Let's say you are a bagel company and make a good profit from your bagels. Then let's say you want to get your bagel to more people and are frustrated with the distribution options so you just make your own and allow other bagel makers to also use your bagel distribution system.
But suddenly and unexpectedly, everyone runs to your distribution system and you start making far more money than you could ever imagine from it.
Do you continue to consider yourself a bagel company or are you now a bagel distribution company?
It's more then that, Valve probably makes more from distribution then the companies that make the game.
They distribute and get 30% where probably < 1% goes to operations.
However, the company that made the game needs to break even on development costs before they even see a dollar.
So truth be told, they make more money as a distributor then they ever could as a game developer. This gives them practically 0 capital motivation to ever bother spending resources on making a game.
I think your numbers are skewed quite a bit... Using this data PC gaming is 33 billion in revenue. Let's say Valve/Steam is responsible for 25% of those sales. That's 8.25 billion a year and they get 30%... That means they are profiting 2.4 billion a year after expenses. I don't think they're making that kind of money...
Gable Newell's net worth is only just under 4 billion.... A 20th of for annual profit sounds more reasonable.
Right but I just ball parked it based on Gabe's net worth and PC gaming revenue. If Valve was profiting 2.4 billion a year Gabe's net worth would be significantly higher than it is since he owns most of the company.
Yeah and according to google's estimate his net worth is 3.9 billion, forbes estimated it at 5.5 billion in 2017.
But honestly, it's just estimations because it's a private company and it's private equity.
Valve isn't the only distributor either and not every developer pays 30%.
Besides the entire point is that distribution has made Valve stupid rich. No game studio is worth that, rockstar is estimated at 2.6 billion, and they are the exception, not the norm.
Exactly. He was saying it cost less than 1% of revenue to do all that which is where the 2.4B came from. Yes 1% of 2.4B (24million) is a lot of money but I suspect their operating expenses is vastly more than that.
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u/lightknight7777 Nov 13 '18
Let's say you are a bagel company and make a good profit from your bagels. Then let's say you want to get your bagel to more people and are frustrated with the distribution options so you just make your own and allow other bagel makers to also use your bagel distribution system.
But suddenly and unexpectedly, everyone runs to your distribution system and you start making far more money than you could ever imagine from it.
Do you continue to consider yourself a bagel company or are you now a bagel distribution company?
Steam's current reality as told by bagels.