As some of you may have heard, Phoenix Point (the upcoming XCOM-like from the original designer of X-COM) has switched to exclusive sale and distribution on Epic Games Store (EGS) for an entire year. This of course has many people incensed, as people who backed the project on Fig or through subsequent pre-orders did so on the premise that they would get Steam and/or GOG game keys when the game was released (as well as access to backer builds prior to). Well not anymore. The game will only be available through EGS for its first year – with Steam or GOG keys coming along after the one year exclusivity deal with EGS is up.

Obviously, this is ruffling many feathers (see exhibit A). But for the moment, I want to dwell on some of the arguments that have been circling around regarding this turn of events and EGS’s potential place in the PC market relative to Steam.

Let’s step back for a moment. Steam is certainly the dominant player in the PC gaming market. And many have credited Steam for being the savior of the PC gaming market during a period when boxed PC games dwindled out of existence (a combination of consoles competing for shelf space, challenges with patching games, etc.) and were increasingly pitted directly against consoles with so many titles becoming cross-platform. Steam pioneered the digital distribution model and their gambit clearly paid-off. Yes, Steam is a mechanism for DRM in one form or another, but that’s come with enough value added that most people look past it. For those that don’t, there’s always GOG, a platform that sells many of the same games, but without DRM.

Anyway, Steam of course hasn’t gone without its share of criticisms and controversies during its tenure. People cite concern that Steam could be “too big to fail,” and if it went belly up a lot of gamers would be left without access to their libraries (given that most games aren’t distributed through steam in a DRM-free manner). There are also concerns that Steam might, overall, be a monopoly in the marketplace and thus are able to dictate terms and prices too strongly. Oft cited is the fact that Steam takes a 30% cut of all sales, leaving only 70% for the publishers and developers (this number is however comparable to console platforms, itunes, etc.).

Many are using the above arguments, alongside EGS’s pledge to leave more sale revenue to developers selling on their platform, to advocate for EGS or other platforms that can give Steam direct competition. And as every proper capitalist knows, competition is good for the consumer. Right?
However, there are some flaws and lapses in the above rationale that are important to highlight.

First – Steam is far more than a mere storefront. In addition to being a point of sale, it is also a distribution platform for other storefronts (more on this below), a game launching platform (library, patching service, Steam controller API, Mac OS and linux support, family sharing, in-home streaming, etc.), a social media platform (friends, voice channels, game forums, groups), a developer platform (steamworks, early access), a modding platform (workshop), and a critic/review platform (curators).

All of the above are value-adds that go well beyond being simply a storefront. This is surely self-serving on Steam’s part – because the more dependent gamers and developers are on Steam’s entire ecosystem and suite of services, the more “locked-in” people become. I contend that any new service looking to sell and distribute games has to have some bigger value proposition in place to compete with everything Steam provides. For example, GOG broke into the market by modernizing old out-of-print titles to work on new computers and coupled this to a (mostly) DRM-free business model and a more carefully curated inventory.  

With respect to EGS, I simply don’t buy the argument that “they are new and growing – they need time to add features to their service.” They are a phenomenally profitable company (Fortnite, remember?) and could certainly spare the expense. Moreover, this logic is like defending a new car manufacturer selling their car without airbags or automatic windows and claiming “we are new, give us some slack.” No, sorry – if you want to compete in a mature market you better bring in a fully-featured competing product and not some half-baked jalopy.

Second – the cries that Steam is the biggest storefront in town and that their policies are unfair isn’t quite accurate. The reason is that, unlike EGS’s “exclusivity” arrangements, Steam allows developers to sell their games (as a Steam key) on other 3rd party storefronts. Steam, while earning nothing (correct me if I’m wrong) from a sale on Humble Bundle (for example) nevertheless provide the distribution and platform for game copies they didn’t even sell. IMHO, this is pretty significant and remarkable – and certainly quite fair.

More to the point, of all of the various sales tactics that exist, “exclusivity” deals are, from the consumers vantage point, one of the more unpleasant. We often talk in lofty platitudes about the importance of an open market in tech ecosystems. Exclusivity deals fly in the face of that.

With regards to EGS, many have asserted that there are plenty of games on Steam that aren’t sold anywhere else. That may be true. But critically, Steam isn’t “preventing” developers from selling on other platforms in anyway. Between being able to crosslist a game on GOG or sell Steam keys on dozens of 3rd party sites, the Steam ecosystem is inherently more open than one that is banking on exclusivity deals in order to penetrate the market.  

Ironically of course, having a game exclusively sold from one vendor at a fixed price creates its own type of monopoly for that game. How does such an exclusivity deal in any way promote competition? It doesn’t. In fact the “point” of such a deal is to quash competition and be able to charge higher prices. For those justifying EGS’s methods as being what it takes to squash Steam’s monopoly, I’d ask you think harder about who you’re getting into bed with. Perhaps it is not surprising to see that EGS has also spoken out against “sale culture.” Profit motive anyone?

Third – where do we go from here? Say EGS is successful via their exclusivity arrangements and they grow into a big storefront competitor for Steam. Are they going to also look to provide all of the other services that Steam provides to developers and gamers?  What about EA + Origins service or Ubisoft and uPlay? Or Blizzard and BattleNET? From an end user standpoint, how convenient is it for me if every major game is only distributed and playable through its respective storefront and launcher. Do I have to track and manage friends across half-a-dozen different platforms to see who is a playing what? No thanks. Dealing with Steam, GOG, BattleNet, and contacts on Discord is already enough.  

It’s hard to know what the future will bring. Maybe the exclusivity deals will prompt Steam to make a counter-offer to developers for a smaller cut of the revenue. I really don’t know. I do feel like a lot of people rally against Steam’s “monopoly” without really thinking through fiscal and practical aspects of what PC gaming would look like with the market fractured into scores of storefronts, launchers, and social hubs. We’ve made great strides in streamlining PC gaming as a platform – from both a development AND gamer experience standpoint – in order to compete with the console market. It would be a shame to burn that all down.