Personally speaking, a store with the market size of GOG is my cutoff point for 30%.
You have to earn that 30% cut, and the way you earn it is by having a big audience and a lot of hungry customers. Look, if you're offering a 70/30 split in this day and age you're delusional. Translation: "You'll have all four of our customers all to yourselves because nobody else wants to be on our store, and we'll give you some sweet shout-outs on Twitter!" I used to get pitches that offered the familiar 70/30 revenue split, but they would "Solve Discovery", or would "give us lots of attention". Steam competitors are slowly starting to realize this. Do that and your chances of success rise from a flat 0% to an impressive ~1%, rounded up. You have to do all four of these things, and nail every single one, just to begin. Playing/buying games must be zero-friction.Straight up bribe players to use your system.Straight up bribe developers to post their games.So your path to not fail before you even start looks something like this: You can't get developers to upload those games without customers. You can't get those customers without a lot of big, popular, games. This is the heart of your problem and all your challenges flow from this. If you've set yourself on this task, and you haven't read Joel Spolsky's Strategy Letter II: Chicken or Egg Problems, go read it now. Minimum Requirements to Not Fail Right Away
Okay, here's what you have to do to not get shot in the face before you even arrive at the starting line. And let's grant that somehow, miraculously, you're going to start with a service that is every bit as good as Steam's. Second, you don't have the institutional memory and processes built up over years and years to deal with all the crazy edge cases, hacking, and general abuse of your system.īut okay, you're going to start small so you don't need to deal with all that stuff just yet. For one, there's no way in hell you're going to be able to manage the amount of traffic and server load they do. Their credit cards are registered on Steam, their friends all play on Steam, and most importantly, all the developers, and therefore all the games, are on Steam.įurthermore, despite all of the constant (and justified!) complaints everyone has about Steam's services, you're kidding yourself if you think you, as a startup, are going to do a better job on every single one.
Even if every aspect of your service is better than Steam's in every possible way, you're still up against the massive inertia of everybody already having huge libraries full of games on Steam. Unfortunately, you can't just build a better mousetrap, because you'll be absolutely murdered by Steam's impenetrable network effects. Being Better Isn't Good Enoughįor whatever reason, you've decided not to take my advice and you're still going to take on Steam, either head-on, or trying to mix it up with some neat gimmick.
I'm just saying that if I was an investor considering your pitch, I'd run.
The marketplace definitely needs the competition, and I'm very open to hearing ideas about how to make things better for everyone. This is not to say that in principle I think nobody should ever try to compete with Steam.
Instead of joining a giant feeding frenzy of sharks where you have to fight for your life just to grab a tiny piece (a "Red Ocean"), you swim out to some pristine fishing grounds the other sharks haven't found yet and feast all by yourself. You've probably heard of Blue Ocean Strategy - Nintendo famously did it with the Wii, and by all accounts are repeating the exercise with the Switch. Here's how you can build a successful business that competes directly with Steam: Don't! It continually amazes me how many people are able to invest so much time, effort, and money into a serious business venture without first surveying the impossible task before them. 99% of them are doomed to failure, but the worst part is the vast majority are doomed before they even start. I get a lot of pitches for "Steam competitors" in my inbox.