Pitchford: Steam "exploiting" developers

By Oli Welsh Published 8 October, 2009

Valve's "money grab" is "conflict of interest".

Gearbox Software boss Randy Pitchford has raised a rare voice of dissent against Valve's digital distribution service for PC, Steam. Pitchford argued that a developer owning such a service is a conflict of interest, and that Valve is "exploiting" small developers.

"I'll tell you what. Steam helps [make it easier to buy games]. As a guy in this industry though, I don't trust Valve," Pitchford told Maximum PC.

Pitchford explained that Gearbox has had a long relationship with Valve (it made its name working on Half-Life expansions), and that he personally trusted the Seattle super-developer, but having such a service run by a direct competitor made for an awkward business relationship. It would be better for Steam to be spun off as a separate business, he said.

"It would be much better if Steam was its own business. There's so much conflict of interest there that it's horrid," he said. "It's actually really, really dangerous for the rest of the industry to allow Valve to win."

Pitchford also argued that the business terms offered by Valve were exploitative of smaller developers, although they worked better for larger concerns.

"I'm just saying, Steam isn't the answer. Steam helps us as customers, but it's also a money grab, and Valve is exploiting a lot of people in a way that's not totally fair.

"Valve is taking a larger share than it should for the service it's providing. It's exploiting a lot of small guys. For us big guys, we're going to sell the units and it will be fine."

In a separate interview with the UK Official Xbox Magazine, the outspoken studio boss also expressed his belief that making easy achievements could boost game sales by up to 40,000 units.

"The Achievement hunter, who's going to make purchase decisions around the Achievements per minute to ratio - he's probably buying 10 to 20 titles a year, or at least playing that many," Pitchford said. "He's playing a lot. So he's a very frequent customer, and you want to be in that pile. That's just business.

"You can probably affect your sales by something like 10 or 40 thousand units, if you're talking about a triple-A game selling between 1 and 2.5 million units."

Look out for easy achievements in Gearbox's latest, Borderlands, then. The promising RPG/shooter hybrid launches in two weeks, on the 23rd Ocotber.

Picture of Oli.

About Oli Welsh

Oli is Eurogamer's acting deputy editor and reviews editor and likes to take things one word at a time. He is among the best dressed people in South London.

Read more articles from Oli by visiting the Oli Welsh archive page.

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Comments (58) Latest comment 2 years ago

Comments threads automatically close after 30 days, but please feel free to continue chatting on the forum!

  • Vice.Destroyer #1 2 years ago

    I'm glad that me and my fellow gamerscore whores are considered in high-level talks during the design phase of games. I'm just used to low-level abuse on gaming websites for my achievement addiction.

  • teabagger #2 2 years ago

    I'd be interested to see figures outlining the difference in profitability for developers releasing via Steam vs. other channels.
    Edited by 1 at 08/10/09 @ 09:07

  • crozon #3 2 years ago

    hmmm what about audiosurf that guy did really well from sales from steam.
    and to my knowledge no other indie has complained about steam and valve

  • ChthonicEcho #4 2 years ago

    And in the meantime, buy Borderlands on Steam! Pre--purchase and you will get a 10% discount!

  • Tomo #5 2 years ago

    "making easy achievements could boost game sales by up to 40,000 units."

    Sweet jesus. I simply don't understand this mentality. You bunch are all completely mental.

  • skillian #6 2 years ago

    I think it's the bigger publishers, not the indies, who really have to worry about Steam's success. I'm a huge fan of Valve but can definitely see his point, it will do no-one any favours for Valve to have too tight a grip on PC game distribution.

    On the other hand, there are other game-selling services out there, and presumably anyone is free to set up their own rival. Increased competition is the answer (like it so often is), so lets see Gearbox release Borderlands on Direct2Drive or Impulse for a fiver less than Steam and you'll see plenty of people move away from Valve's service.

    Personally I'd like to see Gearbox ditch the retailers altogether and just sell the game DRM-free on their website and take all the profits, but I realise that's something of a pipe dream.
    Edited by 1 at 08/10/09 @ 09:30

  • kangarootoo #7 2 years ago

    What percentage do Valve take of games sold on Steam. Iirc, the Apple App store takes only 20%, which makes is a rather good deal for anyone releasing software on it.

