The Hated One
patreon
PROOF: VALVE IS RIPPING YOU OFF!
🕑 Added 2024-09-26 15:11:50 +0000 UTCChapters
00:00 Problems and lies
01:15 Where is the evidence?
2:15 Proof that games are priced equally across multiple store fronts
5:11 Valve price parity requirement only mentions Steam keys
6:40 Evidence from lawsuits of Valve enforcing price parity beyond Steam keys
11:48 How Steam's price parity leads to higher prices for games across stores
I have evidence that Valve’s Steam is ripping every PC gamer off. And I have evidence this is the case whether you get your games from Steam or from any other store for PC games. I’ve alluded to this in the part 1 of my investigation into Steam, where I lay out the different issues I have with Valve – including the fact that you don’t own your Steam games and Internet authentication is perpetually required or that Valve is charging insanely high cuts from all Steam sales.
But there was one thing a lot of Valve loyalists had a problem with – and that was when I said that Valve is forcing publishers to price their games and offer the same content on Steam as on other stores. Which is an obnoxiously anti-competitive behavior where Valve wants to prevent publishers from selling their games for cheaper on other stores than on Steam.
And many jumped to Valve’s defense saying that this price-parity requirement is only regarding Steam keys. And to me, that speaks volumes about how much these people care about the truth. Because I very conveniently cited all the sources that support this claim that Valve is enforcing price and content parity across all gaming stores and it’s not just about the Steam keys.
Because this lie is continuously being perpetuated by Valve and its cultists, I’ve spent the last few weeks reading through literally hundreds of pages of court documents presenting evidence for Valve’s anti-competitive behavior. Yes, I actually read and analyzed hundreds of pages of complaints, exhibits and legal answers. Yes, I did it because I hate myself, because YouTube will make sure this video will peak at 20k views and virtually none of my subscribers will know about it. But I care about the truth and I am proud of the research I am doing. I dare you to find anyone on this platform that does more and better research into their videos than I do. And I still haven’t taken a single sponsor. The only reason I am able to do this is no thanks to YouTube’s abysmal treatment of my channel. It is because I am literally subsidized by my Patreon supporters on patreon.com/thehatedone. So if you appreciate this sheer amount of work I am doing, help me continue it. I am also doing my podcast there. You won’t regret it!
Same pricing
Now, let’s get to the root of the problem. If you are looking for a PC game to buy, you have several options. The obvious choice is gonna be Steam, because this is the biggest library and the largest network of players on the planet. But you can also buy games from the Epic Games Store, GameStop or Microsoft store. And there are also third-party retailers that are reselling Steam keys. Your choices may not be plenty, but you have options.
So let’s say you wanna buy Horizon Forbidden West Complete Edition. Fantastic game, by the way! It’s $59.99 on Steam. That’s pretty hefty. Let’s see Epic. It’s $59.99. GamesStop? $59.99. Weird. Must be a coincidence. Let’s see Red Dead Redemption 2 then. Oh, it’s $59.99 again on Steam, Epic and GameStop. Okay, Control is a niche game. That must be cheaper! Aha! It’s $29.99 on Steam! Gotcha Epic! Oh, wait! It’s $29.99 on Epic too!
These aren’t some random outliers. This is a pattern. Prices of games that are listed on Steam will virtually always be the same across all independent stores, or they’ll be the cheapest on Steam. Multiple legal complaints are laying out several examples with regards to Epic Games Store. But that’s weird for two reasons. 1) Epic has nothing to do with Steam, it’s a completely independent store, they are not reselling Steam keys. And 2) Epic’s commission is only 12%, while Valve’s commission is 30%. So why aren’t publishers lowering their prices on Epic? For a $30 game sold on Steam, they could charge $25 on Epic and still earn the same profit!
There are two possible explanations for this: 1) publishers are too greedy and would rather pocket the savings now, then lure customers onto a cheaper store. or 2) There is something that prevents them from pricing their games differently when they are also selling them on Steam.
If you ask Valve, they would always deny there is a price-parity requirement outside of Steam keys. They always say there was no evidence for this and they call it a fantasy. And for a long time, there really was no evidence beyond correlation and circumstance. But now we have evidence. We have files on top of files of evidence.. We have emails and private communication between Valve and publishers and developers. And we have evidence that Valve enforced price and content parity as unwritten rules with mafia-like tactics. And I am going to show you all of that evidence. But one thing must be explained first.
Exposition
There are two ways to buy a Steam game. One is directly through the Steam client, where Valve takes a 30% cut of all sales by default, except for the largest studios. And the second method is via Steam keys which developers can request from Valve for free, so no 30% tax there and they can sell on third-party stores. Even if you buy a Steam key from third party, you still have to authenticate your game via Steam.
