Discord Store Announces 90/10 Developer Revenue Split

AlphaAtlas

AlphaAtlas

[H]ard|Gawd
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Epic Games seems to have kicked off an arms race between PC game storefronts. When Epic announced the store, they told the public that developers would get 88% of all sales revenue, as opposed to the 70% cut developers and publishers get on Steam. Valve quickly lowered the rates for large-volume titles, and now Discord's relatively new store has an even lower 90/10 revenue split. This isn't quite as low as the mere 5% cut RobotCache promised to take, but the other caveats of that blockchain-based distribution platform are still a mystery.

So, we asked ourselves a few more questions. Why does it cost 30% to distribute games? Is this the only reason developers are building their own stores and launchers to distribute games? Turns out, it does not cost 30% to distribute games in 2018. After doing some research, we discovered that we can build amazing developer tools, run them, and give developers the majority of the revenue share.



All this reminds me of the stock trading fee war brokerage firms have been waging for a few years.
 
AlphaAtlas said:
Why does it cost 30% to distribute games?
Click to expand...

When we are speaking about digital distribution, the distribution costs should be significantly less than stamping disks, packaging them, shipping them, and giving the retailer a cut.
Plus you don't have to worry about shipping too many, or not enough.

So why are companies changing just as much for a downloaded title as for retail?
This is not just with games, but with other software and even books.
 
And the great launcher race has begun. Next up all the various studios are going to want their own exclusive store front and launchers just like streaming. So we can have 50 video streaming subscriptions to go with out 25 game launcher subscriptions all that want to run in the background of all devices at all times and harvest as much metadata as they can legally get away with.


Yay.......
 
nutzo said:
When we are speaking about digital distribution, the distribution costs should be significantly less than stamping disks, packaging them, shipping them, and giving the retailer a cut.
Plus you don't have to worry about shipping too many, or not enough.

So why are companies changing just as much for a downloaded title as for retail?
This is not just with games, but with other software and even books.
Click to expand...

Because the thing you're buying is the IP/Copyright to the work, not the Media in which that work is passed to you.
 
i have a nasty feeling this digital store price war will come and bit the devs in the arse some how. valve/epic/ea etc wont be able to keep dropping the the cut they take.
 
ThatsAgood1jay said:
Because the thing you're buying is the IP/Copyright to the work, not the Media in which that work is passed to you.
Click to expand...

But if I go to the store and buy a game for $60, how much actually goes to the developer? Maybe $30-$40?
When I download directly for the developer, they get the full $60 (minus web site costs), so they end up with $50-$55.

Seems like they could sell the online version at a slight discount, maybe $50 and still make more money then selling though stores.
 
Excellent. Tons of people run discord already, nothing better as far as I know for voice chat these days. Steam taking 30% is ridiculous and they deserve a kick in the ass.
 
While it doesn't take 30% to distribute games, Valve's more expansive, feature-rich platform will have more overhead than these new platforms (Epic, Discord). So, I think that if these other platforms push things to as low as they can go, then a platform like Steam will still have to cost a bit more to be maintained.
 
Hmm...any launchers that can access Steam/Origin/Discord/etc? It would be nice to have a unified view. I have so many games installed, the start menu doesn't quite work so well.
When I finish my new build, I'm only going to install what I'm playing. It should cut down on the clutter.
 
steakman1971 said:
Hmm...any launchers that can access Steam/Origin/Discord/etc? It would be nice to have a unified view. I have so many games installed, the start menu doesn't quite work so well.
When I finish my new build, I'm only going to install what I'm playing. It should cut down on the clutter.
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I don't believe any of them will eliminate the need to have Steam/Origin/etc installed, but there are plenty of launchers that can pull games from all 3 and put all of your installed games into one launcher. Discord even does that already.
 
Delicieuxz said:
While it doesn't take 30% to distribute games, Valve's more expansive, feature-rich platform will have more overhead than these new platforms (Epic, Discord). So, I think that if these other platforms push things to as low as they can go, then a platform like Steam will still have to cost a bit more to be maintained.
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Like the forced update feature or the nagware feature when in offline mode. I don't want any features except what makes the game run.
 
repoman0 said:
Excellent. Tons of people run discord already, nothing better as far as I know for voice chat these days. Steam taking 30% is ridiculous and they deserve a kick in the ass.
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Sounds like you missed the memo on Discord's shady data collection practices.

