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Valve is more profitable than Google and Apple..

Discussion in 'General Gaming' started by BladeVenom, Feb 17, 2011.

  1. BladeVenom

    BladeVenom [H]ardness Supreme

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    Here's an interesting article about Gabe and Vale on Forbes. http://www.forbes.com/forbes/2011/0228/technology-gabe-newell-videogames-valve-online-mayhem.html
    So it's undeniable that making PC games is very profitable, if you're good at it.

    So that's $2.8 Billion in sales, last year.

    And it's growing at a phenomenal rate, and that's during a recession. Meanwhile console game sales are down.
     
  2. Derangel

    Derangel [H]ardForum Junkie

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    More profitable per employee, you could at least title it correctly. Also this was posted on the front page a couple days ago
     
  3. BladeVenom

    BladeVenom [H]ardness Supreme

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    I missed that Steve posted it on the front page a couple of days ago, but as often as you hear the ignorant phrases, "PC gaming is dying," or "piracy is killing PC gaming," it deserves being reposted in the gaming section.
     
  4. Savoy

    Savoy 2[H]4U

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    I agree and since I missed this news on the front page a few days ago I thnk you for posting it here. This is very interesting news no doubt about it but not suprising to me.
     
  5. LuminaryJanitor

    LuminaryJanitor 2[H]4U

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    They're not making anywhere near that kind of money from developing PC games. They're raking it in because they're in the publishing business.

    I doubt PC game sales are doing much better. Steam is only seeing this kind of growth because the sales are rapidly moving away from physical media.
     
  6. Forceman

    Forceman [H]ardForum Junkie

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    Just because they control 70% of distribution of a $4 billion market doesn't mean they are making 70% of the money. They get a cut for distribution, but most of the money is going back to the publishers themselves.
     
  7. jdof

    jdof [H]Lite

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    Steam's crazy sales let them move huge volume and overhead cost is practically nothing but bandwidth. Its a good business model and they were in early so they are now a household name to gamers, they will probably remain dominant.
     
  8. danman

    danman [H]ard|Gawd

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    I'm sure there is a large overhead cost with regards to testing. Look at how many graphics cards and platforms they have to test to ensure that the Steam client and games work without issue. Mac/Windows, ATI/nVidia, Windows XP/Vista/7, 32/64bit, driver versions, game patch testing, DRM, etc. That's not insignificant.
     
  9. Forceman

    Forceman [H]ardForum Junkie

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    I wonder if Valve is doing that work though. They just provide a distibution and DRM wrapper for the game - once the game launches it should be the same as any other version (except for Steam community integration).
     
  10. Crash250f

    Crash250f Gawd

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    They do at least a little bit of testing. I have no idea how thorough they are though.

    http://steamreview.org/posts/13staff/
     
  11. Derangel

    Derangel [H]ardForum Junkie

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    Probably similar to what the console manufactures do. Test the games based on a series of requirements to make sure they don't break Steam or and stuff like that.
     
  12. Tudz

    Tudz [H]ardness Supreme

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    They need to make 1 program, test it on few operating systems with a couple of video card vendors then with each game test that it launches, updates and DRM works. The platform is still buggy as hell.

    Its a big job no doubt, 1 little nerd sitting at home couldn't do it. Maybe a small group of nerds could. Compare that to the retail industry.

    Regular retail distribution involves thousands of stores, hundreds of thousands employees (EB games alone, according to wikipedia, has 2280 stores as of July 2001 and over 33000 employees). Some of those would be part time, but if you think each store probably has the equivalant of 3 or 4 full time employees, you're looking at close to $400m in wages, not even counting how much it costs to rent the stores, and that's ONLY EB games. And that's not even touching on the actual "distribution" part, that's simply the final retail store sales.

    I know, retail stores include console games and peripherals and Steam has to pay for servers. But if they take a significant chunk of PC sales with a tiny fraction of the manpower, it doesn't surprise me in the slightest they have a huge profit per employee ratio.
     
  13. Derangel

    Derangel [H]ardForum Junkie

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    For comparison purposes: Valve has around 250 employees, most of them are likely development staff.
     
  14. Staples

    Staples [H]ardness Supreme

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    As has been said before, Valve is not making billions of dollars a quarter like Apple or Google.

    Their profits are mostly from publishing games, selling them over Steam (and other games, not their own).

    The OP does too much wishful thinking.
     
  15. BladeVenom

    BladeVenom [H]ardness Supreme

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    Looking at US spending, every category of PC gaming, except boxed sales, went up last year by a significant amount. Digital downloads by +60% and Social Network gaming by +66%. Meanwhile console sales went down 29%.

    http://hackmywii.net/consumer-spending-on-video-games-reached-25-billion-this-year

    Console gaming is dying.
     
  16. Serpico

    Serpico [H]ardForum Junkie

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    I'm one of the biggest Valve/Steam fanboys you will find. Even when everyone said Steam "sucked" way back in the 2002 beta, I still saw the potential and said that it would be the future of PC gaming.

    However, "profit per employee" is a useless metric. You could have a software company with 3 employees that makes millions in revenue, and they would be "more profitable than Apple or Google per employee".

    Nobody can argue that Steam is a very successful and very good product (I would almost argue that Steam saved PC gaming), but the "profit per employee" story is irrelevant hype.
     
  17. jiminator

    jiminator [H]ardForum Junkie

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