This almost doesn’t make sense. Why would Valve willingly give game publishers the ability to bypass Valve’s 30% cut? Because Valve is smart about it. They limit how many Steam keys devs can request this way. It’s not meant to be a replacement for the Steam client sales. Valve also requires that Steam keys are sold at the same price for the same content as they are sold on the Steam client. Discounts can run at different stores at different times, but Steam must get the same deal sooner rather than later. https://partner.steamgames.com/doc/features/keys
This is where Steam requires price parity and content parity across stores.
There is nothing anywhere in official Steam documentation that would say non-Steam games also have to be priced the same as Steam listings. It only talks about the Steam keys.
So whenever Valve is accused of enforcing price parity, loyal cultists throw themselves at Valve’s defense, pointing that it is just about Steam keys that Valve generously, out of the goodness of their heart, gives out entirely for free.
But now I am gonna give you plenty of ammunition to fire back at these liars because this has to stop.
When it’s not Steam keys
Valve is facing multiple anti-trust lawsuits. The most prolific ones are Wolfire v Valve and Elliot v Valve. In the Wolfire lawsuit, Valve managed to convince the judge to dismiss the complaint for lack of evidence. But Wolfire filed again with a new complaint and provided email communication between Valve employees and third-party publishers and developers as evidence of Valve’s tactics.
In one of these emails, a Valve employee wrote to a publisher: “[W]e wouldn’t be OK with selling games on Steam if they are available at better prices on other stores, even if they don’t use Steam keys. If you wanted to sell a non-Steam version of your game for $10 at retail and $20 on Steam, we’d ask to get that same lower price or just stop selling the game on Steam if we couldn’t treat our customers fairly.” https://storage.courtlistener.com/recap/gov.uscourts.wawd.298754/gov.uscourts.wawd.298754.309.0.pdf
Now Valve says that the employee who said this, Tom Giardino, has regretted this exchange as a “poor choice of words that doesn’t reflect” what they do on Steam. So we can take this as admission that it is wrong to threaten developers when they price non-Steam games cheaper than Steam versions. Right? Okay.
But this selection of words happens to occur quite frequently among Valve employees.
At another instance, Tom G is seen describing Valve’s pricing parity requirement as “a platform goal that goes beyond Steam keys.”
Another employee also once wrote “We ask that digital content you offer outside of Steam be made available to Steam users directly so that the Steam version is not disadvantaged.” Now this is called content parity.
In another instance, when a publisher asked Valve if they could leave their Steam game out of a planned discount, Valve responded: “we don’t want to be known as the store where [redacted] prices are unfair. We’ve pursued this same policy with other partners [(developers)] and in other regions, to make sure Steam customers aren’t at an unfair disadvantage to customers shopping at retail or online at other stores."
And what happens if publishers don’t comply? Valve says: “we’ve always asked that partners treat our customers fairly and we’ve often opted not to promote games or stop selling them altogether if we aren’t able to get fair treatment for our users."
In another instance: “If PublisherX wants to sell a game at 80% off on [redacted] and 50% off on Steam... we can’t stop them! But we’re not going to promote it until the Steam players get 80%, too.”
And another one: “We’ve made the choice to take the game down until we can reach price parity.” → but I thought you said price parity was a fantasy.
And in another exchange: “Yesterday it came to our attention that [redacted] was also on sale in [redacted] with a significantly better discount – so we removed it from the pirate sale page." Later in the chain, [redacted] added its central marketing teams "for discount rules and awareness" and assured Valve that "to be clear that we know discount parity is essential on both stores…”
The Wolfire side provided all this evidence in Exhibit 85, which lists emails between Valve and developers dating all the way back to 2007 until 2022. All of these are about content or price parity for Steam keys or non-Steam versions of games. It also contains a response to Valve’ response to the plaintiff’s response to Valve’s response to plaintiff’s complaint.
There is also additional documentation from the lawsuit Elliot v Valve where Valve is shown to explain to a publisher: “We basically see any selling of the game on PC, Steam key or not, as a part of the same shared PC market- so even if you weren’t using Steam keys, we’d just choose to stop selling a game if it was always running discounts of 75% off on one store but 50% off on ours. . . .”.
This whole lawsuit is focused on the aspect that Valve is abusing its market power to force publishers to price their games equally specifically even when they are not connected to Steam in any way. Unlike the Wolfire lawsuit, Elliot v Valve is coming from gamers only so publishers interest is left out. Which is important because publishing companies are not saints either. It’s the gamers who are suffering from monopolistic conduct the most.
In this lawsuit, TomG is quoted multiple times requesting that publishers offer the same content, DLC or in-game, whether it’s using Steam keys or not and that publishers must abide by rules even if they are not specifically written. TomG couldn’t have said this any more explicitly when he said “a completely standalone version would have to be the same price as the Steam version.”