And Valve's 30% fee isn't "ridiculous" as long as publishers and developers are happily paying it to sell their games on the biggest digital marketplace with the biggest install base. If publishers start leaving in droves (they're not) only then will it be ridiculous.

The revenue split of these stores are a reflection of their reach and install base. This is what any publisher with elementary school level math understands, and why tryhard stores trying to get publicity with lower fees than Steam are going nowhere.
 
Yaka said:
i have a nasty feeling this digital store price war will come and bit the devs in the arse some how. valve/epic/ea etc wont be able to keep dropping the the cut they take.
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There is no price is war, any more than a lemonade stand swatting at Amazon has any significance.

These are just publicity campaigns by Epic and Discord and another one next week. And Valve/EA don't need to drop shit because their install bases are entrenched. The only reason Valve buckled in rev split at the upper end (25% at 10mil, 20% at 50mil) was to stem more big AAA publishers going self-publishing ala Bethesda Launcher.

This simplistic idea that revenue share is the only meaningful metric is silly when there are so many other factors. A store can have 18% or 20% less rev split than Steam, but then also has 5000% less market size. Publishers are still making orders of magnitude more profit on Steam for known AA and AAA titles since they sell zillions more copies.
 
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Maybe Valve will have to actually start making games again to supplement their income
 
Lower fees don't mean much unless there are many other parts in place, and there isn't. Steam is probably and literally 100,000,000 x the size of Discord. Also, Steam has demonstrated that is has incredible lasting power. Discord hasn't. Where is Discord going to be in 2 or 3 years? Steam could easily crush Discord by releasing a VOIP program that rivals Discord and who knows, they may. I like Discord but I'm very hesitant to start a brand new library with yet another company. In fact, I'm going to spend the same amount of money for a new title anywhere I go so why would I go to Discord? I'll just go to Steam instead where I have over 300+ games in my library. I doubt Discord will ever get exclusive Triple A titles and if they do, they will have to demonstrate a lot more growth which will take years. What about infrastructure? Steam beats anyone hands down. And honestly, it takes a lot of money to do it right. Companies that want to just take 10% cannot possibly make any money and in the end who is going to entrust a platform whose future is questionable? Which brings up another point. Taking 10% does not leave a lot of room if any to grow your company, to build out infrastructure, hire engineers, etc etc.
 
ThatsAgood1jay said:
Because the thing you're buying is the IP/Copyright to the work, not the Media in which that work is passed to you.
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This is not accurate. You are not buying is the IP/Copyright to the work. You are buying a license for use of the work bound by a license agreement. I should know as I manage software licenses for a living and I am a Certified Software Asset Manager.

Even back in the day when you bought disks, you still wern't buying the software, you were buying a license to use the software. I believe that movies work the same way.
 
Have to wonder at what point the storefront will try to make up for lost money by selling data about customers or implementing fees? The cost of a storefront isn't zero, you still need a server farm, website, domain name, CC processing gear and setups, etc. Plus people to handle the inevitable customer service demands. If margins go from 30% to 5%, something has to give.

[21CW]killerofall said:
. . . .
Even back in the day when you bought disks, you still wern't buying the software, you were buying a license to use the software. I believe that movies work the same way.
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Pretty sure movies, at least the ones you get on discs, are owned by the purchaser. Much the same as a book is owned. The book/movie owner is limited in how they can use the product by copyright law. The whole no public showings, making copies etc. But they can sell their copy unlike most software. The early software companies basically bluffed Congress into giving them special treatment because they were "new" and "small" and "tech" and "special" and "couldn't prosper with the laws as written". How we wound up with EULA, TOS and PPs and the debate about how software is so different from a copy of a movie or book.
 
[21CW]killerofall said:
This is not accurate. You are not buying is the IP/Copyright to the work. You are buying a license for use of the work bound by a license agreement. I should know as I manage software licenses for a living and I am a Certified Software Asset Manager.

