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Opinion: Tripwire, Steam, And How We’re Not Getting Exploited
Opinion: Tripwire, Steam, And How We’re Not Getting Exploited Exclusive
October 9, 2009 | By John Gibson

October 9, 2009 | By John Gibson
More: Console/PC, Exclusive

[This week, Gearbox CEO Randy Pitchford said Valve's Steam digital distribution service is "exploiting a lot of small guys." In a Gamasutra opinion piece, John Gibson of Tripwire Interactive, developer of successful Steam-based games Red Orchestra and Killing Floor, explains why he doesn't feel exploited at all.]

After reading the recent article in which Randy Pitchford from Gearbox Software said that he thought Valve was exploiting small developers, I decided to offer some perspective "from the trenches."

As a small independent developer that has released multiple games on Steam, we are exactly the type of studio that Randy believes is being exploited by Valve. Additionally, as president of Tripwire Interactive, I've personally been involved in all of our business deals with Valve and have experienced firsthand how they treat independent developers.

So, is Valve exploiting independent developers? In short: absolutely not. Without pulling any punches, I can say with certainty that if it weren't for Steam, there would be no Tripwire Interactive right now.

In the early days, when we were shopping our first game Red Orchestra: Ostfront 41-45 around to traditional brick-and-mortar publishers, we were shocked at how terrible their proposals were. We were getting pitched offers like, "We'll give you a 15 percent royalty rate, take the IP rights to your game, and slap a $1.5 million administrative fee on top of your recoupment costs." And deals like this were being offered for a game we funded ourselves!

With deals like those, we were wondering how any third-party developer could be successful in the game industry. Under the terms of that deal, we would have needed to sell hundreds of thousands of units before we would have seen one cent of royalties. Enter Steam.

When we got the contract from Valve, we were amazed at how much better the deal was from what we were getting from the standard publishers. Even our lawyer was surprised at how straightforward the contract was. Many game publishing contracts are full of "gotchas," or what we at Tripwire Interactive call "land mines" -– little fine print clauses that, if you overlook them, could blow up in your face later. Valve's contract was the first one we had seen that didn’t have any land mines in it.

Randy's statements suggest that small developers are getting ripped off through their royalty rates. Without breaking any non-disclosure agreements, let me just say that our royalty deal was great, and is in line with what I understand that other digital distribution services are offering. We were able to recoup our development costs for our first game within the first week of sales, and sales were straight profit from that point on.

Randy also pointed out the conflict of interest present in Valve being both a game developer and a game distributor. I agree -- there could be a potential conflict of interest here. But the reality of dealing with Valve just doesn't bear it out to be a problem. Tripwire Interactive's two titles on Steam, Red Orchestra: Ostfront 41-45 and Killing Floor, are both direct competitors to Valve’s own games Day of Defeat: Source and Left 4 Dead, yet all of these titles have been very successful on Steam.

We have never had a situation where Valve downplayed our competing titles. On the contrary, they have done a great job of promoting our games on the front page of the Steam store and through the pop-up advertisements on Steam.

The reality is almost every publisher/distributor has some conflict of interest. Standard brick-and-mortar-driven publishers have their own first-party titles. If they are publishing a first-party title in the same genre as your third-party title, most will either refuse to work with you, or will give your game a much lower priority for funding, advertising, and marketing. With console digital distribution, Microsoft and Sony have a complete monopoly on their platforms, and both companies make first party games. At least Valve has competition on the PC.

Valve has a very unique take on this matter, and one that I think is smart business. Rather than say, "I don't want to sell your game, because it's a competitor to our game," Valve says, "Our game is good, and so is yours, so let's both make some money together." The attitude is if the game is good, they'll sell it.

This is different than standard retail publishers and other digital distribution companies. GamersGate, for instance, refuses to sell games that require Steam because of the conflict of interest. And while they claim to be a better model for digital distribution because GamersGate is a separate business from their related retail publishing company Paradox Interactive, ask Paradox's CEO if they would sell a game at retail that requires Steam.

