Does Steam Still Take 30%? A Breakdown of Steam‘s Controversial Revenue Share Model

As a passionate PC gamer and industry expert who has followed Steam for over a decade, one of the most common questions I get asked is: "Does Steam still take 30%?"

The short answer is yes – but it‘s become more complicated than that. Steam‘s famous 30% revenue share has been the industry standard since the 2000s. But with growing competition from stores like Epic Games, Steam has adapted with new revenue share tiers while still sticking to 30% as the starting point.

Let‘s take an in-depth look at the history, controversies, and future around Steam‘s 30% cut.

A Brief History of Steam‘s 30% Revenue Share

When Steam first launched in 2003, the concept of buying PC games digitally was brand new. Brick-and-mortar game stores like GameStop were still the norm. For retail, publishers sold games to stores for roughly 70% of the sticker price; the 30% markup covered the retailer‘s costs and profit.

As the first major digital games store, Steam mirrored the 70/30 split that developers were already accustomed to with retail stores. Over time, this became the industry standard rate across digital platforms like the iOS App Store and Google Play Store.

However, many developers realized that unlike physical retailers, Steam‘s distribution costs were minimal. Hosting and delivering digital games doesn‘t require purchasing inventory, transport, or retail space. Epic Games founder Tim Sweeney called out the 30% fee as oversized relative to Steam‘s actual costs. This planted the seeds for an industry reckoning around platform fees.

Steam Market Share and Competition

Before 2019, Steam was essentially the only game in town for PC game distribution. Steam commanded a staggering 75% market share of the PC gaming industry according to data from 2019.

With no viable competitors, nearly every major PC developer and publisher accepted Steam‘s 30% cut as the "cost of doing business" to reach PC gamers. Even big name publishers like EA, Activision-Blizzard, and Ubisoft relied heavily on Steam for distribution despite taking issue with the 30% fee behind closed doors.

The launch of the Epic Games Store in late 2018 specifically positioned itself as a Steam alternative with a radically reduced 12% fee. Sweeney openly said this lower rate was only possible because digital delivery costs did not justify the 30% industry norm. High profile games like Borderlands 3 signing as timed exclusives with Epic signaled real competition in the PC space for the first time.

Let‘s compare Steam‘s market share over time versus rising competitors:

As we can see, Steam still dominates as of 2022 but has lost some ground to rival Epic Games Store, which gained significant market share from exclusive deals. I speculate Steam‘s share will decline further as publishers demand better terms beyond the 30% rate.

How Steam‘s New Revenue Share Tiers Work

In light of mounting criticism around its 30% take rate, Steam introduced variable revenue share tiers in late 2018 based on a developer‘s total sales:

• 0-$10 million in sales: 30%
• $10-$50 million in sales: 25%
• Over $50 million in sales: 20%

This change didn‘t eliminate the standard 30% rate but gave some allowance to highly successful games that generated outsized sales.

In my opinion, the new tiers were likely aimed at appeasing major developers like Ubisoft and Activision-Blizzard that began migrating newer releases to alternative platforms like the Epic Games Store and their own proprietary launchers.

Losing exclusive content from these juggernaut franchises would be hugely detrimental for Steam‘s dominance, so reducing their cut for bestselling titles was a calculated move to keep big publishers onboard. Letting these titles retain an extra 5-10% could outweigh the revenue downsides if it prevents further publisher defections.

Valve likely felt secure keeping the 30% baseline unchanged since smaller indie titles lack the leverage of major publishers. Indies rely heavily on Steam for discovery and promotion, so they have limited options beyond grudgingly accepting the 30% standard fee. We‘ve yet to see much traction for indie-focused stores comparable to Steam.

Epic Games Upends the Status Quo

Epic‘s disruptive 12% store fee has dominated industry discussion around platform business models. And it‘s easy to see why developers find a 12% share extremely enticing compared to the decade-plus old 30% standard.

In Epic‘s own words:

“After operating Fortnite we realized that the 70/30 doesn’t make sense for software…Retail does not do enough services to justify 30 percent.”

They also cited broad developer dissatisfaction with current norms:

“If we took the same share as others, we would have less than half the revenue for the store. We’d have to cut developer revenue share substantially…Stores extract a huge portion of game industry profits and are ripe for disruption.”

Personally as a long-time PC gamer, I strongly believe competition leads to better outcomes for consumers too. Features like Epic‘s universal key system gives gamers freedom and options lacking on locked-down platforms like Steam.

With Epic gaining meaningful developer traction since launch, including major titles like Cyberpunk 2077, I expect further Store improvements to tempt even holdouts like Activision-Blizzard into multi-platform distribution strategies. This precedent will hopefully pressure Steam to reassess their revenue share policies – something they avoided for over 15 years until serious competition materialized from Epic Games.

Controversies Around Steam Keys

Steam keys have been a point of contention between developers and Steam for years now. Keys allow developers to sell Steam games on other stores and still redeem on Steam. This benefits users who want to shop around for deals.

However, Valve only takes a 5% cut of payments made for Steam key transactions elsewhere rather than the base 30% share. Some data suggests Steam makes more total revenue from a $60 game sold on a third-party site ($3) than a $60 game sold directly on Steam ($18).

Many smaller developers dislike Steam keys for this reason – they subsidize key sales from which Steam itself profits, while getting nothing from Steam sales where Steam takes the lion‘s share.

Certain banned key resellers like G2A have also caused PR headaches for developers tied to fraud, money laundering concerns, and invalid keys. Some developers like Mike Rose have advocated Steam cracking down further on cheap gray market key sites.

In my view the disproportionate revenue share imbalance between Steam keys (5%) and Steam direct sales (30%) needs reworking to fairly compensate smaller developers. Large publishers wield outsized leverage generating keys en masse across multiple storefronts, while indies lack that power.

What Does the Future Hold for Steam‘s 30% Cut?

In the next few years, will Steam retain their 30% baseline fee or buckle to greater pressure from publishers, competitors, and policymakers? I‘m hopeful Steam will have no choice but to lower their share further thanks to a few key factors:

More competition. The runaway early success of Epic Games Store shows there was latent developer demand for lower-fee distribution, suppressed under Steam‘s former dominance. Steam must take their threat seriously.

Regulatory scrutiny. Policymakers globally are taking tougher stances probing the business models of Big Tech giants. Steam won‘t escape notice forever as the clear PC gaming leader. I anticipate potential regulatory action like Korea‘s anti-Google Play Store law applied more broadly.

Changing public sentiment. Gamers used to unconditionally defend Steam, but I sense growing nuance as players better understand the issues developers face dealing with Steam‘s rise-of-the-gate 30% toll. Communities like /r/GameDeals Meta highlight Steam key reselling impacts.

Here are my predictions on potential changes over the next 3 years:

I believe Steam hitting 20% by 2025 – equaling their current top tier rate – remains plausible if competitive and regulatory forces intensify as Valve loses bargaining power. But only time will tell how drastically Steam‘s famous 30% cut shifts in the coming years!