ngoc The Evolving Steam Developer Platform
Greenlight Gave Indie Devs a Voice
Steam Greenlight was a platform launched in 2012 that allowed indie game developers to crowdsource interest for their games from the Steam community. Developers would pay $100 to submit their games to the Greenlight site where players could vote on whether they were interested in the game being released on Steam. This gave smaller studios and individuals a path onto Steam without direct approval from Valve. While Greenlight helped many promising games find an audience, the process could be time-consuming and approval was not guaranteed. In 2017, Valve retired Greenlight and replaced it with the Steam Direct program. Now any developer can submit their game for a flat $100 fee and have it published on Steam, moving away from community votes towards a more streamlined approval model.
Steam Direct Cleared a Path for All Developers
The launch of Steam Direct in 2017 removed barriers that Greenlight presented for less popular titles. By moving the approval process fully in-house at Valve, review and publication times were greatly reduced. This opened the gates even further for small teams and solo creators to self-publish on the largest PC gaming platform. No longer were developers left in Greenlight purgatory hoping for enough community attention - Direct approval happened in a matter of days after payment. While the $100 fee is non-refundable, it provides a clear and predictable process for getting any game on Steam.
How Developers Make Money Through Steam
The Standard Revenue Share Model
For the vast majority of games published on Steam, Valve takes a 30% distribution fee from each sale. This means developers receive roughly 70% of the list price for any copies of their game sold through Steam. So for a $20 game, the developer would earn around $14 per unit while Valve keeps $6. This standardized revenue split has remained consistent since the earliest days of Steam and provides transparency for developers.
Additional Revenue Streams on Steam
In addition to the primary unit sales cut, developers have access to other monetization options through Steam. The Steam Workshop allows creators to offer additional downloadable content, mods, levels and more - earning additional commissions. Developers can also sell in-game items, currency or subscriptions. These extra revenue streams provide ongoing monetization potential beyond one-time game sales. Premium features like placement in featured bundles or sales can also boost visibility and drive higher unit volumes. Overall the Steam platform gives developers a wide array of tools to successfully market, sell and profit from their titles long-term.
How Steam Sales Impact Developer Profits
Temporary Price Discounts Drive Higher Sales Volumes
Seasonal sales events on Steam like the Summer and Winter sales are some of the busiest times of year for gaming promotions. By temporarily discounting game prices anywhere from 10-90% off, these sales drive overwhelming increases in transaction volumes. During big sale periods it’s common for indie darlings or AAA blockbusters alike to see 10x, 100x or even 1000x normal daily sale rates. However, the reduced price per unit also means developers are earning less from each copy sold during a promotion versus normal retail pricing.
Balancing Increased Volume Against Lower Per-Unit Profits
For a sale to be financially beneficial for a developer, the spike in units sold must more than offset the losses from price cuts. A game selling 100 copies normally at $20 each means $2000 in revenue at the standard 70% Steam rate. But during a 50% off sale, 200 copies at $10 each would still only earn $1400 total - despite double the sales volume. Developers must carefully consider their average sale prices and plan discounts strategically based on expected demand increases. Deep discounts run the risk of losing money even on higher sales if not properly calculated.
Valve’s Approach to Shared Promotion Risk
Valve Takes a Percentage of Discounted Prices
Rather than locking developers into only earning money based on the original retail price, Valve’s sales revenue share model is flexible. If a game is discounted 50% to $10 during a sale, Valve would still collect their standard 30% cut - which is $3 in this case rather than the usual $6 at full price. This sharing of the reduced profit margin helps spread the risks of sales promotions between both Valve and the developers.
Jointly Incentivized to Drive Higher Volumes
By adjusting their revenue share based on dynamic pricing, Valve and the developers have a shared incentive structure. Both parties aim to maximize sales volumes during promotions to make the discounted pricing model mutually beneficial. Developers are less worried about earn-rates dropping too low from discounts, while Valve still collects a cut of all transactions. This collaborative approach helps drive participation in seasonal marketing events that are hugely important for keeping PC gaming excitement high throughout the year.
Evaluating Non-Financial Promotion Benefits
Sales often Boost Discovery and Long-Term Mindshare
While immediate profits are a priority, long-term gains must also be considered for sales to be worth it. Getting new players to try a game during a promotion often means onboarding fans who will purchase future DLC, sequels or full-priced titles down the line. Even if initial sale earnings are reduced, gaining a larger overall audience helps sustain a developer financially over years instead of just a season. Temporary discounts strategically used can be an important marketing lever to build lasting interest in a franchise or developer studio overall.
Reviews,Wishlists and Playtime Benefit Future Sales
Sale promotions not only put games in front of new potential customers, but getting those players to try the game leads to valuable long-term data. More positive reviews from sale participants help boost a title’s perception on Steam over the long haul. Additional non-paying players also increase total playtime tracked which improves search rankings and recommendations to other users. Games that are wishlisted during sales then see spikes in purchases when those deferred customers are ready to buy. These softer benefits contribute to ongoing sales momentum well after any specific promotion has ended.
Finding the Optimal Discount Strategy
Every Game Must Determine its Own Sales Sweet Spot
Just like the gameplay, story and graphics in a game are tailored to its genre and theme, the sales strategy should be customized too. An ambitious sci-fi epic may fare better with a less steep 50% off price whereas an approachable indie hit could fly off virtual shelves at a flash 75% discount. Testing discount tiers iteratively and tracking resulting sell-through rates gives developers critical sales analytics. With this performance data in hand, negotiations can be made with Valve regarding future promotional plans targeting the most financially beneficial discount levels according to a title’s individual attributes and history.
Balancing Short and Long-Term Goals Requires Testing
Developers must consider not just revenue this season, but future potential as well when establishing sales strategy. While a game in its first year may seek broader reach through steeper discounts, a mature evergreen title is better suited to shallower deals balanced by strong review ratings. Regular experimentation and databased decision making allows creators to optimize their discount tactics annually based on the stage their game has reached within the Steam community. With care taken, sales can absolutely act as a long-term growth lever for a project instead of a temporary boost alone.
It’s a Complex Relationship Requiring Open Communication
No One-Size-Fits-All Approach to Figuring Out Steam Sales
With thousands of games, studios large and small, and volatile discount data variables, there is no black and white answer for what makes a “good” or “profitable” Steam sale. Developers must thoughtfully consider their own title attributes, sales history trends, and financial priorities to establish discount target models that optimize both near and far-term objectives. Simultaneously, Valve aims to drive platform traffic through engaging promotions which balance the needs of game makers, customers and their own business as well. Regular discussions between parties are important to jointly make data-informed decisions toward their aligned goal of a thriving PC gaming market. Overall the variables make it an imperfect science that requires experimentation, patience and open collaboration across the Steam ecosystem.
Digital vs Physical Game Copies: Which is Better?