Monopoly? Steam vs Epic Games Store Edition

Monopolies are a bad thing. They are great for the companies who have them and terrible for pretty much everyone else. In some cases they can be convenient for consumers, such as with Netflix, but ultimately they hurt consumers in a number of ways in the long run. Competition is a good thing. Capitalism only truly works correctly when multiple companies are able to compete fairly and consumers are given real choices about where and how to purchase the things they want and need. So today I want to discuss this recent controversy between Steam and the newly founded Epic Games Store (EGS).

Steam has an interesting history. Originally launched in 2003, a game development studio called Valve Corporation wanted a platform that made it possible for developers to easily distribute games to PC gamers. The key tenants of this platform were two fold. The first was to make PC game and update/additional content distribution easier for developers, specifically smaller ones that lacked publishing assistance. This was important for Valve because they themselves were producing games that were great but hard to get out to the public. You may remember projects from them like Portal 1 & 2, Half-Life 1 & 2, Team Fortress 1 & 2, and Counter Strike: Global Offensive. It’s important to note that many of their projects were developed in collaboration with other studios or actually created by studios they acquired over the years. The point though is that their reason for creating Steam started out as very personal in that they needed a platform to distribute their own projects, similar to why Ubisoft created UPLAY several years after the creation of Steam. The second key tenant of Steam was to make it easier for consumers to purchase, download, and ultimately play games. Before Steam, most people still were purchasing physical copies of PC games as well as expansions and additional content for them. Some other platforms that ultimately didn’t take off were created either by individual studios for their own games or by independent corporations trying to essentially do what Steam does today, but really Steam established the modern PC gaming ecosystem.

Steam Store

In the almost 16 years since Steam was established, many changes have taken place, both with Valve and with the platform itself. For example, Valve really doesn’t make games anymore. The last project released that was made by their core development team was Dota 2, released in 2013. Really now they’re just a publisher buying smaller studios like Campo Santo and acting as a main distributor for projects created by the developers under their umbrella of ownership. Steam is the bulk of their business and revenue now. Steam itself has changed a lot over the years. Many things have been added such as forums, a return policy, a user review system, and of course an ever expanding library of games. Most people today would say that it’s the most successful PC games distribution platform in the world with a majority of developers distributing on the platform and more PC based users than any other currently extant platform. But not all the changes have been good . . . for the consumers and developers that use their platform.

Over time, Steam has gone out of its way to keep people from having access to user data. Whether or not this is a good thing is debatable. Steam currently takes 30% of profits from sales of software, meaning developers make at most 70% of the sale price, not factoring in additional costs such as publishers. Steam once had some of the best sales in the PC games market but over time the quality of their sales has dropped. Often you can find better prices for the same products from third party sellers even if the codes being sold are to be used on Steam. Humble Store, Fanatical, and Green Man Gaming are just a few examples of such third party sellers. Steam’s DRM policies have become exceedingly more troublesome over the years, sometimes even lowering the performance of games. As with all companies in gaming, Steam has slowly turned to the dark side, or the EA side as I prefer to call it, over time. That is not to say that Steam is a bad platform. That’s completely subjective to each individual user. But to say Steam is the best possible platform for both developers and consumers, outside of volume of games available, would be a ridiculous statement. Personally I think GOG is a much better platform for consumers. The only real complaint I have about it is of course the limited selection of games. I much prefer UPLAY to Steam. The prices are often better and the rewards system for Ubisoft is built right into the system. But of course this only works for games published by Ubisoft, which is very limiting in the grand scheme of PC gaming.

GOG

People often argue that Steam has a monopoly in the PC games market. This is inaccurate. Monopolies are technically illegal in the US. We have anti-trust laws and have since at least 1890 with the Sherman Act. Now of course the US government basically never polices monopolies anymore, but technically they could if they wanted to. This would not apply to Steam. In reality, what Steam has is a natural monopoly which is not the same and is not illegal. Steam has very little competition because it’s simply too big to fail at this point. Making a true competitor is difficult. It requires lots of start-up capital. It requires providing a service that’s just as convenient as Steam with at least as many extracurricular resources. It requires motivation to get developers to put in the extra effort to work with a new platform knowing full well that the user base won’t be as large as Steam’s. Truth be told, the only way a real competitor will be able to establish itself in 2019 would be to play dirty, which is exactly what’s happening with EGS.

Let me reiterate that I think competition for Steam is a good thing. I’m glad I have choices about where to buy my games. I have no problem using multiple launchers. I use Steam, GOG, UPLAY, Origin when I’m feeling dirty, and a few weird indie ones. I buy from whatever store front has the best prices and least DRM. I buy from Fanatical, Green Man Gaming, Steam Store, UPLAY Store, Humble Store, CD Keys, Kinguin, and others. I genuinely don’t care. The only reason I don’t use G2A is because it seems shady like I can’t really trust the keys. But I say more power to anyone who is comfortable using that store to purchase their games. I am a consumer. My only responsibility is to other consumers and fighting to make sure that we all get the lowest possible prices and best possible performance for our games while keeping our privacy and payment information secure. That’s it. I don’t owe any fealty or loyalty to any brand, platform, or company. Shills be damned. So whenever I hear about Steam getting some real competition, I consider it a good thing. That’s why even though I can’t stand Epic Games and the fact that they’ve made Fortnite Battle Royale seem like legitimate gaming, I was fully in support of them opening their own store. And I’m happy with a number of things about their store. The free game every two weeks being the best example of that. And they get some solid games for free on that store. Axiom Verge is free this week. That’s what’s up. And even though personally I’m not in it for the developers, I do want to see developers make as large a share of the profits from sales they can. So the fact that Epic Games is only taking 12% with no tiers and paying the 5% engine royalty is a good thing in my opinion. Because even if Epic Games doesn’t become as successful as Steam, it will force Steam to change things about how it runs for both developers and consumers in order to stay competitive. That’s the beauty and purpose of competition. It’s not to topple things you already use. It’s to force those things to be better or ultimately be replaced by things that are better. But EGS isn’t playing completely fair.

