Steam Key Price Parity Provision. Valve nominally allows game publishers to make some limited third-party sales of Steam-enabled games through its “Steam Keys” program. Steam Keys are alphanumeric codes that can be submitted to the Steam Gaming Platform by gamers to access a digital copy of the purchased game within the Steam Gaming Platform, even when the game is not purchased through the Steam Store. Steam Keys can be sold by rival distributors including the Humble Store, Amazon, GameStop, and Green Man Gaming.
But Valve has rigged the Steam Keys program so that it serves as a tool to maintain Valve’s dominance. Among other things, Valve imposes a price parity rule (the “Steam Key PriceParity Provision”) on anyone wanting to sell Steam Keys through an alternative distributor. Put explicitly by Valve, “We want to avoid a situation where customers get a worse offer on the Steam store.” But that is equivalent to preventing gamers from obtaining a better offer from a competing distributor. The effect of this rule is to stifle price competition.
Because of this rule, Valve can stop competing game stores from offering
consumers a lower price on Steam-enabled games in order to shift volume from the Steam Store to
their storefronts. Even if a rival game store were to charge game publishers a lower commission
than Valve’s high 30% fee, the distributor would not gain more sales because the game publishers
could not charge a lower price in its store. Game publishers and consumers suffer because this
rule keeps Valve’s high 30% commission from being subject to competitive pressure.
This Price Parity Provision is one of the reasons why Valve has been able to
continue to charge an inflated 30% commission for many years, even as that commission is plainly
above the levels that would prevail in a competitive market. Competition would normally force
such an inflated commission to come down to competitive levels—but Valve’s restraints prevent
those competitive forces from operating as they would in a free market.
Because of Valve’s restraint, publishers cannot utilize alternative distributors to
avoid the 30% tax that Valve has set for the market. Thus, they reluctantly market their games
primarily through the dominant Steam Store where Valve takes its 30% fee. While several
distributors have tried to compete with Valve by charging lower commissions on Steam Keys,
those efforts have largely failed to make a dent in the Steam Store’s market share because
publishers using those distributors had to charge the same inflated prices they set on the Steam
Store.
Moreover, even if a game publisher wanted to scale up its use of Steam Keys to
promote competition, Valve has made it clear that it would shut down such efforts. When Valve
recognizes that a game publisher is selling a significant volume of Steam Keys relative to its
Steam Store sales, Valve can, at its own discretion, threaten the game publisher and refuse to
provide more Steam Keys. Thus, Valve uses the Steam Key program as another tool to ensure that
the vast majority of sales take place on the Steam Store, where Valve gets its 30% commission on
nearly every sale.
So if you want to sell steam keys, you need to offer a similar deal on steam as you would wherever you’re selling those steam keys. This doesn’t apply to other storefronts like GOG, Epic, the Ubisoft store, the EA store or the Windows store, this is only about selling steam keys. So if you want to avoid giving Valve a cut of the sale while still using their platform to distribute your game, Valve is going to get upset and take action to prevent you from doing that.
There is also a section about
Price Veto Provision. Valve also requires game publishers to agree to give Valve
veto power over their pricing in the Steam Store and across the market generally (the “Price Veto
Provision”). Valve selectively enforces this provision to review pricing by game publishers on PC
Desktop Games that have nothing to do with the Steam Gaming Platform at all. Through this
conduct, prices set in the Steam Store serve as a benchmark that leads to inflated prices for
virtually all PC Desktop Games.
which I think was the focus of a different lawsuit that mostly talked about a Most Favored Nation clause. This one is a little more complicated, but this lawsuit ended up getting dismissed. I’m not even close to being a lawyer so I don’t know why exactly, but this video seems to make a pretty good argument for why this isn’t a good legal argument. To summarize: there isn’t actually any proof that this kind of clause is actually anti-competitive and violates anti-trust laws. There’s also no telling whether or not other storefronts have similar conditions in place, because apparently these kind of Most Favored Nation clauses are fairly standard in some industries.
Also being realistic if Valve were to drop their cut to 20% game prices wouldn’t change, the publishers would just pocket the difference, as we have seen with Epic.
You can’t point to current publisher behavior on EGS, because their behavior at present is influenced by Valve’s price policy (called the “Platform Most Favored Nation” or “PMFN” clause in the court filing) which is the foundation of the anti-competitive case against Valve.
Looking at your other comment, I can say that Ubisoft tried ditching steam, but their prices didn’t really change even though they were paying a lower commission to epic than they would have to valve. So they would have had the ability change their prices to whatever they wanted on the epic store without fear of valve vetoing the price, because those games weren’t being sold on steam.
Steam clearly wins on features, the only metric to beat them on is price. Epic is trying to do so, but publishers are not actually lowering the cost on their platform because of Valve’s policies—policies which are only effective because a publisher cannot afford to be delisted from Steam due its large market share.
