Deals with the devil: publishers on Steam
Like Atari and to some extent Strategy First, Majesco is a publisher facing considerable financial issues. Its suits signed a long-term Steam contract last month as part of a refocus on low-investment and low-risk games: a goal that only a few short years ago would have meant bargain-bin shmups, but with today’s digital distribution systems and the forthcoming Nintendo Wii can and has lead to a more progressive path. Which is great, but for whom?
What messages do publisher contracts send to the industry and community?
Majesco’s Steam venture is going to be successful–how could it not be? But that success will be for Majesco. For their sub-contracted developers and others in the same situation, Steam in fact means even less revenue. Valve’s cut is simply piled on top of the publisher’s: while it would be nice to think that Majesco, Atari and company would eat the cost of distribution themselves, what with manufacturing and physical distribution out of the picture, their financially-oriented motivations strongly suggest that the proportions are the same (or worse!) than at retail.
It isn’t much better on the consumer’s side, where it can’t be missed that prices are at near-retail levels in order for the publishers to stay on good terms with their still-vital retail partners.
There’s not much that can be done about this. Even the most eager of mainstream publishers still has a massive administrative beer belly to shift before they can really start to get to grips with digital distribution, and their much smaller, perhaps even humiliatingly so, role within it.
Don’t get the wrong message: despite the gloom, this categorically does not mean that publisher contracts are Bad Things. It goes without saying that awareness of the games in question rockets, and the developers are still getting their funds; the contracts are also the only way that most studios, already locked into the publisher ecosystem, can hope to get onboard digital distribution. But as we have seen, their long-term usefulness is questionable for the developers, Valve, and in the context of digital distribution even the publishers themselves.
Motivations
All that aside, what exactly has led Valve to publisher contracts? Rag Doll Kung Fu was described as the epitome of Steam’s independent aspirations, but it is hard to make the same claim of Bloodrayne 2 and Zuma Deluxe. The easiest answer is the love of money, but, as regular readers will be unsurprised to hear, if we look hard enough there is a more subtle (and as such more Valve-like) rationale awaiting discovery.
Ubisoft don’t have an ongoing contract like Majesco’s. They don’t need one.
Consider Ubisoft, who have entered contract to distribute Dark Messiah of Might & Magic. Ubi love digital distribution. Usually headed by Beyond Good & Evil, their back catalogue games are to be found on many schemes, in fact almost every one going–and yet their Steam contract shows no indication of extending beyond Dark Messiah. With its links to Valve it is obvious why Dark Messiah is an exception, but an exception to what? Why this discrepancy at a time of such expansion?
That Valve only accept contracts from publishers need of financial support is the answer running quietly under the surface. It simply isn’t credible to suggest that only Atari, Strategy First and Majesco have ever broached the distribution issue, even factoring in possible conflicts of interest with Valve being a prominent developer. PopCap remain an anomaly, I will admit, and are quite possibly the moneyspinner they first appear.
Accepting mass-distribution deals only from those truly in need of them presents a far more positive image to the public than that of a sell-out, the other motivation visible with our current knowledge. Today’s publisher contracts might be a compromise of Steam’s initial vision but are arguably ones worth living with, at the very least until more developers become independent. It is only unfortunate that Valve cannot advertise their reasoning (if it is indeed as I’ve theorised) without embarrassing their clients.
12 Responses to this post:
Comments
Jobye Says:
I believe the only reason Ubisoft is allowing Valve to publish Dark Messiah on Steam is money. Looking back on the article you did on Laid Back Games (some of the guys previously from Troika), it was said that if you license the Source Engine, you get 100% of the revenue from the Steam sales. So, Ubisoft is pretty much doing it for the money I think.
boglito Says:
I disagree completely with your theories.
I am 100% sure valve would be happy to distribute games from successful publishers. The problem is that successful publishers do not want to distribute their games through steam.
As such, the only anamoly on steam is dark messiah, but as Jobye points out that could be because the combination source+steam is unusually profitable.
There is really no other plausible explanation for the lack of quality* titles on steam. Even 3drealms/human head studios went with the rather risky triton instead of the true and tested steam, the reason being that they didn’t like the valve-steam connection.
.bog.
*quality as in game well-funded by big and successful publisher.