Even back in the day when you bought disks, you still wern't buying the software, you were buying a license to use the software. I believe that movies work the same way.
Click to expand...

Due to the semantics of "software", that's not completely true. It's established in most of the Western world that when you purchase software, you own that software which was advertised to you and which you selected for purchasing. What you don't own, and what you license, is the software IP.

Similarly, when you purchase a book, a movie, a car, an item of clothing, etc, you aren't purchasing the IP of those things, you're purchasing a licensed-instance of the IP. The licensed-instance, the copy of the IP that you purchase is exclusively your property. It is the same with software.


If you work for a software publisher or on their behalf, then you're likely trained to see things from their preferred perceptive and to push their propaganda.

But people do own the software they purchase - as ruled by the EU and Australian top courts, and as never ruled contrary to by any top court in the world.

EU Court: When You Buy Software You Own It

European Court confirms the right to resell used software licences

Top EU court upholds right to resell downloaded software


2018 Australian High Court judgement ruling that people who purchase games from Steam own those games


Here are key parts of the Australian High Court's judgment that Valve sells game software, not merely licenses, and that the people who purchase games from Steam become owners of the software:

141 Valve submitted that there was no supply of goods to any consumer because consumers require a non-assignable licence to access and use the video games and they must log on to Steam to verify their account and subscriptions to the game. Valve also submitted that the provision of any licence for the use of computer software is not the provision of computer software.

142 This submission omits relevant facts and, in any event, cannot be accepted.

...

143 Valve’s submission essentially relies upon a distinction between a licence to use and a property right. Valve submitted that the Licence Agreement (which, by cll 1 and 3, confers only a non-exclusive licence to install copies of the program for personal use until termination) was not a property right. Similarly, Valve pointed to each version of the SSA (cl 2) which confers “a limited, terminable, non-exclusive license and right to use the Software…” . Each version of the SSA, in the same clause, also provides that the software is licensed and not sold. Valve asserted that a mere licence could not be a “supply of goods”.

...

145 I reject Valve’s submission that goods supplied by licence are not a “supply of goods” for two reasons corresponding to inconsistency with the text of the Australian Consumer Law and inconsistency with its purpose.

...


157 Although not everything Valve supplied was a good, the important point for the purposes of this case is that at the core of Steam’s supply to its subscribers was the provision of games. And at the heart of the provision of games was the supply of computer software.

...


340 A heavy focus of this trial was upon whether the Australian Consumer Law applied to transactions of this nature involving the sale to Australian consumers from a foreign corporation of products, the essence of which was computer software. Each of Valve’s challenges to the applicability of the Australian Consumer Law fails. The conflict of laws provisions in the Australian Consumer Law did not essentially carve out an exception for conduct by foreign corporations like Valve governed by a different contractual proper law. Valve supplied goods (which are defined as including computer software).
Click to expand...


You own the software that you purchase, and any claims otherwise are urban myth or corporate propaganda

How things work is this:

This software (IP) is licensed, not sold

This software (instance / copy) is sold, not licensed or rented


Also, EULAs don't count for much in lots of countries, and often don't count for anything.

EU Court Says, Yes, You Can Resell Your Software, Even If The Software Company Says You Can't

US Supreme Court rules that people may resell their copyrighted goods without the copyright-holder's permission - US Software Association has a fit
 
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tunatime said:
Honestly 30% is huge they could get away with that when they where the only game in town but now you have a lot of other store fronts.
Click to expand...

I'm not convinced 30% is as huge as you think it is, when you have all the following costs:
  • Workforce reviewing and approving patches in an attempt to drive quality control
  • Hosting of ever larger game files
  • Bandwidth for customers who can choose to uninstall and redownload the title as many times as they want
  • Bandwidth for patching
  • Steam support staff
  • Store overhead (work on site, credit card payment methods, etc. etc.)
  • Etc. Etc.

