Everyeye.it: Let’s start from the most discussed question of this period: Epic Games arrives on the market with a shocking proposal, pays to get timed exclusivity deals and takes just 12% of sales revenue compared to the 30% Steam asks for. Is this situation beneficial for the market?
Marco Minoli: In some situations it can surely be advantageous, more for developers than for users, but what surprises me is that nobody has ever faced the main problem, that is, that leaving 88% of sales revenue to developers is simply not sustainable, for Epic, on the long term.
Everyeye.it: Why is a 12% cut not sustainable? What are the expenses they have to sustain?
Marco Minoli: It’s clear that if you have a store without features, so without search, forums, achievements, your expenses will be low, because the management of such a structure doesn’t require high investments. But if you start to have a structured store, so a series of services for users and a working client, that is, all that Steam has, here’s that the costs increase.
Same goes for the “hidden” part of the service only developers have access to. Imagine an indipendent team that wants to publish a product: it subscribes, it gets a notification, it enters into its management area and at that point it’s completely alone: there isn’t a physical person to help you. Only a few publishers have a physical person that can deal with the publishing and advertising phase. At this point, since many developers are “forced” to do everything by themselves, the more features, management options and tools the store has, the better the service will be for the developer. Developing these tools, hearing the needs of smaller teams and publishers to make the tools they need has a cost that can hardly be covered by a cut as small as this.
Therefore, the service Epic is doing now is not for indie developers. After all, they declared thet they’ll allow a maximum of 100 games per year on their store, so they’ll accurately select all of their products: if I’m an indipendent developer, most of the time my only way into the market will still be Steam or indie games distribution sites, like Itch.io and so on.
Right now Epic is increasing its userbase with high caliber titles that it handsomely pay, with the objective to make its platform grow. It’s a shareable and acceptable strategy, but it shouldn’t be disguised as a service for the community of developers or players.
Everyeye.it: What other services Steam makes available to the publishers and their teams?
Marco Minoli: Steam was very important for the market and the public often forgets that. You can insert beta titles into Valve’s store, submit updates without restricitons and distribute Steam Keys. Valve has created a system where if I decide to open a store, I can sell Steam Keys without losing Steam’s cut, because the company does not make any proceeds from the generations of keys.
I can generate an unlimited number of keys at no cost and then sell them at the price I want. The only condition is that the product must be registered on Valve’s platform. It’s brilliant. There’s also the possibility to invalidate unsold keys that are sold, and you just have to send a text file on Steam with the codes to invalidate them and stop them from being resold. Steam also lets you create “region locked” keys to block the gray market.
Everyeye.it: If Epic’s investment for the exclusivity of a game is such that it can even cover development costs partially or completely, a team accepts the deal with great interest. But what happens then if the product doesn’t arrive to the public? Is it still a convenient option one that lets you have a game that already repaid itself, but nobody has really played?
Marco Minoli: This is an interesting question, it poses a problem that can be solved in two ways. On one hand we have the big publishers, like Ubisoft, Slitherine or Electronic Arts, that reserve the right to also sell their games on their stores, like Ubisoft did with The Division 2.
So they give the user two choices: buy the game from them, although they don’t have a service, or come to us, and you have a series of benefits that range from direct assistance to loyalty programs. Publishers know that in this situation many players will opt for the direct channels: in this case the opportunity for long-distance branding, also and above all, passes through their stores, meanwhile Epic’s outlay for esclusivity (usually timed) will have wrote off development costs.
For an indipendent developer Epic’s proposal might still be convenient the moment the investment completely covers development costs, letting the developer create the next game. You gain experience, start to build a line-up and you don’t have an investment to repay. Consider that nowadays, seeing how hard it is to sell copies, getting the exclusivity money it’s an opportunity that’s hard not to think of.
Around 8000 games are released every year on Steam, with an average of 4000 copies sold per game: it’s really hard to be noticed, and being certain to cover the costs can be a decisive thrust for many. Take Storm in a Teacup, which made a deal for Close to the Sun.
They have a case history, a big visibility hook that they can spend in the future independently of how much their game will sell, and they may be potentially ready to make a new product without worrying about the results. If I have to tell you my point of view, I’ve always been of the idea that a product should be sold on every store: the more shopping windows are there, the better.
Everyeye.it: In your opinion, is this competition that for now looks more “commercial”, not tied to services for publishers or users, good or evil in general?
Marco Minoli: Competition is always good. Even GOG’s competition, which came before Epic’s, was somewhat positive for both market and publishers. Even today I’m still happy to be on GOG, of the service they offer and of the type of users found on their store.
It’s also a very wide store, the “number two” in the market, even though there’s an ample distance between it and the “number one”.
Consider that 30% of our revenue comes from our sites, Slitherine and Matrix; Steam is the absolute leader of the remaining 70%, but there are also all the others. Steam could learn something from GOG that, for example, has a very functional affiliation system, especially useful for Youtubers: they can put a unique link in their video descriptions and receive money for every copy sold. The same system is good for Gamesplanet, a site that sells mainly on the german, french and english markets. They also use this fine-working system. (Continues)
Everyeye.it: Do you sustain any expenses to put a game on Steam? What about the activation of some discounts?