Tom Edwards Says:
Prey was a FPS in direct competition with Valve, and 3DR are (or at least were) one of Valve’s biggest competitors. That isn’t the case for a publishers’ strategy games, adventure games, stealth games, or games of any genre other than FPS. What is the harm in Valve knowing the sales figures, partial sales figures in fact, for Beyond Good & Evil, for instance?
Bob Says:
I’m also gonna say that I totally disagree with what you have put down here. You seem to have very strange ideas about what Steam is for – suggesting its “initial vision” was to be some white knight to developers in need.
You grossly underestimate the conservatism of most companies. Valve have previously had desperate companies because those are the only people who will take the risk. Ubisoft only putting Dark Messiah on Steam is because it’s easy money (as you yourself revealed, Steam+Source=100%), easy tech to deploy and so is a safe way of testing the waters. The fact that it went several weeks without a price being announced for the game suggests that there were fierce negotiations on that subject. (Which Valve appear to have come out worse on, given the absence of the previously-standard pre-order discount.) They haven’t decided *not* to put BG&E on it, I would be very certain, and if DM is successful I expect those games to show up sometime thereafter.
Valve are in the business of building a platform. That is their bread and butter with Steam. The supporting the “little guy” is just their bit on the side that comes from being a privately-held business with a little guy culture. Building a platform is about quantities – the size of your customer base, the breadth of your demographic, the size of your product portfolio, etc. They’d be mad to turn anyone away.
I also find your attitude to publishers to be bizarre. “Deals with the devil”? For real? There are bad eggs, but you can’t get around the fact that publishers provide the advances and publishers own the end products. The number of developers who own the publishing rights to their games are very very small.
Finally I don’t understand your second paragraph at all. Do you have details on the revenue breakdown for the contracts signed for Steam, or are you just assuming? It would be helpful if you could clarify this.
Tom Edwards Says:
The problem here seems to be one of perception: you have no more solid proof that Valve are wearing their capitalist hats as I have that they are trying to maintain some integrity. There are some things I’d like to cover though:
What risk? The only risk involved is that you might upset retailers, but as we’ve seen that is being negated by retail or near-retail prices. For Ubi in particular there are zero risks; they already have their games downloadable elsewhere.
Removing the middle man is half of Steam’s reason for existence, and easily its most important function. It cannot be stressed enough how important it is that the industry breaks out of the publisher/retail cycle. Greg Costikyan wrote two articles loosely covering the industry issues Steam deals with a while back for The Escapist: Death to the Games Industry, Part I and Part II. Suffice to say, Valve are not building Steam purely as a gravy train.
It’s just a headline. Don’t take it too close to heart.
The current publishers on Steam (discounting Activision, who arrived after the article was published) are all in financial trouble, so they are very unlikely to be reducing their profit share. It’s most likely that Valve’s cut is removed and the remaining profits are then split at the same ratio that they would be from a retail purchase.
boglito Says:
I think the Activision-deal single-handedly disproves the “steam only accepts games to help developers”-theory. Activision is hugely successful, as is the games released on steam recently (possible exception:gun). In addition, the CoD-franchise is the closest competitor to the DoD-franchise.
I think valve is willing to take any game (within reason) on-board. They are much more about equal-opportunity than narrow-minded elitism, and ofcourse, by merit of being a privately owned corporation they also look at the profit-margins.
.bog.
Andy Simpson Says:
What do you mean by privately owned? Valve isn’t owned by stockholders, so they’re not motivated by profit like a lot of publically owned companies would be, who have a duty to return money to their shareholders.
Andy Simpson Says:
Wow. That Escapist article needs to be read. It sure as hell sounds like Valve have read it. Especially part 2. It sounds that the guy is actually literally proposing what Steam is.
boglito Says:
I just meant privately owned as in; “someone owns Valve, and they are probably not indifferent to their company’s bottom line”.
.bog.
Chris Says:
Steam should be realizing some spikes in sales as DRM stiffens. As I have turned to them as of late. DRM has become quite ridicules. I find myself having to apply no cd cracks to games I buy retail. Crysis Warhead is one. 5 computer limit, yet I haven’t even put I on two and my copy expired. WTH?
Chris Says:
Never mind, this forum is ancient.
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