Is there any actual proof of this? Epic is well known for giving games away for free, the best price customers can hope for. Yet they still can’t seem to retain a loyal customer base. Maybe the price isn’t the most important factor for a digital distribution platform.
Yeah, to be honest that portion of the Wolfire case is pretty weak in my opinion. The Wolfire case isn’t only about steam keys, though, it also alleges that the PMFN clause applies to all game listings outside of Steam.
I’m not even close to being a lawyer so I don’t know why exactly, but this video seems to make a pretty good argument for why this isn’t a good legal argument.
I watch the timestamp provided. The video appears to me to suggest that it is a well-founded legal complaint given you can establish the MFN is the cause of the lack of differentiated pricing. The commentator seems to dismiss the idea that such an effect is evident in the information provided, and seems wishy-washy on a lot of his claims about economic principles. I’ll take his word on the legal front, but for the economic side I will turn to the plethora of academic and legal publications on the effects of MFN clauses (which support the anti-competitive effects alleged by the filing).
There’s also no telling whether or not other storefronts have similar conditions in place, because apparently these kind of Most Favored Nation clauses are fairly standard in some industries.
Looking at your other comment, I can say that Ubisoft tried ditching steam, but their prices didn’t really change even though they were paying a lower commission to epic than they would have to valve. So they would have had the ability change their prices to whatever they wanted on the epic store without fear of valve vetoing the price, because those games weren’t being sold on steam.
This is interesting, I was unaware. I’ll have to look into it.
Not to be nitpicky (because this might be solid counter-evidence), but do we know that in a universe without the Steam MFN policy Ubisoft wouldn’t have listed the games concurrently on Steam for 18% higher?
Is there any actual proof of this? Epic is well known for giving games away for free, the best price customers can hope for. Yet they still can’t seem to retain a loyal customer base. Maybe the price isn’t the most important factor for a digital distribution platform.
Strikes me as a little beside the point. A randomly rolled free game once a week is almost nothing compared to the sea of purchases in the game industry. If I want to buy game XYZ, the free weekly does me no good—at most, it gets me to install Epic (which is what they want). But it isn’t going to change the fact that Steam gives more bang for the buck, all else equal.
The fact remains, that Steam is preventing games from being listed for less on Epic. So if price isn’t the most important factor, why does Steam feel the need to impose such a policy?
Not to be nitpicky (because this might be solid counter-evidence), but do we know that in a universe without the Steam MFN policy Ubisoft wouldn’t have listed the games concurrently on Steam for 18% higher?
We can go back and look at the historical prices for The Division 2 and see that Ubisoft didn’t have a lower baseline price on their own store compared to the epic store. So either Epic has an MFN policy as well, or Ubisoft would most likely want to keep their prices consistent across platforms and stores.
Strikes me as a little beside the point. A randomly rolled free game once a week isn’t going to change anyone’s purchasing habits or change the landscape of the marketplace. If I want to buy game XYZ, the free weekly does me no good—at most, it gets me to install Epic (which is what they want). But it isn’t going to change the fact that Steam gives more bang for the buck, all else equal.
That’s the thing: you’re being given a random game every week and that’s still not enough to get people to stick around. The games they’re giving away are often pretty good too, and yet it’s not enough to convince people that the Epic Games Store is worth using. And looking at the store now, it seems they’re just giving back 5% of the money you spend, meaning if you opt into their ecosystem, all their games actually are cheaper. At some point you need to admit that people won’t abandon steam just because prices are lower somewhere else. Because the alternative would mean that piracy would be everyone’s preferred method of getting games.
The fact remains, that Steam is preventing games from being listed for less on Epic. So if price isn’t the most important factor, why does Steam feel the need to impose such a policy?
We also don’t really know that they do. The source saying that the MFN policy exists at all is the CEO of Epic Games saying so on twitter. And I’m pretty sure the lawsuit says that it’s “selectively enforced”, so there aren’t any actual examples of Valve vetoing a game’s price based on the price in another store.
We can go back and look at the historical prices for The Division 2 and see that Ubisoft didn’t have a lower baseline price on their own store compared to the epic store. So either Epic has an MFN policy as well, or Ubisoft would most likely want to keep their prices consistent across platforms and stores.
Thanks for digging that up, interesting to note. Epic might have an MFN, or maybe Ubisoft’s internal publishing overhead is roughly 12%.
That’s the thing: you’re being given a random game every week and that’s still not enough to get people to stick around
I don’t know what you envision when you say “stick around”. Do people uninstall Steam when they install Epic? No, they don’t. You just have both installed. The free game gimmic is for you to download the platform; that’s the first hurdle, but it does little to change your preference between platforms when it comes time to make a purchase.
And looking at the store now, it seems they’re just giving back 5% of the money you spend, meaning if you opt into their ecosystem, all their games actually are cheaper.