    I figure that if Steam helps you ship and profit from a title, you have to expect to pay a charge for that service.


    I guess the seperate issue (and the issue that Randy is really talking about) is one of competition in the market place. And I guess specifically his fear is that Valve will push their own titles on Steam more strongly than they might promote anyone elses (which I suppose would not the case if Steam were a seperately owned entity).

  • skillian #8 2 years ago

    I don't think other publishers mind giving money to someone to sell their game, they just don't like giving that money to Valve, who are direct competitors. It means the more successful your game is, the richer your competitor gets. That must suck.

    edit: I don't think anyone knows how much Valve charge (and I suspect they charge different publishers different prices), but I don't think 20% is a great deal for the game-makers. Most brick and mortar retailers don't make that much of a percentage.
    Edited by 2 at 08/10/09 @ 09:47

  • hiddenranbir #9 2 years ago

    Yes, finally someone else says that letting Steam monopolize the digital market is a bad thing. Work the competition, work it!

  • Sunyavadin #10 2 years ago

    I'd be interested to see figures outlining the difference in profitability for developers releasing via Steam vs. other channels.

    Agreed.

    I do feel Valve have the capacity to sell for less, due to their own financial strength. This has the potential to be problematic for the industry and competition in the long term.

  • Vice.Destroyer #11 2 years ago

    "making easy achievements could boost game sales by up to 40,000 units."

    Sweet jesus. I simply don't understand this mentality. You bunch are all completely mental.

    And the arrogance of these type of commentators I don't understand. You might not understand this mentality, but you think that we are all mental for it? This seems to be the argument that will never die in this generation of consoles. I suppose that all I can say to that is the following: a gamerscore whore cares not about anyone who can't grasp that there are different facets to playing games. Certain parts of gaming attract certain personalities. Some people enjoy collecting achievements, waving their e-willy about, comparing achievements or being mental. Whatever you want to call it.
    One thing that you can't deny, and important people seem to realise is that we also use our hard-earned to enjoy our hobby how we see fit.

    Being looked at as some sort of second-class gamer, some sort of gaming leper for enjoying achievements, or getting achievements or thinking that achievements are just as important as the games themselves, that I will not understand. But carry on judging me and others like me. I like achievements. I like going out of my way for achievements. I have been known to play games I wouldn't normally because of easier achievements. But as far as I am concerned, it is my cash and my time that I am using. And I wouldn't presume to tell anybody else how to enjoy their hobby.

  • Toothball #12 2 years ago

    @Vice.Destroyer:

    I see Avatar TBE in your games list. That's the sign of a true addict.

  • mkreku #13 2 years ago

    I kind of like achievements when I find them.. but I wouldn't go out of my way to.. er.. achieve them. I do like looking at the achievements lists though. Kind of fun to see what's totally unobtainable for my puny gaming skills.

  • Vice.Destroyer #14 2 years ago

    @Toothball
    I know. Sometimes, even I feel a pang of shame. Even my girlfriend dissed me when she saw me get 1000 in less than 2 minutes.

  • Skurmedel #15 2 years ago

    Someone should ask Garry, Garry's Mod creator, if I recall correctly he did make some money from it. But I guess it might be something that varies from case to case.

    Myself I'm kind of an RPG completionist, I do as many stupid side-quests as I can. So I can understand people that try to get every single achievement.
    Edited by 1 at 08/10/09 @ 10:12

  • kangarootoo #16 2 years ago

    @skillian

    On the app store the 20% is Apple's cut. The dev gets 80% (assuming I am right, its somewhere around that number), which is probably the best deal on planet short of self published shareware.

  • kipper #17 2 years ago

    @Vice.Destroyer
    If it makes you feel better, I also feel pretty bad about the Gamerpoints I got from the free game Dash of Destruction. (and not just because I couldn't even get all of them) >_

  • kangarootoo #18 2 years ago

    @Vice.Destroyer

    Good post (from someone who doesn't really care about achievements, but doesn't mind one bit if others do).

  • Slipstream #19 2 years ago

    I think it's the bigger publishers, not the indies, who really have to worry about Steam's success. I'm a huge fan of Valve but can definitely see his point, it will do no-one any favours for Valve to have too tight a grip on PC game distribution.

