Alternative distribution is rapidly gaining traction in the PC gaming industry, yet it remains shrouded in misconceptions, particularly regarding the so-called ‘grey market’. Vadim Andreev, co-founder and CEO of the global distribution platform Rokky, aims to clarify these misunderstandings and shed light on the realities of this evolving landscape.
In the realm of PC gaming, few names resonate as strongly as Steam. With an estimated revenue of .8 billion in 2024, Valve’s platform continues to dominate the market, despite the emergence of competitors like the Epic Games Store, which reported .09 billion in revenue last year. Valve’s revenue model, which involves taking a 20-30% cut from sales, has drawn criticism from developers who feel that they are surrendering a significant portion of their earnings to reach Steam’s vast audience of over 132 million users.
However, many developers and publishers are now opting to sell Steam keys through third-party platforms, such as Fanatical and Humble. These alternative storefronts collectively attract traffic that rivals Steam, capturing at least 18% of its visitor numbers and 10% of its gross merchandise value. This shift towards alternative distribution is not without its challenges, particularly the fear of inadvertently contributing to the grey market.
Myth 1: Selling game keys outside Steam is forbidden
Contrary to popular belief, selling Steam keys outside of Valve’s ecosystem is not prohibited. Developers and publishers can request various types of keys from Valve, including standard release keys, which can be sold on other platforms. Valve allows companies to request up to 5,000 standard release keys for this purpose, provided they adhere to pricing guidelines that prevent undercutting Steam’s direct sales.
Myth 2: Marketplaces and e-stores are the same
While both marketplaces and e-stores facilitate the purchase of games outside Steam, they operate under different models. Marketplaces, such as G2A, feature a mix of approved keys from publishers and resold keys from consumers or grey market resellers. In contrast, e-stores like Humble and Fanatical provide a direct line from developers to consumers, ensuring that all keys are legitimate and sourced from publishers.
Myth 3: Anywhere but Steam is a grey market
It’s a common misconception that all alternative distribution channels fall under the grey market umbrella. In reality, the grey market refers to the resale of game keys in a manner that undermines publishers’ profit margins, often due to regional pricing discrepancies. It is not a physical location but rather a concept that can be managed with the right strategies.
Myth 4: The grey market is a natural part of alternative game distribution
Developers often fear that engaging in alternative distribution will lead to a loss of control over their keys, potentially allowing the grey market to flourish. Concerns about regional price manipulation stem from historical instances where keys from lower-cost regions were resold at higher prices in stronger markets. However, there are proactive measures that can be taken to mitigate these risks.
Myth 5: Developers cannot stop the grey market
Despite the challenges posed by the grey market, developers have tools at their disposal to manage and even prevent its emergence. By gaining insight into where and how their keys are sold, developers can implement strategies to control pricing and distribution. Key management platforms can provide visibility into key sales, while region-locking and appropriate pricing adjustments can help maintain fair market conditions.
As the landscape of game distribution continues to evolve, the potential for alternative distribution channels presents exciting opportunities for developers. While the grey market poses real concerns, a thoughtful approach to alternative distribution can lead to reduced fees and expanded access to international markets. In this context, the term ‘opportunity’ may be more fitting than ‘grey market’ when discussing the future of game distribution.