Interesting point on the 5%, I was unaware of that.
We also don’t really know that they do. The source saying that the MFN policy exists at all is the CEO of Epic Games saying so on twitter. And I’m pretty sure the lawsuit says that it’s “selectively enforced”, so there aren’t any actual examples of Valve vetoing a game’s price based on the price in another store.
What evidence would be needed to convince you?
Clearly, there is a business case for listing a game for less on Epic (or a publisher’s own site!). We can trust the MFN policy most likely exists. What other explanation for the observed behavior can be put forth?
“Selectively enforced” is the wording used by Valve’s own employee. That could mean anything from “only big, noteable games” to “only enforced when we noticed it” to “actually enforced consistently”. Regardless, it can have a chilling effect that causes everyone to step in line.
I don’t know what you envision when you say “stick around”.
I would expect people to start buying games from the epic games store. They’d be using it regularly and have a sense of ownership over the games they have in their libraries.
What evidence would be needed to convince you?
Honestly, I’m mostly just being pedantic. I’m perfectly willing to believe this kind of clause exists, but I want to acknowledge that at least for now there’s no actual evidence of it.
What other explanation for the observed behavior can be put forth?
For games being the same price on different store fronts? Whatever the justification for selling digital games at the same price as physical games was back when digital purchases were becoming mainstream, or for the same reason that Nintendo games will rarely go on sale: because there are still people willing to pay.
“Selectively enforced” is the wording used by Valve’s own employee.
Is it? Because I pulled the term from the complaint filed Apr 27, 2021 under the Price Veto Provision section. Where did you see a valve employee saying it?
… but I want to acknowledge that at least for now there’s no actual evidence of it.
I wouldn’t call a multi-year class action asserting that a clause exists “no evidence”.
(I mostly continue on this point because I will continue to go around saying Valve uses a PMFN clause, and it’s not unfounded for me to do so)
What other explanation for the observed behavior can be put forth?
For games being the same price on different store fronts? Whatever the justification for selling digital games at the same price as physical games was back when digital purchases were becoming mainstream, or for the same reason that Nintendo games will rarely go on sale: because there are still people willing to pay.
Alright, if you’re not convinced that there ought to naturally be differentiated pricing, and that the uniform pricing we see is artificial, I don’t know where else to go.
Is it? Because I pulled the term from the complaint filed Apr 27, 2021 under the Price Veto Provision section. Where did you see a valve employee saying it?
Ah, I was thinking of the “TomG” quotes here. I see what you’re referencing now, though that doesn’t really make the language as less ambiguous.
Anyway, I enjoyed the discussion but I’m going to call it here. Cheers.
Alright, if you’re not convinced that there ought to naturally be differentiated pricing, and that the uniform pricing we see is artificial, I don’t know where else to go.
I think my point was more that publishers aren’t going to do that. Back when digital wasn’t the default, it was acknowledged that selling a download was a fair bit cheaper and easier than manufacturing disks or carts that could easily be resold by the customer after they were done with it, but the pricing didn’t change to reflect that. This kind of thing has been going on for a long time, and not just with steam.
Anyway, I enjoyed the discussion but I’m going to call it here.
Sure, let’s look at that lawsuit.
So if you want to sell steam keys, you need to offer a similar deal on steam as you would wherever you’re selling those steam keys. This doesn’t apply to other storefronts like GOG, Epic, the Ubisoft store, the EA store or the Windows store, this is only about selling steam keys. So if you want to avoid giving Valve a cut of the sale while still using their platform to distribute your game, Valve is going to get upset and take action to prevent you from doing that.
There is also a section about
which I think was the focus of a different lawsuit that mostly talked about a Most Favored Nation clause. This one is a little more complicated, but this lawsuit ended up getting dismissed. I’m not even close to being a lawyer so I don’t know why exactly, but this video seems to make a pretty good argument for why this isn’t a good legal argument. To summarize: there isn’t actually any proof that this kind of clause is actually anti-competitive and violates anti-trust laws. There’s also no telling whether or not other storefronts have similar conditions in place, because apparently these kind of Most Favored Nation clauses are fairly standard in some industries.
Looking at your other comment, I can say that Ubisoft tried ditching steam, but their prices didn’t really change even though they were paying a lower commission to epic than they would have to valve. So they would have had the ability change their prices to whatever they wanted on the epic store without fear of valve vetoing the price, because those games weren’t being sold on steam.
Is there any actual proof of this? Epic is well known for giving games away for free, the best price customers can hope for. Yet they still can’t seem to retain a loyal customer base. Maybe the price isn’t the most important factor for a digital distribution platform.
Yeah, to be honest that portion of the Wolfire case is pretty weak in my opinion. The Wolfire case isn’t only about steam keys, though, it also alleges that the PMFN clause applies to all game listings outside of Steam.