epic-games-store

What exactly constitutes a monopoly when it comes to digital game sales? In the dictionary, a monopoly is defined as “the exclusive possession or control of the supply of or trade in a commodity or service.” But that’s an extremely vague definition in today’s world. And the Supreme Court keeps it that way because our capitalist system doesn’t actually want to stop monopolies. Legally speaking, when it comes to digital game sales a monopoly would most likely be defined as one company being the only place where you can buy digital PC games. That means that if say Steam and Epic Games were to buy out every other PC game seller/distributor including UPLAY Store, or Ubisoft as a whole for the purposes of argument, then the government would step in if the two companies were to consider merging. But that’s the far extreme, lazy definition of what actually constitutes a monopoly. I would define a monopoly in the case of PC games as any store front that has exclusive rights to sell a game that isn’t directly responsible for the creation and publishing of that game. For me, it comes down to each individual game. So let’s flesh it out.

Epic Games created Fortnite. So if Fortnite was only available on the EGS it would not be considered a monopoly because it’s just them selling their own product. But if a company that doesn’t have its own direct distribution method makes a game and it’s only available for purchase on Steam with no other third party sellers, launchers, or other ways to legally purchase the game on PC, then that is a monopoly. Today we call this a platform exclusive but usually it only applies to console platforms and almost always means a game was published by the console platform’s company. Spider-Man on PS4 is recent example of this. It was not developed by SONY. It was developed by Insomniac Games. But it’s only available on PS4. That’s a monopoly. But we don’t formally count it as a monopoly because Sony published the game. But what if instead Anthem was a PS4 exclusive? That would be considered a monopoly because it’s not developed or published by SONY. It would simply be one company holding all the sale and distribution power of a game that they had no stake in the development and publishing of because BioWare, the developer, is owned by EA, the publisher. But even in that case it wouldn’t necessarily be a monopoly because you could still purchase the game from other distributors. You might say SONY had a platform monopoly but you would still be able to purchase the game from Wal-Mart, Amazon, Newegg, or any other games seller. To really consider it a monopoly, Anthem would have to be a PS4 exclusive that could only be purchased in digital form directly from the PSN Store. That’s how specific things would have to get for it to be defined as an actual monopoly. And that’s what makes playing dirty so easy in the current PC games distribution frame work.

Monopoly v Competition

EGS has started signing store exclusive deals with developers/publishers in exchange for that 88% profit share. Recently it was announced that this would be happening with Metro Exodus. The game was already available for preorder on Steam and has been for some time. Then suddenly, last week, it was announced that the game would no longer be available on Steam and that the PC version would only be available for purchase on the Epic Games Store, at a price of $49.99. This is a monopoly. Now we can’t call it a full monopoly because you can already preorder the game from third party sellers like CD Keys to be activated on EGS. Legally speaking, that means it’s not really a monopoly. Also, it’s not a PC exclusive. So again, legally speaking it’s not a monopoly. But it is dirty that Epic Games did that. Especially after it was originally available for preorder on Steam. But at the end of the day what really matters is that this is not the real definition of competition. Real competition means consumers have the choice to buy and play wherever they want. Exclusive titles, whether it be by platform, console, or launcher, are not competitive. This is not capitalism working as it should. They’re unofficial monopolies that stifle competition and ultimately lead to companies being able to manipulate players into making otherwise bad purchasing decisions due to lack of options.

A truly competitive market would have no exclusive titles and force every seller, distributor, and launcher to actively work to be the best possible service as a way to motivate people to buy from them. That’s true capitalism. I don’t want to see a scenario where I have to buy a game from EGS. I don’t want to see a scenario where I have to play a game on EGS even if I’m willing to pay more to play it somewhere else. In practical terms I will buy it from EGS if the price is better, but that should be my choice. I being forced to use their platform is problematic. And such practices will only make things worse for consumers and developers in the long run. We’ll slowly lose our freedom of platform as Steam, Epic Games, and others start forcing developers into exclusive distribution agreements. Player bases will become fragmented as people end up committing to different platforms because of such and such benefit or loyalty program. PC Gaming will essentially become console gaming without the actual exclusive titles that were developed in house to justify the exclusivity of a particular game/brand. I foresee bad outcomes if EGS is allowed to continue these tactics. I want to see real open competition. The people should be able to decide where to buy their games. Not be forced to change platforms or use multiple because developers are chasing large profit shares and platforms won’t play nice with each other. I want to see Epic Games Store continue to grow and thrive. But I don’t want to see it done in this way.

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