The key point here is this: every publisher has a conflict of interest in publishing third-party games. What really matters is how they have handled this conflict of interest. In our experience Valve has handled it very well; other companies, not so well.

I believe Valve has kicked off an indie revolution with Steam. Before Steam, there were very few routes to market for independent developers on the PC. Now Steam has opened up a whole new market for independent games. Indie games like Garry's Mod and Audiosurf were developed by one-man teams and have torn up the sales charts on Steam, making their developers a substantial amount of money. When since the 1980s could one person write a game, release it, and make a pile of money?

Indie teams like Tripwire Interactive, ACE Team (Zeno Clash), and Media Molecule (LittleBigPlanet, Rag Doll Kung Fu) got their start in the industry selling games on Steam and have expanded their businesses from there. Steam certainly doesn't guarantee success for indies -- you still need to make a really great game and release the right game at the right time. But the proof is in the Steam stats. A quick look will show that the top-played games are a mix between popular triple-A titles and indie games such as Garry's Mod and Killing Floor.

Three years and two games later, we've built our company in large part on top of selling our games on Steam. We started out with just a couple of people making games in a small room. Now we’ve built our company up to fifteen people, recently nearly doubling our staff and office space, largely thanks to the success our game Killing Floor has had on Steam. I guess all this "exploitation" has been hard on Tripwire Interactive.

So the next time someone wants to say that small developers are getting exploited by Valve, I suggest they talk to a few first. Ask Garry Newman, creator of Garry's Mod, or Dylan Fitterer, creator of Audiosurf if they feel exploited. Ask the Tripwire Interactive employees if they feel exploited, as they move into their new offices paid for by the money the company has made on Steam. Or me, as I drive away from the company that was built from the royalties we made on Steam, in my sports car paid for by the royalties we make on Steam, to the home that I pay for with the royalties we make on Steam.

If that's exploitation, I'll take a little more.

[John Gibson is the president and co-founder of Tripwire Interactive LLC. Prior to founding Tripwire Interactive, John worked as a programmer for the Moves Institute on the original America’s Army. Before getting into game development, he was a professional musician playing with the bands Aeturnus and Dirge.]

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Glenn Storm
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Thank you for this side of the story, John. This offers some well-deserved balance to the discussion.

David Barton
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Good to know. Red Orchestra has remained a favourite of mine since its release. I'm interested in whether it's better for you if gamers buy from Steam or other outlets, but I don't expect an answer to that. It doesn't matter to me anymore if I have a box or a disc but sometimes the cost is less when buying a physical copy online. If it helps the devs when I buy on Steam, that would be enough for me to choose.

Good point about the '80s. BBC4 showed a drama called Micro Men the other day and it was fascinating to remember those days when a bedroom game programmer could reach hundreds of thousands of players.

Bart Stewart
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I also thought this was a great peek at how things are working now. But what I'd like to see addressed is what happens tomorrow.

What we're talking about here are portals that control access to content. Having numerous portals competing with each other for exclusive content probably reduces overall product sales. On the other hand, that competition also motivates the portal owners to keep royalties to independent developers up, and encourages the portal developers to improve their services. That's the situation today, and John Gibson's story illustrates it effectively.

But it's what happens tomorrow, when deals have squeezed out all but one or two portal developers who control access to digitally downloadable game content, that should be the focus of attention. That's the point at which concerns like those expressed by Randy Pitchford will matter, because nothing but their continued niceness will prevent the portal owners from getting lazy and dictating worse deals for independent developers or pushing their own games. And counting on niceness is not a recipe for success in business.

I believe Randy wasn't saying things are bad now; he was warning that things could go bad tomorrow when weak digital game distribution portals give way to one or two big players. And that, it seems to me, is a caution worth heeding.

sean lindskog
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I definitely appreciate the insight into dealing with Steam. As head of a recently-formed indie studio working on our first project, I've had my eye on Steam since the beginning. Randy Pitchford's article was in stark contrast to the opinion I'd formed of them. And while Steam seems to be the most successful digital distribution site so far, there is some healthy competition in the market with impulse and GamersGate to name a few.

