Discord Store Announces 90/10 Developer Revenue Split

[nutzo]

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.

While I agree with that, I also wonder how many more units that would sell if the price was cheaper.

I'm really bothered by Nintendo. The DS/3DS/Wii games where $40. The Switch games are $60.

I'm finally breaking down and buying a switch, but it's a family game (like a console).
Unlike the DS where everyone got one and their own copy of Pokémon, with the switch they will be one unit connected to the TV.
Compared to the DS, the Switch is too expensive and fragile to be taken to friends house.

 

[Zarathustra[H]]

While I agree with that, I also wonder how many more units that would sell if the price was cheaper.

True, with the marginal cost of each license sold being so low with digital sales, it would seem you could sell more and make more money by lowering the price, and Gabe Newell himself suggested as much back in 2011

My guess is that those responsible for predicting sales quantities at each price point, and trying to pick the optimum where "N units sold" x "sales price" is maximized are saddled by pre-digital distribution cost biases and are afraid of dilution the cost too much, because once you lower prices its very difficult to raise them again without public outcry.

Essentially, foolish pride and ignorance keep them from lowering prices and in the process making more money.

At least that's my guess.

 

[velusip]

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...

I still feel the same way.

The logical progression would be for a digital distributor to offer a unified storefront for game studios to use and manage themselves, with opt-in/out integration with a larger system. (Like most online retail storefronts such as shopify, woocommerce, etc.) But people have been so receptive to Valve's model, and there has not yet been any attempt to undermine this fault by competition. I wouldn't be surprised to see brick and mortar retailers take up the slack and invest in some real competition.

Platform conglomeration is too attractive (or important for exposure) to avoid, so there needs to be incentive toward this kind of change among incumbents. Hopefully we'll see what finally tips the monopoly soon.

 

[IcePickFreak]

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.

Check out books. A lot of the time a printed version is cheaper than the digital version.

 

[Lakados]

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.

You would think that but when you stamp and ship a physical copy it is a one time cost then it is done with, you never see it again. Valve sells a digital copy and they have to take a large enough cut to offset their costs with it for the next 10+ years, you are not just downloading a title once then never doing it again you are going to uninstall and reinstall it multiple times over the next decade. Digital distributors need to account for all their costs associated with that title for as long is it is in the store, and Valve has promised to keep them there for as long as they are still going.

 

[Lakados]

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.

Discord has been making money to date with out the store, for them the store is an added bonus at this point to make their platform more widely adopted, honestly I think they are trying to make themselves more attractive for a buy out from either MS or FB but that is just me being paranoid..... maybe.

 

[Denpepe]

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.

Back when WOD or Legion launched for wow the retail price of the game was actually lower then the digital one offered by blizzard themselves. Then again you could buy the digital version almost a year in advance and start playing a (albeit small) portion of it. I guess convinience has it's price.

For the smaller studios especially it's nice to see they can get a bit more, I would also assume the cost to the distributor would be smaller as they don't sell that many copies. Tripple A game launches have been knowto crash servers or cause ogin issues due to demand etc..

Some big games do tend to drop in price pretty fast (the latest tomb raider or fallout 76 e.g. come to mind) so total amount of pcs sold does not mean they all sold for 60$ yet you have to provide the same service for all customers.

My main question is other then the creator of the game getting more money, what am I getting out of another launcher/account.

 

[Flogger23m]

If publishers start leaving in droves (they're not) only then will it be ridiculous.

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.

Seems like these two statements are at odds.

Skyrim, at the time of its launch, was the most played game on Steam. And whatever else that studio comes out with likely won't be on Steam. Fortnite is currently one of the most played games right now and it isn't on Steam. Do you really expect Ubisoft to continue selling on Steam forever? Anyone who purchased and Ubisoft game in the past few years has Uplay even if they bought it on Steam.

Valve certainly has a lot to worry about. Especially with the extra discount for UE4 developers. I don't see Discord taking off, but I can see Epic's store going somewhere. They already have a killer app, are game developers, and offer technology used by many game developers with a further discount. I can see them having the infrastructure and flexibility as Steam longer term.

Nothing will happen overnight but the writing is on the wall. Steam resembles a flea market and half of the big games that people actually want to buy won't be on there in the coming year(s). What is the last big hold out, Ubisoft & Square Enix? I am sure Square will have their own shitty launcher soon enough. I recall them (or was it WB?) that alluded to it. I half expect Rockstar to go with only their shitty launch with RDR2 when it comes to PC as well.

 

[Delicieuxz]

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.

This might be useful to you if you ever deal internationally with Canada. To add to the EU and Australian stances on software, I just looked up whether software is a good or a service in Canada and found that explicitly all forms of distributed software are classified in Canada as a good and not a service.

