For the last two decades, Valve’s Steam has grown into a gigantic hub for distributing PC games. It’s become one of the most important marketplaces in the entire gaming industry.

Valve’s market position in PC gaming is undeniably dominant. Various estimates suggest that Steam commands a vast majority of digital PC game sales, and one lawsuit even made the claim that Valve rakes in roughly 75% of all PC game revenue, largely thanks to the 30% commission it takes on each sale. That 30% commission isn’t unique to Valve, though there’s nuance to that. Epic Games waives the fee entirely for the first $1,000,000 in revenue, whereas Valve decreases the percentage for games that earn more money.

Even Amazon couldn’t break the monopoly

Amazon’s own gaming foray is a great case study, with the company’s former Vice President of Prime Gaming, Ethan Evans, admitting defeat to Valve in a LinkedIn post.

“As VP of Prime Gaming at Amazon, we failed multiple times to disrupt the game platform Steam. We were at least 250x bigger, and we tried everything. But ultimately, Goliath lost.”

Amazon tried multiple strategies: it bought a small digital distributor (Reflexive Entertainment), integrated a games store into Twitch, and even launched the Luna cloud gaming platform. None gained traction. As Evans admits, Luna “went largely unnoticed” while Steam’s “uncontested dominance” persisted, and he goes further to state that Amazon “underestimated the power of existing user habits.” Gamers saw Steam as “a store, a social network, a library, and a trophy case all in one” and simply weren’t going to abandon it for a new platform without a dramatically better offering. In other words, Valve’s so-called monopoly endures not because of a lack of challengers, or because of shady practices, but simply because nobody is better. This “monopoly of quality” is reinforced by powerful economic barriers that aren’t necessarily in Valve’s control. It’s not just that Steam’s store is better; it’s that its high switching costs (losing access to a curated library spanning multiple decades) and powerful network effects (the entire social graph of friends lists and communities) create a sticky ecosystem that rivals like Amazon simply cannot break with money alone.

Why did other rivals not try?

It’s not for lack of trying by rivals, either, that nobody has broken Valve’s iron-clad grip on gamers. Epic Games, backed by Fortnite and Unreal Engine, launched a high-profile challenger store in 2018, enticing developers with lower fees and showering users with free games and exclusive titles. Yet, years later, Steam remains the default. Even generous giveaways of high-profile games haven’t broken gamers’ entrenched habits, as users just pick up free games when it suits them, rather than completely switching to that competing platform. The network effects Valve has cultivated (friends lists, achievement systems, huge game libraries, mod workshops, and more) make switching costs high for consumers, not to mention the decades of game libraries people hold on the platform. Valve has a big first-mover advantage here because of that.

The question of whether Valve abused its position is all that matters

Where things get more contentious is whether Valve has abused its dominance to unfairly maintain that position, as that’s the crux of any legal monopoly question. Under U.S. law, having a monopoly isn’t illegal on its own; it only becomes a problem if the company abuses that power to stifle competition or harm consumers. Valve’s defenders will argue that the company earned its status by innovating and serving customers well, not through underhanded or predatory tactics. Steam won on PC largely by being the better product in the eyes of consumers. This is why many gamers remain comfortable with it, noting that Steam’s feature set and user experience outshine its competitors. You’ll often hear gamers make arguments that Steam is good for gamers, and other services that maintain a similar dominance, such as YouTube, are in that position just by virtue of being better.

With all of that said, it’s not all  positives for gaming’s beloved giant. Critics and competitors have pointed out several Valve practices that do threaten to cross that line of monopolistic abuse. One major sticking point is the Steam’s platform rules preventing price competition, though even that has been misinterpreted widely. In a legal filing, it was alleged that Valve has long insisted on a form of “most-favored nation” clause with game publishers. It claimed that if you sell your game on Steam, you aren’t allowed to offer it for less on any other store, nor offer extra content on a rival platform as an enticement. 

What do the Developers say?

Atomik Research has shared the findings of its survey, “The State of PC Game Distribution,” through the PC distribution platform Rokky (via GamesIndustry.biz). The survey was conducted in May of this year with responses from 306 industry executives in the United States and the United Kingdom.

According to the results, 72% of all responding executives felt that Steam has a monopoly on the PC games market. The survey participants also acknowledged that Steam sales provide over 75% of their revenue. But only 32% of responding executives said that their companies still support physical media of some form.

As Steam is the only one providing the game developer’s enough money to support their families due to the large customer base that they have no choice and have to continue to stick with them. This means customers also stick with Steam as it has the games they want to play. This becomes into a endless loop where Steam just keeps benefiting.

Who is fighting against the monopoly of Steam?

There are severals lawsuits against Steam and one notably being Valve Collective Action. It is a £656 million lawsuit against Steam for having a monopoly in pc gaming. The lawsuit accuses Valve Corporation of shutting out competition in the PC gaming market by forcing game publishers to sign up to ‘price parity’ obligations that dictate Steam always has the ‘best price’ and prevents the same games being sold at a cheaper price on rival platforms.