will go a long way to determining how they manage Steam in Europe in the future. 

I also pondered about whether Valve would be wise to consider splitting the storefront away from their product development business. While this hasn’t happened yet, in December they made some changes to how they split revenues with developers selling on their platform.

Rather than making an across the board change to their splits, they introduced a tiered system. While allowing developers with over $10million of revenue on the platform the opportunity moving forward to retain a greater share of their sales, is undeniably good for the big boys, it left indie developers less than enthused.

It was another example of Valve shooting themselves in the foot. Their efforts to try and ensure large developers, especially a company like Ubisoft who already have their own store, selling through Steam were perhaps a bit desperate. But to not offer indies the same benefits was yet another of those PR blunders.

…the future?

What happened just a few days after Valve made their announcement shows it in a darker light. Epic, you know, those guys behind that little Fortnite game, came along and announced their own store, taking aim square at Valve.

A flat, across the board revenue split of 88/12 shows how meagre Valve’s offerings are. The make no bones that the great financial success of Fortnite has allowed them to be so bold with their decision. It’s already one that is having far reaching implications with Ubisoft planning to release The Division 2 on Uplay and the new Epic store, while Metro Exodus will be available exclusively from Epic.

What had been a cold war that was starting to slowly warm up has suddenly exploded into life. What comes next? We’ll take a look soon.