Why this leads to higher prices
If you are still watching, congratulations! You have integrity! Because the most important part of this videos is yet to come – how does any of this lead to higher prices for games?
There are several reasons for this. One of the biggest, is that Steam’s commission is the highest in the industry. Valve takes a flat 30% cut off every sale on Steam, with the only exception for largest studio making up to $50 million in sales. On Epic Games and Microsoft, their commission is only 12%. Apple and Google, take 15% for the first million in annual revenue. Discord once ran a store at only 10% . But all of these competitive offers are completely nullified by Steam’s conduct. Every publisher will have to set higher prices on Steam to offset Valve’s high commission and they wouldn’t be able to keep their Steam listing if they lowered their price elsewhere. Steam keys are completely out of the question here. Yes, Valve offers them for free, but games sold via Steam keys must be explicitly sold at the same price and content as games sold directly on Steam. So there is no room to make cheaper deals for gamers there. Steam keys sales only account for about 28% of total Steam sales and in-game purchases are still taxed 30%.
Another reason for higher prices is that developers can almost never avoid Steam. Steam controls about ¾ of the global PC gaming market. That is an insane level of control. Any developer wishing to target the broader PC gaming market must do business with Valve and thus pay the 30%. They could go to Microsoft or Epic and sell exclusively there and offer a lower price for only 12% commission. But then they lose out on the overwhelming majority of the PC gaming market. The sheer size of Steam is unavoidable. Even large multi-billion-dollar studios like Ubisoft, Microsoft or Sony come back to Steam even when they can easily afford to run their own stores.
Valve didn’t make a better store. They just got lucky. They made the Steam client to publish their own games all the way back in 2004. Valve had some of the most popular games in the world and by forcing Steam on them, they managed to capture a vast portion of the PC gaming market that was still in its infancy. They got lucky and now they reap the rewards. And now you have to pay more than you should and could if Valve’s conduct was prohibited.
Now the final question is – is Valve’s 30% cut justifiable? I know Valve’s loyalists love to defend them on this one. I would love to tear them a new hole to shit through. Do you want me to do that? Let me know in the comments and subscribe to my Patreon to find out! And please, validate my life’s choice to burn hundreds of hours reading documents that no one else does just so I can tell you the truth for free.
SOURCES
Wolfire Games LLC v. Valve Corporation (2:21-cv-00563) https://www.courtlistener.com/docket/59859024/wolfire-games-llc-v-valve-corporation/
Wolfire's complaint against Valve: https://storage.courtlistener.com/recap/gov.uscourts.wawd.298754/gov.uscourts.wawd.298754.127.0.pdf
Valve's response to Wolfire's complaint: https://storage.courtlistener.com/recap/gov.uscourts.wawd.298754/gov.uscourts.wawd.298754.309.0.pdf
EXHIBIT 85 - Evidence of Valve's enforcement of price and content parity beyond Steam keys: https://storage.courtlistener.com/recap/gov.uscourts.wawd.298754/gov.uscourts.wawd.298754.348.1.pdf
Valve denies most allegations: https://storage.courtlistener.com/recap/gov.uscourts.wawd.298754/gov.uscourts.wawd.298754.128.0.pdf
Video game giant Valve hit with consumer class action over pricing https://www.reuters.com/legal/transactional/video-game-giant-valve-hit-with-consumer-class-action-over-pricing-2024-08-12/
Elliott v. Valve Corporation (2:24-cv-01218) https://www.courtlistener.com/docket/69032524/elliott-v-valve-corporation/
Elliot's complaint against Valve: https://storage.courtlistener.com/recap/gov.uscourts.wawd.337957/gov.uscourts.wawd.337957.1.0.pdf
Dark Catt Studios Holdings Inc v. Valve Corporation (2:21-cv-00872) https://www.courtlistener.com/docket/60020642/dark-catt-studios-holdings-inc-v-valve-corporation/
Dark Catt's complaint: https://storage.courtlistener.com/recap/gov.uscourts.wawd.300801/gov.uscourts.wawd.300801.1.0.pdf
Valve's Motion to dismiss Dark Catt https://storage.courtlistener.com/recap/gov.uscourts.wawd.300801/gov.uscourts.wawd.300801.38.0.pdf
Valve's Answer to Dark Catt's complaint https://storage.courtlistener.com/recap/gov.uscourts.wawd.300801/gov.uscourts.wawd.300801.75.0.pdf
Steam Key rules: https://partner.steamgames.com/doc/features/keys
Does Steam have a most favored nations provision (Reddit discussion: https://old.reddit.com/r/gamedev/comments/n3k5kw/does_steam_have_a_no_favored_nation_clause/)
CREDITS Music by CO.AG Music https://www.youtube.com/@co.agmusic
Comments
Mikhail Goncharov
great! 👍 thank you
