Valve is more profitable than Google and Apple..

BladeVenom

Supreme [H]ardness
Joined
Jun 29, 2005
Messages
7,707
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
Newell says that, per employee, Valve is more profitable than Google and Apple.
So it's undeniable that making PC games is very profitable, if you're good at it.

Steam controls half to 70% of the $4 billion market for downloaded PC games,
So that's $2.8 Billion in sales, last year.

Valve announced last October that it was on track for its biggest year ever, with 200% year-over-year growth.
And it's growing at a phenomenal rate, and that's during a recession. Meanwhile console game sales are down.
 

Derangel

Fully [H]
Joined
Jan 31, 2008
Messages
19,568
More profitable per employee, you could at least title it correctly. Also this was posted on the front page a couple days ago
 

BladeVenom

Supreme [H]ardness
Joined
Jun 29, 2005
Messages
7,707
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.
 

Savoy

2[H]4U
Joined
Oct 1, 2005
Messages
2,491
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.

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.
 
Joined
Oct 26, 2005
Messages
2,340
So it's undeniable that making PC games is very profitable, if you're good at it.
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.

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

Forceman

[H]F Junkie
Joined
Aug 7, 2005
Messages
9,243
So that's $2.8 Billion in sales, last year.

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.
 

jdof

Weaksauce
Joined
Feb 11, 2006
Messages
81
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.
 

danman

[H]ard|Gawd
Joined
Aug 17, 2005
Messages
1,668
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.
 

Forceman

[H]F Junkie
Joined
Aug 7, 2005
Messages
9,243
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.

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).
 

Crash250f

Gawd
Joined
Nov 9, 2007
Messages
640
They do at least a little bit of testing. I have no idea how thorough they are though.

http://steamreview.org/posts/13staff/
There’s a bunch of guys who are kind of on the steam team who do game releases. They include five people total, probably, who get the games, test them, get them into Steam and distributable on the content servers, and then write the news updates and do the artwork for the storefront.
 

Tudz

Supreme [H]ardness
Joined
Jun 15, 2008
Messages
7,434
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.


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.
 

Derangel

Fully [H]
Joined
Jan 31, 2008
Messages
19,568
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.

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

Staples

Supreme [H]ardness
Joined
Jul 18, 2001
Messages
7,978
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.
 

BladeVenom

Supreme [H]ardness
Joined
Jun 29, 2005
Messages
7,707
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.
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.
 

Serpico

[H]F Junkie
Joined
Oct 8, 2000
Messages
8,425
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.
 
Top