[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.]