Marco Minoli: No, we don’t sustain any expenses. About promotions, there are some yearly events, like the autumn or winter sales or the Chinese New Year, where they send you a proposal to apply a discount to a specific product. As a publisher, we also have the possibility to define specific moments of the year where we propose discounts on our whole line-up, and the dates have to be agreed upon with Steam.
Also, when a game is inserted in a godd number of wishlists, Steam lets you activate specifically-made discounts. Wishlists are a very important indicator and a fundamental communication system for the publisher, a tool that makes possible to reach a large number of players interested in the product. There’re also the bundles, really exceptional, that can also be done together with other publishers.
For example, regarding Warhammer we can even contact Creative Assembly and propose a bundle: if everything ends well, Steam will automatically distribute the revenue.
There’s also the “complete your bundle” function: if you already have some of the products of a bundle and this bundle is sold with a 30% discount, you can buy only the games you don’t have with the same discount. This way we can make bundles even after 5 years from a game’s release and the users can buy only the product they don’t have.
Everyeye.it: What about the visibility on the homepage? Do you have to pay for it?
Marco Minoli: Absolutely not. There are a lot of factors in the Steam’s algorithm about how a product makes to the homepage. First of all, if you release a new product, you’re entitled to a million of visuals by default, meaning you’ll appear in the homepage at least a million of times. Then there’re games that genereate a lot of traffic: they have the right to appear again in the homepage, like games that are on a big number of wishlists and have a lot of comments.
In general, there isn’t any way to pay for visibility on any store on PC. You can however activate extra visibility cycles, like when you’re close to release a new DLC or a patch, completely free of charge. When you release a product, you have 5 of these slots to reintroduce your game in the homepage, but you can earn others if your game sells particularly well.
Everyeye.it: Does a visibility cycle of a product arrive to “profiled” users, specifically selected as potentially interested to that title?
Marco Minoli: The game is visualized by all the users that have shown to be interested in that title in some way, maybe because it’s in their wishlist or because they entered the product’s page. Basically, anywhere that has more possibility of conversion.
The visibility cycles last two weeks and are completely free. Steam also puts you in contact with with the curators: you can select the ones you want to send a Steam Key to and Valve will automatically send a notification where they tell the curators that they’ve got a code from a publisher. This is a way to have autonomous public relationships with both influencers and publishers. Also, it’s now possible to start live streams directly from the product page, and they can be shown in the homepage if they have an high number of visuals.
Everyeye.it: Despite all these possibilities, is there always a visibility issue on the platform?
Marco Minoli: Of course: the overcrowding of Steam libraries is a deterrent factor for sales. A game like Pathway years ago would’ve sold much more, the quantity of products today is usually overwhelming. For example, despite being more beautiful than Lucas Pope’s previous work, Obra Dinn sold less than Papers, Please, even because of the overcrowding of Steam’s libraries.
It has become fundamental to remain in the first pages of the sales ranking lists today exactly because of this problem. On the first page you can find the 25 most sold products on Steam for that week, followed by other 25 titles on the second page and so on. With Gladius (Warhammer 40.000: Gladius Relics of War), we stayed on the first page for two weeks, and it was our most sold game of the previous year. Pathway is now on the third page, after the 50th page, and has 450 reviews.
Everyeye.it: Is there a way to estimate the sales of a product?
Marco Minoli: It’s a completely empirical system, and the situations change case by case, but in general we can consider 2500 copies sold every 100 reviews.
Everyeye.it: Do curators have an influence?
Marco Minoli: A marginal one, it usually depends from the groups. In terms of yield, the world of the influencers has really gone down during the last years. Many years ago, we distributed a 4X strategy game called Pandora and sales weren’t going well in the beginning. At the time we involved Yogscast and they proposed requests that sounded really unbelievable. This was the deal: 5 videos on Youtube, and in the first two weeks of sale the channel would’ve received 30% of the game’s revenue.
A very surreal figure. However, even if we weren’t close to the launch date, we tried. After this promotion, the game sold 75.000 copies in two weeks. Since this kind of strategy worked well, we proposed it again with Battlestar Galactica two years ago, and it was completely useless.
This kind of model doesn’t work as well now becaue there are a lot of Youtubers and the userbase is very diluted. Also, the public doesn’t base their purchase on the videos it watches, because Youtube users are also very passive: they listen to their favorite Youtuber without much interest, like it’s background noise.
Everyeye.it: Is there a problem with a product’s persistence on the market? Like, does it sell well only at Day One?
Marco Minoli: Absolutely not. A game keeps selling without too many issues even after four or five years, and different tools I’ve already mentioned works well. For example, the wishlist works very well with products that have a name: it worked really well for Battlestar Galactica and Warhammer Gladius. The whislists conversion average is around 15-20%.