The funny thing is that this 30% was the reason Steam grew so explosively in the early years to begin with, as the 30% cut was WAY smaller than what it cost to sell through traditional retailers. The developer had to deal with a publisher that charged huge fees, both to pay for boxes, manuals, press CD's, advertising, etc, and also for their own profit. These had a large per unit cost even before it wound up on retailers shelves. The retailers then marked up titles more than 100% and had a guaranteed return contracts so if any box came back opened, damaged or for any other reason not looking brand new, they would have to buy them back from the retailer.

Compared to this, for developers to get a 70% chunk of the pie was HUGE.

Personally I can't help but wonder how Discord is going to make this work while only taking a 10% chunk. There are a lot of costs involved. This could just be a low introductory rate to stir up some early adopters, with the intent to raise it later, but it is much more difficult to raise prices than it is to lower them.

This market certainly is about to get interesting. I hope most titles continue to be available through Steam, because that's where I have had my library for 15 years now, and I don't want to have multiple libraries or change. Ideally all titles would be sold in all stores, and the market would decide the winners. It's the bastard publishers who do exclusives who need to die in a fire.
 
ryno9100 said:
???
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upload_2018-12-14_16-5-21.png
 
I remember Gabe saying in some interview a few years ago that Valve is in the top 50 consumers of bandwith worldwide. Now what is Steam actually offering gamers beyond that I am asking myself; match making through friends lists?

GOG takes 30% but they also have deep sales and are bringing old titles back to life with no DRM. They are actually doing something to bring back art (yes, video games are art) to run on current systems.

I welcome low store cuts and readily available engine technology to bring back the golden era of gaming (1-5 developers working on a game). There has been so much graphical jerking off in games over the past 10 years that practically everything is just a re-skinned and graphically updated reboot of an older game.
 
nutzo said:
When we are speaking about digital distribution, the distribution costs should be significantly less than stamping disks, packaging them, shipping them, and giving the retailer a cut.
Plus you don't have to worry about shipping too many, or not enough.

So why are companies changing just as much for a downloaded title as for retail?
This is not just with games, but with other software and even books.
Click to expand...

Because costs and price aren't really related.

Products are priced at whatever price the market will bear, regardless of what it costs to develop or produce them.

The market will still bear $59.99 for a new AAA title at launch. It may be cheaper to distribute now that you don't have to spend money on boxes, manuals, and have retailers take a smaller cut than they did back in the brick and mortar days, but the market will still pay $59.99 for the game, so, you just wind up with higher profits instead.

Cost plus pricing (the practice of pricing a product based on what it costs to make, plus a profit margin) is widely seen as a noob mistake in the business world. Instead, you establish the maximum price you can charge while still selling a decent number of units, and work backwards from that, in order to determine if a project is worth pursuing or not.
 
nutzo said:
When we are speaking about digital distribution, the distribution costs should be significantly less than stamping disks, packaging them, shipping them, and giving the retailer a cut.
Plus you don't have to worry about shipping too many, or not enough.

So why are companies changing just as much for a downloaded title as for retail?
This is not just with games, but with other software and even books.
Click to expand...

Also, I'm not convinced we are being over-charged for games from a historical perspective.

In this scan of the 1991 Electronics Boutique catalog you can see that Sid Meier's Civilization (the original) cost $45 when it was launched, and it was pretty typical for a new game.

If we adjust for inflation, that's ~$85 in today's money according to the Consumer price index (CPI-U, 1991 to 2018)

The most expensive game in that catalog was a tie between Wing Commander II and F117A Stealth Fighter 2.0, both at $59.99. That's ~$115 in today's money.

What's even scarier, check out some of the list prices.... $79.99 for a game in 1991 dollars is $150 today. (though it is unclear if anyone actually paid list price or if they were just there to make it look like you were getting a good deal)

Either way, adjusted for inflation, the price per title is way way down since 1991.
 
Biggest change no overhead. Physical doesnt have disks or packaging like back then. I think most prices are just right.
 
DPI said:
Sounds like you missed the memo on Discord's shady data collection practices.
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katanaD said:
sounds like a race to the bottom.. lets be so cheap.. we cant stay in business..
Click to expand...

Connect the dots and its easy to see how they will try to stay afloat. If Epic stays honest and survives they may encourage Steam to reduce their cut a bit. Other than them Steam, GoG, and Origin, I have no motivation to even consider other launchers.
 
