Where is my money, dude: what is silent Steam

    This is the first of six articles in which I want to review the entire process of publishing games on PC from beginning to end. Let's leave the development behind the brackets - besides it, many other adventures await you. Choosing a publisher or self-publishing, localizing and adapting the game, marketing and PR, choosing prices and planning discounts, working with publishers, distributors and intermediaries.

    We will talk a lot about Steam, the largest open platform for games, then we will look at the 3rd-party distribution and alternative sales options. Before you find your own answers - let's take a sober look at how the game flywheel works now.

    Sorry, guys, but it will be a very mercantile article with numbers and percentages - I believe that if the creation of games is your passion and craft, without them it is difficult to confidently go forward. Let's start with prices, discounts and how the desired list works on Steam.

    Let's start from the middle?

    It is from the middle - we will remove the rose-colored glasses, arm ourselves with a calculator, a school course of mathematics and a drop of patience to calculate the cost of your game.

    Right now, we are only interested in one figure - how many copies you need to sell, so that your game pays off and you don’t go out to sell a kidney on the black market or leave a rented house on bail.
    Imagine that you are planning to spend $ 100,000 on developing and marketing and selling your game for $ 20. Turn on pragmatics - $ 100,000 / $ 20 = 12,000 copies before the return on investment. Did you get 5,000? It seems you think wrong - let's understand why.

    Let's say you want to release a game in North America, Western Europe and the UK, Russia and China. In territories with large exchange differences, instead of $ 20, we will need to use the concept of “average price”, since The cost of your game in these countries will be different.
    In 2017, Sergey Galenkin wrote a very interesting overview of the state of affairs on Steam - the distribution of revenue on the cost of the game, sales growth, reduction in the cost of games, the average number of game owners. Be sure to read if you have not done so yet.

    Now we are interested in countries for which historically established prices are not directly converted, like the dollar exchange rate to the national currency. So, the equivalent of the price of $ 20, which Steam offers in China - Ұ70 (~ $ 10), in Russia - $ 46 ($ 8).

    If we take into account that 50% of the copies sold will be in the USA ($ 20) and Europe (17.2 € or $ 20), 25% in Russia ($ 8) and 25% in China ($ 10), the average price will be $ 14.5 , the number of copies we need to sell in order to recoup the creation of the game is 6,896.
    The more copies you sell in regions with a higher price (North America and Europe), the stronger the average cost will tend to the originally stated figure.

    We take into account that there are returns on all large digital distribution sites, and customers use them. You will never have a situation with zero returns to Steam - there will always be dissatisfied or players with technical problems. You should pay from 2.5% to 5%, I will be a pessimist - given this factor, we will need to sell at least 7.258 copies (with 5% of returns).
    Let's leave the exact calculation of taxes (VAT and GST) a little bit aside - this is a difficult question, which depends on what country your company is registered in, the user from which country buys the game, the existence of an agreement on the elimination of double taxation between your country and the store .

    On my own experience, I can say that with global sales for a company from Cyprus, the share of VAT losses from revenue is around 4.5% or 7,600 copies.

    Somewhere here you should have been a bit annoyed, right? Exhale, it's time to share profits. Platforms take ~ 30% and for payback you need to sell at least 10.875 copies.

    You should also remember about income taxes that you pay in your country. For example, if your company from Germany profits from commercial activities are taxed at 15.825%, and the number of copies sold at full price must be at least 12.919.
    Copies = Your budget / (Average price * Platform share * Returns * Taxes)

    Yes, yes, I can’t calm down with the price. We also have no opportunity to consider the average price the same over the course of the year - discounts, sales and special promotions will lower it. And after your winning march in the first months with sales at full price, the average annual price will be 25% - 30% lower than at the start of sales.

    Damned mines? Sales !!!

    It should immediately accept and accept that all modern distribution of PC games is based on sales and we will start with Steam.

    You are waiting for two large and open annual sales, summer and winter, the opportunity to participate in the Weeklong Deals - this sales, which are held every week and begin on Monday. You can also launch your own sale - choose the time, discount, write what this sale is about.
    Plan your release so that it does not overlap with the summer or winter sale. Think about when to launch the first sale - after it ends, your sales at full price will fall, and it will be difficult for you to return them to the previous level. Remember that discounts on Steam are summed up. Think strongly about the feasibility of release on Friday - you can run into Weekend Deal and the big sale back catalog of a major publisher like Ubisoft, which will shift the focus of a wide audience from your release on AAA games with a 70% discount.

    There are special promotions that you can try to negotiate with your personal Steam manager: Daily Deal, Weekend Deal, Midweek Madness or special sales that are constantly held during the year, for example, the best games of a certain genre or games from a particular country.

    The possibility of participating in special promotions is in a sense a lottery. This is one reason to think about the publisher. A publisher who works with Steam for quite a long time has a better chance of getting such an offer for you.

    Find where Weeklong Deals and the summer sale were? When discounts start on Steam (except for the one that you set yourself), you automatically get a good feature for a short time and a lot of traffic. Each sale will bring you a big jump associated with the arrival of money and the audience, each time the audience of your wish list will jump.

    It is believed that sales start to work well with 20%. If you have already reached the level of 50%, forget that your sales in organics will work as well as before.