It’s also true that the level is going down because users have many, too many wishlists. Regarding the pre-orders mania, that maybe spreads the idea that a game sells only at Day One, if not before, I’ll have you know that opening pre-orders is not always the best solution: it’s usually done by products that have a strong brand behind them.
After all, you pay a pre-order on the spot and that creates a problem that’s no small matter: if you have a product you want to push up the sales list and you open pre-orders, you’re diluting your potential Day One sales volume in the months preceding the launch. So when Day One comes, people that’ve already paid aren’t added with the new buyers, therefore this gives the game less chances to enter in the Top 10 and gain more exposure.
Everyeye.it: When you lower a game’s price during a sale, you’re basically making a new price: when the price goes up, do people not buy the game until it’s on sale again?
Marco Minoli: No, on the contrary: consider that during ten days of sales, we sold more copies the week after the promotion compared to the week before it. As I said, the lifespan of a product can last even for five years, especially if supported by DLCs. During those five years, the period when a game sells the most is the third year. That’s why making long-term investments make sense.
Everyeye.it: A curiosity about the productivity aspect: is there a chance that the pre-orders’ money will be immediately reinvested by the development teams?
Marco Minoli: In my opinion, it’s not a common practice. It’s not the same strategy of the Early Access, where you use the income to pay the future development of the work, and even in that case the situation is quite particular.
For example, I see Early Access as the moment where the game’s launched, because even after the product’s been completed it won’t have the same as his debut in EA. This isn’t always helpful, because if the EA build is not done well negative reviews starts to pour in.
Everyeye.it: You told me that 30% of the general revenue comes from your platform: does it’s manteinance have a cost for you?
Marco Minoli: No, I’ve costs to sell because I’ve an eCommerce site that takes a share to make transactions, pay sales taxes, etc. The customer service is on us and made of internal staff.
Everyeye.it: Does your customer service also answers to Steam users?
Marco Minoli: Yes, actually.
Everyeye.it: How much of a problem is the communities’ aggression today?
Marco Minoli: It’s a completely casual factor and it’s impossible to predict. Our policy is quite harsh: the moment someone starts being aggressive, we close the thread. One of our biggest problems are the negative reviews from users that bought a game at a discounted price and don’t know how to play. (Continues)
Everyeye.it: Let’s go back to the original argument and try to summarize: presently, is it convenient to go on the Epic Games Store?
Marco Minoli: Epic is carrying out an aggressive strategy, but the answer isn’t completely positive:no one would accept a permanent exclusive. For example, Metro will also come to Steam after a year, its DLCs will also be available on Valve’s store and maybe part of the users will keep supporting the product on Steam. Steam has no concerns about short-term competition.
In general, I believe that this famous 12% will go up: it’s an hardly sustainable solution in the long term. To keep these percentages the only way is to have a vary basic store, too far from Steam’s quality, or add more features and finance it at loss. However, don’t forget that Epici s still a giant with big resources on its back, and even if the sales percentages will be raised they’ll still have a big advantage tied to the Unreal Engine royalties.
Everyeye.it: How much of an economic advantage is the possibility to not pay the Unreal Engine royalties?
Marco Minoli: A big one, because using the UE costs a lot. Big and medium teams have deals with Epic: we, for example, don’t pay as much as an indie studio, but the price’s still high.
Everyeye.it: If Steam’s features are very useful for a developer, how much does a user feel these benefits? Does the public perceive a difference in the value of the two stores?
Marco Minoli: I believe loyal Steam users possess a series of tools that are, at this point, part of their way to play games. If you’re used to the achievements, the trading cards and the internal chat, you feel the differences.
Many times people tend to forget that the user is essential: usually they make the mistake of having a certain type of product and believe that they can sell it where there aren’t any kind of services.
Everyeye.it: Do you think Steam will answer in some way to Epic’s strategy? Has something already changed after the arrival of the new competitor?
Marco Minoli: At the moment, Steam hasn’t shown the intention to pay for exclusives. On the other hand, the relationship with publishers has improved: Valve answers much faster, with more attention, and seems more attentive to the needs of many.
Everyeye.it: The situation you depicted today is very far from the public’s perception. Do you think this difference in perceptions could determine some problems (for Steam, for example) or give an advantage to Epic?
Marco Minoli: I don’t think so: after all, certain positions aren’t very often valid for the single users, but are carried on by big vocal masses whose ideas are hardly changeable. It’s interesting to see how these positions, despite looking as the prevailing ones, don’t usually represent reality. Take Star Wars: almost nobody liked the last episode and SOLO didn’t do well, and you think that the brand is over.
Then new products are announced at the Star Wars Celebration and people go crazy. There isn’t a way to forsee the public’s reactions, and the ones we perceive are often not the same in reality. Maybe Epic can be seen today as an explosive force that arrived on the market to stop Steam’s monopoly, but the truth is that Valve’s platform will still be the only solution for the majority of users and publishers for a long time.