    I see your point, but with the current state of PC gaming (without the inclusion of MMOs) This service is essential.

    Also Valve offering recognition and growth to indie studios is not a bad thing Mr Pitchfork. If it were, they'd have complained a long time before you and your larger business.
    Edited by 2 at 08/10/09 @ 10:38

  • Nephirion #20 2 years ago

    Achievements reminded me of Stars for good behaviour when I was at primary School, wtf MS you trying to make a adult feel like a little kid again with rewards for being a good gamer

  • kangarootoo #21 2 years ago

    @Nephirion

    Achievements are just a reward structure. Reward structures in all forms are a fundamental part of all good video game design. It is literally that simple.

    The only thing that makes adults seem like children is their inability to grasp that basic concept.

  • skillian #22 2 years ago

    @kangarootoo

    What really makes the difference in the App Store is that devs don't need a publisher. Plenty of retailers already take less than 20% of a game's sale price when it's boxed and in high street shops.

    I'd be really surprised if Valve currently takes more than 20% of each sale, but if they do, then I can see why Mr Pitchford is speaking out.
    Edited by 2 at 08/10/09 @ 10:47

  • kinky_mong #23 2 years ago

    I thought people buying games just for the achievements/trophies was a myth.
    Do people actually do that? That is insane

    Yep there are people who do that. I'm the opposite type of achievement whore, I've been put off buying a couple of games because of ridiculous grinding achievements on a rubbish multiplayer mode that's been shoe-horned in (I'm looking at you Riddick!)

  • Vice.Destroyer #24 2 years ago

    @Kangarootoo
    Achievements are just a reward structure. Reward structures in all forms are a fundamental part of all good video game design. It is literally that simple.

    The only thing that makes adults seem like children is their inability to grasp that basic concept.

    That is such an elegant quote, the perfect argument killer. I shall quote that from now on, anytime someone gives me gip about my achievement addiction.

  • kangarootoo #25 2 years ago

    @skillian

    Although retailers take less than 20%, there are a LOT more middlemen between the dev and the retail outlet. An indie making a game in the usual way will normally agree about 5% royalties with the publisher (though it has be considered that the publisher is usually funding the game, not the dev).

    If a dev deals direct with Steam or Apple, there are literally only two parties cutting up the pie, meaning everything left after the "admin fee" goes to the dev. This obviously ignores the issue of who funds the development, so I'm not saying the dev ends up with a big pile of money they can spend (they probably have costs to cover from their cut).

  • skillian #26 2 years ago

    Agreed, and that's why I see DD as a good thing for the industry, not bad.

    But it will only work if there is choice and price competition.

  • PiranhaUK #27 2 years ago

    Im suprised that very few people in this thread seem to understand the economics involved here. Im not saying Valve doesnt have a conflict of interest but Valve are the people that took a HUGE risk spending development time and money on Steam when the rest of the industry were ignorant to the future of digital distribution. Most people thought they were mad at the time they announced steam.

    The service itself costs money for Valve to run (bandwidth costs/technical staffing costs/payment processing payment/costs associated with card fraud) so of course they deserve to take a percentage of the sale price like any other store.

    Its insincere of Pitchford to now say its unfair for Valve to have control of Steam. If his company had spent time and money developing an alternative I dont think he'd be so quick to complain!!

  • MENTAL1ST Verified Senior Software Engineer, Picsel UK Ltd. #28 2 years ago

    If valve spun off Steam into a separate company, then I'd give it maybe two years before Microsoft (or possibly EA) made them an offer they couldn't refuse.

  • actionfitz #29 2 years ago

    hmm. seeing as games are more expensive over steam most of the time despite having no manufacturing, storage and shipping costs is utter bullshit. The prices are artificially high to appease someone, be it retailers or publishers. The money goes somewhere though.
    Digital Distribution has to pass on these savings to customers or really whats the point? We get less but pay more/the same?

  • kangarootoo #30 2 years ago

    "seeing as games are more expensive over steam most of the time despite having no manufacturing, storage and shipping costs is utter bullshit"

    This old bug bear raises its head again.