I watch the timestamp provided. The video appears to me to suggest that it is a well-founded legal complaint given you can establish the MFN is the cause of the lack of differentiated pricing. The commentator seems to dismiss the idea that such an effect is evident in the information provided, and seems wishy-washy on a lot of his claims about economic principles. I’ll take his word on the legal front, but for the economic side I will turn to the plethora of academic and legal publications on the effects of MFN clauses (which support the anti-competitive effects alleged by the filing).
Also it looks like the Colvin wasn’t dismissed, it was consolidated into the Wolfire class-action.
Yep, and the MFN is also a point in the monopoly proceedings against Amazon.
This is interesting, I was unaware. I’ll have to look into it.
Not to be nitpicky (because this might be solid counter-evidence), but do we know that in a universe without the Steam MFN policy Ubisoft wouldn’t have listed the games concurrently on Steam for 18% higher?
Strikes me as a little beside the point. A randomly rolled free game once a week is almost nothing compared to the sea of purchases in the game industry. If I want to buy game XYZ, the free weekly does me no good—at most, it gets me to install Epic (which is what they want). But it isn’t going to change the fact that Steam gives more bang for the buck, all else equal.
The fact remains, that Steam is preventing games from being listed for less on Epic. So if price isn’t the most important factor, why does Steam feel the need to impose such a policy?
For that fact to “remain,” it would need to have been established in the first place. At best it’s been alleged.
We can go back and look at the historical prices for The Division 2 and see that Ubisoft didn’t have a lower baseline price on their own store compared to the epic store. So either Epic has an MFN policy as well, or Ubisoft would most likely want to keep their prices consistent across platforms and stores.
That’s the thing: you’re being given a random game every week and that’s still not enough to get people to stick around. The games they’re giving away are often pretty good too, and yet it’s not enough to convince people that the Epic Games Store is worth using. And looking at the store now, it seems they’re just giving back 5% of the money you spend, meaning if you opt into their ecosystem, all their games actually are cheaper. At some point you need to admit that people won’t abandon steam just because prices are lower somewhere else. Because the alternative would mean that piracy would be everyone’s preferred method of getting games.
We also don’t really know that they do. The source saying that the MFN policy exists at all is the CEO of Epic Games saying so on twitter. And I’m pretty sure the lawsuit says that it’s “selectively enforced”, so there aren’t any actual examples of Valve vetoing a game’s price based on the price in another store.
Thanks for digging that up, interesting to note. Epic might have an MFN, or maybe Ubisoft’s internal publishing overhead is roughly 12%.
I don’t know what you envision when you say “stick around”. Do people uninstall Steam when they install Epic? No, they don’t. You just have both installed. The free game gimmic is for you to download the platform; that’s the first hurdle, but it does little to change your preference between platforms when it comes time to make a purchase.
Interesting point on the 5%, I was unaware of that.
What evidence would be needed to convince you?
Clearly, there is a business case for listing a game for less on Epic (or a publisher’s own site!). We can trust the MFN policy most likely exists. What other explanation for the observed behavior can be put forth?
“Selectively enforced” is the wording used by Valve’s own employee. That could mean anything from “only big, noteable games” to “only enforced when we noticed it” to “actually enforced consistently”. Regardless, it can have a chilling effect that causes everyone to step in line.
I would expect people to start buying games from the epic games store. They’d be using it regularly and have a sense of ownership over the games they have in their libraries.
Honestly, I’m mostly just being pedantic. I’m perfectly willing to believe this kind of clause exists, but I want to acknowledge that at least for now there’s no actual evidence of it.
For games being the same price on different store fronts? Whatever the justification for selling digital games at the same price as physical games was back when digital purchases were becoming mainstream, or for the same reason that Nintendo games will rarely go on sale: because there are still people willing to pay.
Is it? Because I pulled the term from the complaint filed Apr 27, 2021 under the Price Veto Provision section. Where did you see a valve employee saying it?
I wouldn’t call a multi-year class action asserting that a clause exists “no evidence”.
(I mostly continue on this point because I will continue to go around saying Valve uses a PMFN clause, and it’s not unfounded for me to do so)
Alright, if you’re not convinced that there ought to naturally be differentiated pricing, and that the uniform pricing we see is artificial, I don’t know where else to go.
Ah, I was thinking of the “TomG” quotes here. I see what you’re referencing now, though that doesn’t really make the language as less ambiguous.
Anyway, I enjoyed the discussion but I’m going to call it here. Cheers.
I think my point was more that publishers aren’t going to do that. Back when digital wasn’t the default, it was acknowledged that selling a download was a fair bit cheaper and easier than manufacturing disks or carts that could easily be resold by the customer after they were done with it, but the pricing didn’t change to reflect that. This kind of thing has been going on for a long time, and not just with steam.
Fair enough, good night.