In the government of Canada's Goods and Services Manual, classes 1 - 34 are goods, and classes 35 - 45 are services. "Computer programs and software" are in Class 9:


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Class 9
Scientific, nautical, surveying, photographic, cinematographic, optical, weighing, measuring, signalling, checking (supervision), life-saving and teaching apparatus and instruments; apparatus and instruments for conducting, switching, transforming, accumulating, regulating or controlling electricity; apparatus for recording, transmission or reproduction of sound or images; magnetic data carriers, recording discs; compact discs, DVDs and other digital recording media; mechanisms for coin-operated apparatus; cash registers, calculating machines, data processing equipment, computers; computer software; fire-extinguishing apparatus.

This Class includes, in particular:

• apparatus and instruments for scientific research in laboratories;
• apparatus and instruments for controlling ships, such as apparatus and instruments for measuring and for transmitting orders;
• protractors;
• punched card office machines;
• all computer programs and software regardless of recording media or means of dissemination, that is, software recorded on magnetic media or downloaded from a remote computer network.

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As a good, software is therefore a private property that is purchased and owned by its purchaser. The Australian High Court's reasoning in its judgment against Valve on the basis that Australian consumer law classifies software as a good and not a service (contrary to Valve's submitted argument that it should represent a service) therefore can be assumed to also apply in Canada.

 

[Zarathustra[H]]

As a good, software is therefore a private property that is purchased and owned by its purchaser. The Australian High Court's reasoning in its judgment against Valve on the basis that Australian consumer law classifies software as a good and not a service (contrary to Valve's submitted argument that it should represent a service) therefore can be assumed to also apply in Canada.

That is just crazy. It defies all logic to classify any intellectual property of any kind as a good.

 

[Delicieuxz]

That is just crazy. It defies all logic to classify any intellectual property of any kind as a good.

Well, I think that an IP certainly is a good - if it's marketed for sale. However, the software that is marketed to use and that we're purchasing through digital or physical retailers isn't the IP but an instance of the IP, which itself is a good although a distinct one from the IP, itself.

If an IP-holder markets and sells their IP, then the IP has been bartered as a good. If an IP-holder only markets and sells non-reproduceable instances of the IP, then only those non-reproduceable instances of the IP have been bartered as goods. And this would be the same with books, movies, music, clothes, etc. When Disney bought the Star Wars IP, the Star Wars IP was a good in that transaction.

We normally don't fuss over somebody claiming to own a book, movie, or album because we're used to defaulting to the side of semantics for those things that mean the individual copies that we purchase from stores, and not the template they're manufactured from. In tech circles regarding software, due to publisher EULA propaganda I think, there's often a defaulting to assuming the IP-side of semantics regarding the term "software". I think that's a conditioning unique to software discussions. I also hope that conditioning goes away in light of the large majority of the Western world's laws having decided that software is a purchased property.

 

[Silverlok]

I still feel the same way.

The logical progression would be for a digital distributor to offer a unified storefront for game studios to use and manage themselves, with opt-in/out integration with a larger system. (Like most online retail storefronts such as shopify, woocommerce, etc.) But people have been so receptive to Valve's model, and there has not yet been any attempt to undermine this fault by competition. I wouldn't be surprised to see brick and mortar retailers take up the slack and invest in some real competition.

Platform conglomeration is too attractive (or important for exposure) to avoid, so there needs to be incentive toward this kind of change among incumbents. Hopefully we'll see what finally tips the monopoly soon.

"platform conglomeration" ...ahh foresight; did you know Edison tried over 300 methods to produce the carbon filament electric bulbs and failed every time , then Tesla suggested he roll it and then Edison created the ( EXTREMELY ENERGY INEFFICIENT incandescent ) light bulb that became "normal" for almost the next hundred years

But people have been so receptive to Valve's model, and there has not yet been any attempt to undermine this fault by competition

'so receptive' does not equal civilly accepted, they just leveraged new tech to make POS ( point of sale ) impulse a fingertip option as opposed to historically a 'boots on the ground option'. The level of acceleration in the nature of consumer interaction in the information age is now just exiting the fluid state valve capitalized on .

 

[Wildace]

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.

its too keep those brick and mortor stores selling your product. if your under cutting them at every turn it will lower the sales in the brick and mortor stores enough they will just stop carrying your product.

 

[raz-0]

Now what is Steam actually offering gamers beyond that I am asking myself; match making through friends lists?

While I sympathize with your question of "what does steam offer me, the consumer" keep in mind you are NOT the consumer of steam distribution really. The devs are, and other than that bandwidth, Steam provides currency handling for many regions, steamworks copy protection, valve anti cheat, and a number of other things you and I as the consumer of the games don't really think or care about very much.

The ONLY thing this price war can give to you and me are lower prices, and I don't see anyone offering that so far.