Bart Stewart makes a reasonable point in explaining Randy Pitchford's concern, that a future monopoly in the digital distribution market could be problematic. But for now, independent developers should be very thankful that Steam and the other digital distribution sites offer an alternative to traditional publishing models. From my standpoint, the future looks brighter now than it has in a long time.

Chris Melby
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Thanks for posting this side. I felt that Pitchford's comments had an ulterior motive, but what do I know.

Patrick Brown
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Good article, and overall a concise view of the little-guy's side of the story.

Derek Smart
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I couldn't have said it better - so I'll just regurgitate what I already posted over at Shacknews when the story broke yesterday.

Alan Wilson
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To David Barton's point: simple arithmetic would say that it is better for us if people buy from Steam - there are no production and shipping costs involved, for a start. HOWEVER... retail sales are still very important to us - there are a whole pile of reasons why people prefer to buy a boxed copy. These include not liking buying online, slow internet access for the downloads or simply just liking the really neat boxes we do. It is also important to us in that services like Steam attract more "hard-core" gamers - the casual buyer will still just wander round the (brick-and-mortar) store when they get the urge to buy a game.

So, Wal-Mart, Best Buy, Amazon and all the rest are important to us too. We may have to take higher costs and lower margins through that route - but it makes a BIG difference to sales numbers. And the more people who play a game, the more people who then want to play it - all good news for us as independent developers, for the stores as they find that they can still sell good numbers of PC titles - and for Steam.

And think about this key point: if it is good for the stores and for Steam, then it is good for us indie developers. And if it is good for us indie developers (and ACE and all the rest), then it is good for the gamers - who will go on getting games that think just a little "out of the box".

David Barton
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Thanks for that, Alan. It's great to get such a quick and direct answer straight from Tripwire, and reassuring to know that it does make a difference.

I'll be getting Heroes of Stalingrad from Steam in that case, but you have a good point about casual buyers. Just don't make the packaging or extras too attractive or I might have to get a boxed copy after all. Unless you make sure there are PDFs available online of the artwork and any extras...

Oh, and thanks to everyone at Tripwire for Red Orchestra.

Mark Venturelli
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I mean no disrespect towards Mr. Pitchford (we never met, but he looks like a nice guy), but this discussion looks like a rather clever way of generating attention to him and his game in such a strategic timeframe for him. Steam is a great platform for independent games, period.

Tim Carter
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Okay, so there is no potential for conflict-of-interest? You have a vertically-integrated company providing publishing solutions to its competitors. They don't really market any of those products - they only provide a pipeline that lets people buy them (valuable, but there's more to making a game into a hit than that). There's no physical retail - and physical retail still makes up the lion's share of sales. That's kind of a half-publishing solution, don't you think?

Would Steam ever cross-collateralize one of the games published on its service? Can you see Steam leveraging your IP to make it into a movie, a sequel, a prequel, et cetera? Can you see Steam investing in your game to make it better? Or are you basically on your own for all that?

I'm just asking. But at least I'm asking.

Have you ever seen Steam run advertising for their games outside of the Steam interface itself? (Certainly EA can do that on their home - EA doesn't need Steam's help to arrange marketing; but not everyone is EA.)

Or is it the usual fanboy we-are-not-worthy, totally-absent-of-criticism attitude?

Maybe you want to be on your own. After all who needs a publisher who can turn a single IP into a multi-platform franchise when you can keep more percentage points?

Maybe a small royalty rate from a publisher who is going to sink money into making your game better and bigger, into marketing and cross-collateralizing, is better than a huge royalty rate to make a teeny game and get a slot in a digital catalogue among a slushpile of other little wee games that people soon forget?

I just checked out the top Metascore games on Steam and, strangely, they're all ones that are backed by major publishers already. That doesn't sound like it's promoting indie developers. It sounds a lot like you're on your own, buddy.

