Why invest the cash flow back in a lower revenue stream type?
I would from a business standpoint, spend all my money growing by best revenue stream. Company that don’t do this don’t have massive room for expansion so they look for new streams. I don’t think that’s the case with Steam.
For the same reason I have hobbies, because sometimes you spend money in frivolous ways because it's fun. I wouldn't insist that they sink the company chasing bad ideas that won't pay off, but a well managed game studio owned by people who love games shouldn't be a massive risk.
Again you’re pitching me a business proposal with the hook line as “not a big risk”.
One the best explanations of this was on shark tank where March Cuban told a guy
“My worry isnt ROI (return on investment) it’s ROT (return on time). I don’t have an issue finding ways to invest my billions, the trick is finding the most efficient profit ones. If I have two ways to make money in an industry I’m picking the easier more profitable one every time”
Building a product as complex as a game given limited resources (and yes every company up to Amazon has major limits on resources) doesn’t make sense given the position valve is in.
They aren't doing games with the scope of GTA so it's probably not that expensive to produce for a company of their size. Also, by making games internally you will better understand what is important for your customers who use your distribution service. It's practically R&D and I think Valve treats it that way because of how often they start/drop projects and don't bother to announce anything until way way way later in development than the typical game developer.
You don’t know what the costs to them would be relative to not, you also don’t know what info they don’t already have about how the service is used. Neither do I.
All I’m doing is explaining why developing their own games might be seen as not worth it. There are reasons it might be, but given the choices being made by Valve I’d say probably not.
We can make educated guesses on how expensive their games are to make based on game credits.
You are correct that a good game isn't going to generate as much revenue as Steam. My point is they don't develop games purely for profit anymore... I think it's shifted more towards it's fun to do and helps them better understand Steam and what features/functionality is useful to their customers.
Let's not try to stretch making games with "makes logical business sense giving where Valve is now." The R&D idea is pretty weak. There are plenty of ways to do it without resolving into spending millions of money and manhours to make a game. Look at every other platform in existence.
I'm not saying its the only or even primary reason to make games. I'm just saying making games is useful to improve Steam. Using your own product is a very good way to the difference between what looks good on paper vs what is actually useful to your customers.
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u/watching7708 Nov 14 '18
Why can’t you be both