Delicieuxz said:
Due to the semantics of "software", that's not completely true. It's established in most of the Western world that when you purchase software, you own that software which was advertised to you and which you selected for purchasing. What you don't own, and what you license, is the software IP.

Similarly, when you purchase a book, a movie, a car, an item of clothing, etc, you aren't purchasing the IP of those things, you're purchasing a licensed-instance of the IP. The licensed-instance, the copy of the IP that you purchase is exclusively your property. It is the same with software.


If you work for a software publisher or on their behalf, then you're likely trained to see things from their preferred perceptive and to push their propaganda.

But people do own the software they purchase - as ruled by the EU and Australian top courts, and as never ruled contrary to by any top court in the world.

EU Court: When You Buy Software You Own It

European Court confirms the right to resell used software licences

Top EU court upholds right to resell downloaded software


2018 Australian High Court judgement ruling that people who purchase games from Steam own those games


Here are key parts of the Australian High Court's judgment that Valve sells game software, not merely licenses, and that the people who purchase games from Steam become owners of the software:




You own the software that you purchase, and any claims otherwise are urban myth or corporate propaganda

How things work is this:

This software (IP) is licensed, not sold

This software (instance / copy) is sold, not licensed or rented


Also, EULAs don't count for much in lots of countries, and often don't count for anything.

EU Court Says, Yes, You Can Resell Your Software, Even If The Software Company Says You Can't

US Supreme Court rules that people may resell their copyrighted goods without the copyright-holder's permission - US Software Association has a fit
Click to expand...
"Most computer software is distributed through the use of licensing agreements. Under this distribution system, the copyright holder remains the "owner" of all distributed copies." - per the US Department of Justice (https://www.justice.gov/jm/criminal-resource-manual-1854-copyright-infringement-first-sale-doctrine)

I have to know things like this due to it being my job. I work in the US, but my company is a global company so I do have to worry about international laws, but most of what I deal with is in the US.

BTW Software Asset Managers work for companies acquiring software, not the companies making the software.
 
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[21CW]killerofall said:
"Most computer software is distributed through the use of licensing agreements. Under this distribution system, the copyright holder remains the "owner" of all distributed copies." - per the US Department of Justice (https://www.justice.gov/jm/criminal-resource-manual-1854-copyright-infringement-first-sale-doctrine)

I have to know things like this due to it being my job. I work in the US, but my company is a global company so I do have to worry about international laws, but most of what I deal with is in the US.

BTW Software Asset Managers work for companies acquiring software, not the companies making the software.
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It's true, the US hasn't made a comprehensive position on software ownership like the EU and Australia have. Though, I wonder if that Department of Justice page on the first-sale doctrine in the US is a bit out of date, given the position of the US Supreme Court changed from 2010 to 2013, with the 2013 decision seemingly applying to all copyrighted works and that decision evoking a pointed reaction of displeasure by the US' Software & Information Industry Association:

https://www.wired.com/2013/03/scotus-first-sale-decision/

The Supreme Court ruled that buyers of foreign copyrighted works may resell them in the United States without the copyright holder's permission, a 6-3 decision Tuesday affirming the "first sale" doctrine of federal copyright law.

The decision (.pdf) by Justice Stephen Breyer was a major endorsement of the right of a purchaser of legitimate copyright-protected works to resell or use the work without the copyright holder's permission. That’s why used bookstores, libraries, GameStop, video rental stores and even eBay were on thin ice pending Tuesday's decision.

But how the doctrine applied to foreign-purchased works imported into the United States had been a matter of considerable debate, with a mixture of conflicting rulings in the lower federal courts.

...

The high court in 2010 said the first sale doctrine did not apply to overseas purchases of copyright-protected works that were imported for resale in the United States.

...

The Software & Information Industry Association, a software-maker and digital-content trade group, blasted the decision.

"The ruling for Kirtsaeng will send a tremor through the publishing industries, harming both U.S. businesses and students around the world," the group's general counsel, Keith Kuperschmid said in a statement. "Today's decision will create a strong disincentive for publishers to market different versions and sell copies at different prices in different regions. The practical result may very well be that consumers and students abroad will see dramatic price increases or entirely lose their access to valuable U.S. educational resources created specifically for them."
Click to expand...