Just questions. Tough questions. But let's not do the cognitive dissonance thing (right Mark - dismissing a valid beef with an ad hominem attack).

Mark Harris
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It's always a good thing to question, it tends to keep all the players in check.

This issue is complicated beyond the scope of a comment box. The questions (including Tim's) involve a number of variables that don't lend themselves to easy interpretation, namely the long and short term goals of an individual developer accompanied with the availability of funding in your given terms, current and future project scope, etc etc.

I think the most pertinent take away from the discussion on a macro level was brought up by Bart. We want to broaden the channels of distribution, digital or otherwise, and prevent any narrowing.

Alan Wilson
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To Tim's points...

1. Yes, there is of course potential for conflict of interest. To date Valve have handled it without anything that would ever generate any complaints from us. Killing Floor can bounce ahead of L4D in the sales charts and they never complain at us either :)

2. Does Valve try to do anything with our IP? No - it is our IP, not theirs. They aren't acting as a publisher, they are providing Steam as a distribution service. Different thing entirely.

3. Valve runs ads for its own IP all over the place, including on TV. They don't run ads outside Steam for our IP - same answer as #2 :)

4. We don't wan to be "on our own" - but we long since made the decision to own our own IP, which would NOT happen if we signed with a large publisher. If we had originally signed a "major" deal, we would no longer own the RO IP - and Killing Floor would most likely never have been released. We are very happy the way we are :) Besides, most "indies" don't get the chance to sign those sort of deals off the bat.

5. As for people "soon forgetting", well... Red Orchestra has sold well over 400,000 units on PC and is still selling online and in stores after over 3 years. Attracting articles here on Gamasutra too - only a few hours before this one broke (very conveniently, to allow me to answer that jibe!).

Yes - there are a ton of complicated issues underlying all this. Come and see my piece on Publisher Alternatives at GDC next year for more thoughts! We made an informed choice. It has worked very well for us - it may well not for others. But the key point: Steam GAVE us a choice.

Alan Wilson
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Tim, we should take this offline, rather than derail the topic... so - please jump to my blog, rather than chew up John's answer to Randy.

Adam Houten
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"I just checked out the top Metascore games on Steam and, strangely, they're all ones that are backed by major publishers already. That doesn't sound like it's promoting indie developers. It sounds a lot like you're on your own, buddy." - Tim Carter.

In answer to that, I'd just like to point out that Steam does not create the Metascores, and to suggest that is frankly ridiculous. The debate on whether Metacritic is valid or not is one for a different time. But the point stands that I would have never have bought many now popular indie games if steam hadn't of let them be part of the weekend deals, with a large add on the front page of steam pointing out to me that this game exists. Oh, and Steam doesnt even include the Metacritic scores on the front page, so the argument is doubly moot.

Tim Carter
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I didn't suggest that, Adam. What I suggested was that selling your IP to a publisher might be worth it because they could pump funding into your game to get a higher Metascore rating. (As opposed to keeping it all and having a great little game that you [ahem, your dev company] own 100% of, but then having a game that nobody really knows about because the game doesn't look as good or doesn't have exposure.) Or maybe there could be another way to sell your IP...? Maybe you could get some better terms?

Kim Pallister
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@Tim:Have you ever seen Steam run advertising for their games outside of the Steam interface itself?

Not sure about Steam, but for casual game portals or things like the Xbox dash, placement on the interface/website is VERY important. Even within the portal, placement matters a great deal.

Adam Bishop
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While it's possible that selling a game to a publisher may be more worthwhile to some people, it likely isn't for others. See this article about World of Goo, for example ( Ron Carmel makes it pretty clear that going with a publisher would have been the wrong move for them from a business standpoint.

Tim Carter
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Not every game is World of Goo. Some games need muscle behind them.

At the end of the day I'm trying to get people to question their assumptions (which just doesn't seem to occur very much in the game industry). We need guys like Randy Pitchford to push, because that pushing improves things. Dismissing valid beefs without consideration is cognitive dissonance.