    Of course there is storage. Terrabytes of it, housed in a secure data centre. Then there is the admin of said storage. Not to mention the admin of the secure shopping system, which will have also cost money to set up and run. Then there is the bandwidth required to literally deliver the data to each cutomer. And the support costs involved with maintaining and developing the client software.

    Every time the subject of DLC comes up, people act like there are no costs involved, just because there is no physical item. The suggestion that a digitial distribution system has no manufacturing, storage and shipping costs is just not even remotely true.

  • the_mtfr #31 2 years ago

    They're not in direct competition. Me as a customer can buy at any time both the companies' games, right?

    I could have indulged in his comments until he suggested to make achievements easier to boost sales. What a total moron.

  • skillian #32 2 years ago

    Compared to the traditional way of doing things, the costs of manufacture, storage and shipping are tiny.

    Just the cost of hiring staff to put price stickers on 500,00 games would pay for all the bandwidth needed to deliver those games through Steam.

  • kangarootoo #33 2 years ago

    @the_mtfr

    "Me as a customer can buy at any time both the companies' games, right?"

    I think are confusing direct competition with a monopoly.

    Unless you have an infinite amount of money, both companies are competing for your limited funds by providing you with a choice of very similar products. It is that specific provision of similar products that fits the definition of direct competition.

    In essence, if you want a video game, both of these companies can sell you one. Hence, direct competion.

  • kangarootoo #34 2 years ago

    @skillian

    Do we really know this? Its not really my area, but data centres are not cheap. And secure shopping services even less so. DVDs, cardboard boxes and even diesel fuel is pretty cheap by comparison.

    I guess the key thing is that the costs of a disc and box system scale with the number of units, whereas a DLC solution scales less so (it still scales, but not as severely). The more units you sell digitally, the lower your costs per unit. The same is true of boxes and discs, but by a smaller degree.


    I am just waffling. My point really is that I don't think we should underestimate how much Steam costs to build and maintain.

  • roz123 #35 2 years ago

    I would probably agree with this point (about steam), but giving money to valve is the lesser of a thousand evils.
    They only make good games.
    They provide more free dlc then most of the competition.
    They are in the industry (not Tescos etc..).
    The only rating of games they show is the metacritic score (which is an average of all the major reviews)
    They have promoted plenty of indie games
    The service is pretty good and generally reliable
    They are innovative

  • skillian #36 2 years ago

    My point really is that I don't think we should underestimate how much Steam costs to build and maintain.

    I think people do underestimate it, but people underestimate the costs of the traditional retail chain too. The cost of boxes and discs is a very small part of it.

    Think how many shops are involved in selling the total units of those games. Probably thousands. Each of those shops pays a huge amount of rent for a unit in the High Street. They also hire a large number of staff to work in those shops, not to mention all the people at Head Office, the lorry drivers, the factory workers and cleaners and managers and lawyers and marketers.

    The cost of all this when aggregated out is unbelievably huge, but nearly every cost/service there can be removed with a company like Valve who have 200ish employees (and most of those presumably are devs unrelated to Steam).

    I have no idea what the figures involved are, but I would have a hard time believing the savings for getting a game to market digitally compared to trad retail are anything but enormous. Get rid of the publisher (and hell, the retailer too I'd suggest) and the difference must be like night and day.

  • Spekingur #37 2 years ago

    So wait, is he trying to tell us not to use Steam because it isn't good for the developers?

  • Chufty #38 2 years ago

    Ok ignoring everyone who thought the most important piece of information in that article was the Achievement nonsense at the end:

    Steam is only monopolising the digital distribution segment because noone else has made a product good enough to compete with it. It's the whole Microsoft Windows argument again - Windows is so popular because the alternatives simply don't meet people's needs. It's the same with Steam.

    Developers, however, are flocking to Steam - especially indie developers who would not get the exposure otherwise. So I don't really see the evidence for what this man is saying. The only people getting ripped off are those of us who pay twice as much for a new AAA title on Steam rather than ShopTo or Play.

  • Skurmedel #39 2 years ago

    Mentalist: And if they were registered on the stock exchange, they might even be able to take them over just by buying enough stock.

