The antitrust lawsuit against Valve from Wolfire Games got a little spicy this week. To quickly get you up to speed: Wolfire claims that Valve uses its position with Steam to control game prices and muscle out competition. Though the initial lawsuit against Valve was dismissed, Wolfire amended their suit in May 2022 and the legal battle was back on.
It may have taken almost two years, but we are now starting to see some of the documents that surfaced during the discovery phase of the lawsuit. Among those documents are some email exchanges between Epic Games CEO Tim Sweeney and Valve CEO Gabe Newell, COO Scott Lynch, and project manager Erik Johnson.
The email exchanges are, for the most part, typical corporate correspondence, but there are a few nuggets of solid gold to be found. The first of which comes from a 2017 email exchange that deals with a leaked remark from Valve's Sean Jenkins. At the time Jenkins erroneously said that Steam may start to restrict keys that it provides to developers. It begins with an email sent by Gabe Newell to Tim Sweeney.
August 17, 2017 - Gabe Newell to Epic's Tim Sweeney:
Anything we doing to annoy you?
We're guessing Sean Jenkins public dumbness might be part of it.
Anything we doing to annoy you?
We're guessing Sean Jenkins public dumbness might be part of it.
August 17, 2017 - Tim Sweeney's response to Valve's Gabe Newell and Erik Johnson:
Not at all, and I've never heard of Sean Jenkins.
Generally, the economics of these 30% platform fees are no longer justifiable. There was a good case for them in the early days, but the scale is now high and operating costs have been driven down, while the churn of new game releases is so fast that the brief marketing or UA value the storefront provides is far disproportionate to the fee.
If you subtract out the top 25 games on Steam,| bet Valve made more profit from most of the next 1000 than the developer themselves made. These guys are our engine customers and we talk to them all the time. Valve takes 30% for distribution; they have to spend 30% on Facebook/Google/Twitter UA or traditional marketing, 10% on server, 5% on engine. So, the system takes 75% and that leaves 25% for actually creating the game, worse than the retail distribution economics of the 1990's.(...)
Not at all, and I've never heard of Sean Jenkins.
Generally, the economics of these 30% platform fees are no longer justifiable. There was a good case for them in the early days, but the scale is now high and operating costs have been driven down, while the churn of new game releases is so fast that the brief marketing or UA value the storefront provides is far disproportionate to the fee.
If you subtract out the top 25 games on Steam,| bet Valve made more profit from most of the next 1000 than the developer themselves made. These guys are our engine customers and we talk to them all the time. Valve takes 30% for distribution; they have to spend 30% on Facebook/Google/Twitter UA or traditional marketing, 10% on server, 5% on engine. So, the system takes 75% and that leaves 25% for actually creating the game, worse than the retail distribution economics of the 1990's.(...)
In the following exchange, a very angry Tim Sweeney emails Valve's Gabe Newell and Scott Lynch. Sweeney opens with some of the grievances he has with Apple. He continues on to say that he and Epic Games are about to launch the Epic Games Store. Sweeney wants Valve to respond to this email with the idea that it could strengthen Epic's case against Apple. Unfortunately, Sweeney seems to lack tact and grace when making such demands.
December 3, 2018 - Tim Sweeney to Gabe Newell and Erik Johnson:
(...)So, the question of open platforms and store economics will be foremost on Apple execs’ minds this week. I believe the best outcome can be achieved if Apple speedily concludes that the combination of an app store monopoly and 30% fees is untenable, and that opening iOS up is the best stop-loss strategy.
Right now, you assholes are telling the world that the strong and powerful get special terms, while 30% is for the little people. We're all in for a prolonged battle if Apple tries to keep their monopoly and 30% by cutting backroom deals with big publishers to keep them quiet. Why not give ALL developers a better deal? What better way is there to convince Apple quickly that their model is now totally untenable?
(...)So, the question of open platforms and store economics will be foremost on Apple execs’ minds this week. I believe the best outcome can be achieved if Apple speedily concludes that the combination of an app store monopoly and 30% fees is untenable, and that opening iOS up is the best stop-loss strategy.
Right now, you assholes are telling the world that the strong and powerful get special terms, while 30% is for the little people. We're all in for a prolonged battle if Apple tries to keep their monopoly and 30% by cutting backroom deals with big publishers to keep them quiet. Why not give ALL developers a better deal? What better way is there to convince Apple quickly that their model is now totally untenable?
December 4, 2018 - Valve's Scott Lynch to Valve's Gabe Newell and Erik Johnson:
You mad bro?
You mad bro?