Glen M
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Great article! Loved this quote: "When since the 1980s could one person write a game, release it, and make a pile of money?"

"Randy also pointed out the conflict of interest present in Valve being both a game developer and a game distributor."

I would say the odds of a game developer giving a rat's ass about other game developers is much higher than a retailer caring about them. Think about it, built Steam because the deal they were getting from retail were not fair for them either. Go Steam! Go Impluse, Go iPhone, and X-Box Indie Games! Keep flatting the game development world.

j kelly
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I appreciate Steam being in existence. But after just getting word that the Source engine is a moderately sized six figure advance, I have to question how a "hobbiest" game developer makes the jump from programming in a small room into owning sports cars and homes paid for by games they created?

My question is just that, a question. Not being smart assed, just wondering how to get from point A to point B.

Jonnathan Hilliard
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J kelly, you don't need to use the Source engine to release a game on steam. You can use whatever you like. Torque for a few hundred bucks, Unity for a similar price, or other free engines, or make your own.

Chris Remo
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J Kelly,

Neither of Tripwire's games on Steam use the Source engine. Both games have their roots in Unreal mods.

j kelly
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Ahhh. I was unaware. Thanks for the info. Regarding making my own...way too back breaking having done it once already. But I might just cannibalize it and get back in touch with Valve.

Alistair Langfield
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Firstly, this was a great read, as a contributor to one of the free mods for Red Orchestra (cue shameless plug - Mare Nostrum - also available on Steam), it's re-assuring to hear that Steam continues to offer a fair route to market. I have had many many hours of enjoyment from Red Orchestra, and I would likely have never heard of it were it not for Steam.

Tim raises some interesting points however, and what he says is likely true. Some indie developers may be much better off taking a far smaller slice of a much bigger pie by selling on their IP quickly. But surely publishers are going to have to do their own lateral thinking if they are to convince indies to favour their (on the face of it) much riskier looking proposition. Major publishers have been failing to foster independant talent for decades with the unviable deals on offer.

Most indie games on Steam are sold at a low price point, that encourages impulse buying. Prior to Steam I hadn't bought games on impulse since the ZX Spectrum days when you could pop down to John Menzies and buy a game on cassette tape for £2.99! Steam, Xbox Live and PSN are all contributing to this trend and I love it. It's introduced me to gems that would traditionally never have been released, or would have been priced too high for an impulse purchase.

So whilst I think Steam's support for Indies is also generally good news for the consumer, I'm not convinced it's the best distribution channel for major publisher backed titles, but this isn't the fault of Steam At the moment it's apparent traditional retailers still dictate what we are paying digitally. I've never seen a new AAA title cheaper on Steam than I could buy in-store and there is something distinctly fubar about that, considering the major cost savings this kind of distribution gives and the impact it must have on the 2nd hand market.

Daniel Mullins
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Wow, so Randy Pitchford says he doesn't want Valve to be a monopoly and the CEO of Tripwire comes out trying to enlighten all of us..

"So the next time someone wants to say that small developers are getting exploited by Valve, I suggest they talk to a few first."

"So, is Valve exploiting independent developers? In short: absolutely not."

Nice opinions.

"Without pulling any punches, I can say with certainty that if it weren't for Steam, there would be no Tripwire Interactive right now."

That is the key issue I have with this thread. You made all your money through Steam so of course you think they are the best thing since sliced bread.

Isaiah Williams
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Actually, Red Orchestra had a retail release.

Daniel Mullins
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Nice catch. "You made all your money" was a bad choice of words on my part.

Alan Wilson
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John never pretended we were unbiased - he was simply countering Randy's stated view that Steam is "bad" for small/indie developers. And we sold enough copies of Red Orchestra at retail for there to be no question about the retailers taking Killing Floor. Just that we would have been very much less likely to survive, let alone thrive, if we had to live off the money made through a publisher at retail. Which is, of course, why we now self-publish (and are also publishing Zeno Clash at US retail). But that takes cash, too, of course.