Loup Ventures: Steam Can Fend Off Competitors With Vast User Network, Developer Value

Steam, Discord and Epic Games are improving their lineups by improving their developers, and they’re improving their slate of developers with competitive revenue models.

Discord and Epic Games recently announced more favorable revenue splits for contributing creators, and Steam followed suit with a smaller, contingent adjustment.

The more competitive marketplace is seen to improve content discoverability, player engagement in the gaming community, and player protection from publishers — but it also thins the addressable market and complicates distribution, according to Loup Ventures.

Direct Downloads

“If a developer tries to reach a Steam user through a different game store or via a direct download, there is an additional barrier,” Loup Ventures managing partner Doug Clinton said in a blog post.

This isn't necessarily a "dealbreaker," Clinton said, adding that "Fortnite" has its own launcher and will soon be available in the Epic Games store, while "League of Legends" has its own download.

It does matter for non-AAA titles, the Loup Ventures partner said.

Developers of AAA games — or those with the highest quality and budget like Activision Blizzard, Inc. ATVI and Bethesda — can create their own launchers or provide downloads through proprietary sites.

“These developers don’t need to rely on the user curation aspect of the Steam store because they already have a dedicated user base and spend a lot of money marketing their games,” Clinton said.

Providing The Right Value

For Steam, the risk of publishers’ direct distribution compounds the risk of rising competition from Epic Games and Discord. But while the combined factors could cut into Steam’s market share and power, the legacy store doesn’t necessarily need to adjust its revenue model to compete, according to Loup Ventures.

“Steam simply needs to justify their share of revenue and continue to provide the right amount of value to developers — more value than Discord and Epic if they intend to charge more."

Related Links:

BofA: Latest Steam Gaming Data Good News For Nvidia, AMD

Infographic: PC Gamers Prefer Nvidia GPUs

"Fortnite" screenshot courtesy of Epic Games.