Also, the argument "Most computer software is distributed through the use of licensing agreements. Under this distribution system, the copyright holder remains the "owner" of all distributed copies" reflects the same confusion that was a part of the 2010 9th Circuit ruling that was seemingly overruled by the 2013 US Supreme Court judgment - that of a false dichotomy between ownership and licensing.

A purchased physical mass-produced good like a car is also distributed via a licensing agreement - whether that agreement is simply inherent by law or explicitly stated: The purchase of the vehicle essentially entails a license (a right to use) of the IP, while the licensed-instance of a particular physical copy of that IP is not licensed but is outright purchased.

That doesn't mean that people who purchase the vehicle don't own the vehicle that they purchased.

I think the DoJ's first-sale doctrine page is simply out of date and was written after review of and therefore based in the same confusion as the 2010 Vernor v. Autodesk case ruling by the 9th Circuit (which never applied to the US as a whole, anyway), which has been super-ceded by the 2013 US Supreme Court ruling.
 
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nutzo said:
But if I go to the store and buy a game for $60, how much actually goes to the developer? Maybe $30-$40?
When I download directly for the developer, they get the full $60 (minus web site costs), so they end up with $50-$55.

Seems like they could sell the online version at a slight discount, maybe $50 and still make more money then selling though stores.
Click to expand...


The reason the can't is because of the distribution channels. This is the same reason you can't go to bluebell and order ice cream cheaper than the stores. If they did that the stores wouldn't give them the shelf space at all then new customers would be very hard to generate.

Eyes on product is a huge part of marketing today. Even for video games and the like. So getting eyes on those boxes with the sexy or awesome characters on them is important to maintain sales.
 
Nope. I just broke down and installed the Epic Games launcher (mainly to get Subnautica for free, but still). I don't need an 11th game service.
 
El Derpo said:
I’m all for developers getting as much as possible for their work.
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Which could mean 30% cut in exchange for the level of exposure to yield a maximum.

Delicieuxz said:
While it doesn't take 30% to distribute games, Valve's more expansive, feature-rich platform will have more overhead than these new platforms (Epic, Discord). So, I think that if these other platforms push things to as low as they can go, then a platform like Steam will still have to cost a bit more to be maintained.
Click to expand...
When you look into what "steampowered" really means, there is a lot of technology which is not directly related to the client involved. Merely maintaining a distribution platform might be cheap, but keeping that platform engaging, supporting devs and customers, and developing kits, libraries, and compatibility layers can be costly. Valve isn't just working on Steam and Proton lately, they've been developing MANY kits and libs for developers to better support and integrate their games ever since he beginning. And as technologies change in operating systems, these libraries need to change as well.
 
I did not like the 'permanently shackled to Steam' when I "buy" something concept when it was new ( has it been 15 years ? ) , and I still don't like it , but one must give Valve the credit for forging the spearhead of what history will certainly point to as the real beginning of functional mass-digital distribution . Add to that, the fact they were smart enough to get someone like Zelsnack to write the back-end for Steam and respect should be placed where respect is due.

I also think it is Wise of Epic to give us a third Pillar , I mean whom would you rather trust ; GOG, Steam, and Epic or EA, Bethesda, and Ubisoft ( and don't get me started on disney+) ?

( on edit: IF you were unaware recently EA, and Bethesda put out stinkfest unfinished crap "AAA" titles ( BF5 and FO76) and then started refusing customer refunds. With EA going so far as to say if you downloaded it you cannot refund it , when the only way to get the actual content was to download it )

At any rate in the short term, a bit of silver lining as Steam has dropped the prices on a lot of AAA games . I mean I have never seen GTAV for $14.99 ( as it is until dec 20th)

( on second breakfast, ...edit; for discord with GTAV being 14.99 would mean they only make $1.50 per download .... forggeting all other costs think: bandwidth price. that has to put discord into razor thin margins country...I guess, 'let the fun begin ' )
 
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