  • skillian #40 2 years ago

    Steam is only monopolising the digital distribution segment because noone else has made a product good enough to compete with it.

    Yeah, that's where his argument kind of falls apart. This isn't the same as consoles, where you need a company's permission to start selling games. If Steam isn't doing a good enough job, someone else can just come in and offer a better (or cheaper) service. You can't blame Valve that no-one's been able to do that yet.

  • thesombrerokid #41 2 years ago

    i think his real problem is that online distribution is not conducive to competition and even if it was, no one else is offering a service anywhere near as good as steams, if there were any competitors whatsoever it'd be a big wait off my mind and i'm sure randy's as well.

  • Rodafowa #42 2 years ago

    If you've got to have a direct competitor running the digital distribution service you sell your games on, it's just as well it's a direct competitor that releases one game a year (if that), eh

    Can you imagine the carnage if an EA or an Activision were in charge of the dominant dowload service? Ye gods.

    Also, re: Steam pricing. Publishers set the prices not Valve. As any fule no. But on the other hand, the costs of distributing a digital copy of a game vs. the cost of distributing a boxed copy shouldn't have any relevence to the pricing. You're trading off owning physical media that you can potentially sell off down the line, against being able to download and play the game on any computer anywhere ever, an automated update service and Steam's integrated community features. Some people feel that owning a boxed copy is important, for others not so much. But just saying "digital distribution is cheaper therefore the prices should be lower", even if it's true, is fundamentally missing the point. It's not the cost to the distributor that sets the maximum price they can optimally charge, it's the benefit that the consumer.

  • makeamazing #43 2 years ago

    I can see the conflict of interest, luckily Valve dont release that many games where it can cause such a problem. Now if this was a service run by EA, Activision or even MS then I could see there being a real big conflict of interest. As it takes Valve years to release anything (except L4D), then its not like there are game conflicts.

  • IneptPercy #44 2 years ago

    All we need is good quality competition, using MP3 downloads as an example there is many places to buy and it can be done cheaply.

    Right now I haven't bought any games over DD as in my case the download time and time in post aren't all that different and generally I can get boxed software cheaper, of course if I need to re-install at a later date disc is a lot easier.

  • skillian #45 2 years ago

    But just saying "digital distribution is cheaper therefore the prices should be lower", even if it's true, is fundamentally missing the point. It's not the cost to the distributor that sets the maximum price they can optimally charge, it's the benefit that the consumer.

    If the market is mature, it's not benefit to the consumer that sets the price they can optimally charge, it's the prices that the competition charge. That's why cost is such a big part of it. It's not missing the point, it is the point.

    Why has the price of computers gone down from every manufacturer despite the fact they offer much greater benefit to the consumer than they did 20 years ago? It's because there are rival companies selling computers at a lower price, because they've made savings in manufacturing, staff costs, etc. Therefore all other companies must also lower their prices to remain competitive.

    If another company realises they can still be profitable while selling games at a cheaper price then they will enter the market and be more successful than Steam, who would have to lower their prices to compete. This is all made possible by lower costs.

  • UncleLou #46 2 years ago

    Also, re: Steam pricing. Publishers set the prices not Valve. As any fule no.

    People keep saying that, but there are too often price differences between different services like Impulse, Gamersgate and Steam as that I'd believe it's entirely in the publisher's hands.

  • valaris #47 2 years ago

    I believe Valve takes a 40% cut (similar to most other online gaming distributors).

    I won't comment on whether or not this is a lot, since I don't know the full range of services they offer to those selling games through Steam... payment processing, sales statistics, that sort of thing.

  • skillian #48 2 years ago

    Really great retort on the subject from Derek Smart of 3000AD: [link url=http://www.shacknews.com/laryn.x?id=21097820#ite manchor_21097820
    ]http://ww w.shacknews.com/laryn.x?id=2109...[/link]

    If this subject is of interest to you, you should read it, but here's a quick quote that explains why costs and competition are so important:

    "Because one site that I am with was taking a 50% cut for selling our games. Once we got on Steam and saw what their [smaller] cut was - we were able to have that other site match Valve's cut or we would pull our titles from the service and not give them our new games. The end result was that we got an amendment with the reduced cut. So now ALL the sites that we have our games on are taking the SAME cut as Valve."