    Remember, you cannot run Weeklong Deal more than once every 60 days. Other things being equal during the year you will not be able to participate in more than five or six (most likely five) promotions. Total, in addition to the release, you have 5 - 6 points of growth, and the cost of the game after closing the release window will correlate with an average discount that applies to the whole year. Soon we are waiting for the return of the format Flash Sales, which will give the opportunity to run discounts for 6, 8, 10 or 12 hours.
    Any large sales increase the percentage of returns.

    In addition to discounts on Steam there is another cool tool - coupons. This coupon with a 14-day discount can be issued to all users of one of your games for another of your games. The average discount on such coupons is 15 - 25%, and it works very well if your game has a large audience. Such coupons cannot be turned on by yourself; you can only ask them to create a Steam manager.

    This is not the most popular tool for the Steam manager, since the creation of such coupons is the handmade work of their technical specialists. If your game has more than 200,000 installations, you will most likely go to a meeting. This, by the way, is the second important bonus for working with the publisher - he may already have products with a large audience and experience with coupons.

    It is also worth thinking about such a tool as Steam bundles, which may include not only DLC sets, but also other games, including games from other studios and publishers. Think with which of the colleagues in the shop you would like to be sold together and try to discuss this opportunity in advance.

    Steam wishlist

    We have already decided that in order to pay back our game, we need to sell at least ~ 13,000 copies at full price and it is best to do it in the first month of sales, until discounts have been taken. Let's understand how the wishlist can help us. In other words - let's count how many people you should have on your wish list to plan sales.

    All the companies I know have their own ideas about how the desired list works in Steam and is converted. What I am going to tell now is my personal experience plus the experience of those colleagues with whom I constantly communicate on this subject, and the statistics that Steam shows in its tools for developers.

    Find yourself release date and sales? Among the Steam metrics associated with the desired list, we are interested in one thing - the percentage of users converting from the desired list into buyers.

    This figure is constantly changing and at the time of this writing, Steam partner tools indicate that a conversion of 5.0% - 7.5% is normal in the first 3 months from the start of the game, up to 12.5% ​​in the first 6 months and in the area 15.2% in the first year.
    There are examples of games and companies whose conversion ranges from 19% to 30%. Please be pessimistic - if you are lucky, there will be a reason for joy. If not - you will not be upset.

    On Steam, nothing is given for nothing. And the situation in which the top 100 games will make 90% of the box office will not change, because they sell well and everyone knows how to count their money. After you have received your ad impressions to launch the game, you do not have so many options within the Steam ecosystem - discounts that will attract new users and mailings to people on your wish list.

    You also have several cycles of impressions - five cycles of 500,000 impressions each, dedicated to important news and updates. They are shown only to users who have already bought the game or added it to the list. On average, this conversion from 1.9% to 4.2% so do not count on the high importance of this tool. You can earn new show cycles if your game sells well and the news has a high rating.
    Estimated that in 2018 you had to make at least 2,000 sales a day to stay at the top of Steam sales and at least 700 to 1,000 to keep getting enough organic hits.

    Notice that your game is out will be sent to all users on your desired list, so the bigger the better, it will give your game a surge in sales in the early days and raise the game to the sales tops, where it will receive organic traffic that will lead to new sales. Here is such a cycle.

    After the release, Steam will give you about one million impressions, on the basis of which it will be concluded about your conversions and expediency of the new traffic. If you have good performance, you will receive traffic until they deteriorate, and good sales are waiting for you. Separate examples show that companies that invest a lot in engaging the audience and advertising their brand and increase their loyal audience, keep in the tops for months and years. This is not because they have agreed with the conditional Steam manager and gave him money, but simply because their sales have been high for quite some time.
    Think about early access - there are many articles that say how it can be useful to you. This is not 100% early money - rather a unique opportunity to solve its technical and conceptual problems and test the quality of marketing materials.

    Steam never reveals the internal structure of its rotation mechanisms, and developers and publishers are trying to analytically and empirically understand how they work. On Reddit, discussions periodically flare up on how this can work, how it can be hacked.

    It's time to uncover calculators - taking into account the 5% conversion from the desired list to purchases within the first month, we need at least 40,000 people in the desired list to sell 2,000 copies per month. This simple and rough mathematics gives us confidence that, regardless of other factors, we can predict a fixed number of sales.

    There are different views on how the desired list is converted into purchases on a time interval of one year. I know at least two diametrically opposed techniques. According to the first, using the sales on Steam (both seasonal and those that you can run independently), you can convert up to 70% of the audience in 2-3 years. Those. If today you have 40,000 people on your wish list, then eventually you will sell them about 28,000 copies. The second technique says that in the entire life cycle of the game you will not sell copies any more than you have users in your wish list at the time of the start of sales. This is a more pessimistic model of forecast, in which of them to believe - decide for yourself.

    In the graph above, the number of additions to the wish list and the balance is the number of additions minus the purchases and deletions made. Bear in mind that with a large number of games, the list of desired never decreases. With each of your activities, a large number of people will add the game to the wish list and will wait for the price offer that suits them and you will only have to guess what it is to do to make these subscribers convert to sales.

    Table of contents

    - Pricing, discounts and wish list on Steam (we are here now).
    - Regional restrictions, third-party distribution and alternative open platforms.
    - Bandles, funds and vendor support, crowdfunding
    - How much and how does translation of games and LQA work.
    - Marketing, PR and publisher search.
    - What about consoles?

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