  • JensonJet #49 2 years ago

    I hate achievements too... a complete waste of time. I know people believe it's some sort of bragging right, or proof of skill. The higher the achievement score the smaller your social life, or proof of your gaming obsession, or usually that you spend more money on games. I've never understood why the hobby of gaming isn't rewarding enough, or getting better at a game doesn't fulfil all. I don't know, finishing a game on the hardest difficulty is rewarding enough for me, I certainly don't need a larger number next to my name to feel good. Along with Avatars, I'd certainly like to switch this off.

    Am I not right in saying Valve purchased Left 4 Dead, Counter Strike and other games from the modding community? In that case, what have they actually created, designed and produced on their own apart from Half Life? It's sequel?

    What Pitchford has said very much ties in with my opinion that Valve are entirely behind charging Xbox owners for content PC gamers get for free. Valve are like a small fry version of EA or Activision.

  • skillian #50 2 years ago

    Valve are like a small fry version of EA or Activision.

    This is the stupidest thing I have read on the internet in the last few hours.

  • kangarootoo #51 2 years ago

    @JensonJet

    "I certainly don't need a larger number next to my name to feel good. Along with Avatars, I'd certainly like to switch this off."

    The gentleman doth protest too much. The way you go on, anyone would think you were jealous of people that have a larger gamer score than you. If it is any consolation, my gamerscore is pityful. And I sleep like a baby.


    "Am I not right in saying Valve purchased Left 4 Dead, Counter Strike and other games from the modding community? In that case, what have they actually created, designed and produced on their own apart from Half Life?"

    Is that even slightly relevant?

  • Eraysor #52 2 years ago

    Steam is awesome.

  • FogHeart #53 2 years ago

    Steam is a little bit questionable...if you buy a Valve game off the shelf you are required to install Steam to get it running, and then you have it selling you games. So the game is something of a Trojan Horse (not the virus kind, the good-thing-hiding-the-unexpected-thing kind). We can't get indignant at MS insisting that Windows must come with IE and then be sanguine about Valve games including Steam. Valve could be accused of using one product (their game) to leverage another product (Steam) which is what we all rage at MS about.

    So when Steam ends up by default on your PC you might never bother with another download service, like most people never bother with Firefox/Safari/Opera/Chrome. As we know these alternatives aren't just credible they're preferable, but because most people don't know/don't feel they need to bother once they have Steam they won't invest their time into looking at other download services. And then consumers lose out and Valve gains too much.

  • cobaltfram #54 2 years ago

    A lot of indie devs try to sell directly through their own website, because Valve takes an insane cut of the profits. That's fine on a 50 dollar game, but with something like The Path or Blueberry Garden that only costs a few bucks, the developers are left with very little for themselves. And a separate company would be wise; I imagine it's only a matter of time before the regulatory agencies show up and start asking questions.

  • thewolfiv #55 2 years ago

    guys an ass, they ruined brothers in arms HH - i'll never forgive em...

  • Skurmedel #56 2 years ago

    Jenson: They hired them and helped them make newer updated versions of the mods? I don't see the problem with that, other than that DoD:S really isn't as fun as the original mod. And as kangaro said, it's not relevant.
    Edited by 2 at 08/10/09 @ 20:06

  • Bravestinsane #57 2 years ago

    Sure shove easier achievments in game, when you start dumming them down even more that's 39,999 more sales you will get not 40,000.

    There needs to be a mixture, hard and easy and not collecting 500 fucking orbs.

    The reason i don't buy as many games isn't because of the damn achievments it because they cost so fucking much.

    Achievments don't sell games to me there just a perk thats make games last longer.

  • neems #58 2 years ago

    As somebody (finally) mentioned, Steam has such a grip on the PC DD market because it is the best / biggest / shiniest service out there. Impulse is good, although it always seems a little less user friendly than steam to my eyes (maybe just not used to it). But D2D, EA Digital Store et al are pathetic. Limited installs, games that can't be patched, unintuitive clients / interfaces.

    Valve / Steam are where they are because they know what they are doing, how to deliver a service. Stardock / Impulse have made great strides. EA just whack up a website and say 'hey look, we have a digital download service'.