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Business Operations Business Models

How Does Steam Make Money (Business and Revenue Model)

The Steam business model

Steam logo
Here’s what you should know:
  • What is Steam, and how does Steam work?
  • How does Steam make money?
  • Commission from game sales (collected from gaming developers)
  • Transaction Fees (collected from buyers)
  • Direct Fees for developers to distribute games (Steamworks)
  • Licencing Fees (through Steam PC Café Program)
  • Selling Physical Products (Steam Store)
  • Steam profit and revenue
  • What is the Steam business and revenue model?
  • Steam funding, net worth, and valuation
  • Steam subsidiaries, acquisitions, and exits

How does Steam make money? Well, here is a full, in depth, breakdown of their five (5) revenue streams and the different products and services they offer, as well as the Steam business and revenue model, how much Steam makes per year, and how Steam works.

What is Steam, and how does Steam work?

Steam is a digital gaming distribution and storefront platform that enables the community of gamers to connect, build, and play with each other.

Steam was developed and released in 2003 as a software client by Valve Corporation.

Today, Steam now has more than 50,000+ games listed on Steam that attracts more than 132 million monthly active users to its platform, making it one of the world’s top go-to gaming platforms for gamers.

So, how does Steam work? To get started playing on Steam, you can first start by creating an account on their website and then downloading Steam onto your PC by clicking the “Install Steam” button.

Once you’ve downloaded Steam, you can then preview, purchase, and install Steam games by heading over to the Steam Store and searching games by genre or category.

Steam App in Apple App Store | Steam Business Model | How Does Steam Make Money? | How Does Steam Work?
Source: Apple App Store | Steam

How does Steam make money?

According to Steam, Steam has grown to have more than 50,000+ games listed that attracts more than 132 million monthly active users to its platform.

So how does Steam make money off of all these users and games?

Below is a breakdown of how much money Steam makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 5 ways of how Steam makes money in 2022

Steam has a revenue model that makes money in five (5) ways; from the commissions from game sales it collects, transaction fees, fees from Steamworks, licensing fees through the Steam PC Café Program, and by selling physical gaming products.

#1. Commission from game sales (collected from gaming developers)

One of the ways Steam makes money is through the revenue they split with developers from each game sale made on the Steam platform.

From Steam’s last reported and verified game sales that came in 2017, Steam reportedly generated $4.3 billion USD from game sales that year. (Which, is safe to say it has only grown since then.)

Of that, Steam takes a 20% to 30% cut from all of that revenue generated from those gaming sales. Which you can see the revenue spit breakdown below.

How much does Steam take from sales? (Steam commission fee)

  • Under $10 million in revenue: 30% of each game sold
  • $10 to $50 million in revenue: 25% of each game sold
  • Over $50 million in revenue: 20% of each game sold
Steam Store | Steam Business Model | How Does Steam Make Money? | How Does Steam Work?
Source: Steam | Engadget

#2. Transaction Fees (collected from buyers)

Steam also charges a fee and makes money from the customers buying the games as well.

The Steam Transaction Fee is 5% of the items cost and, according to Steam, is “used to protect against nominal fraud incidents and cover the cost of development of this and future Steam economy features.”

How much are Steam transaction fees?

  • 5% of every transaction (with a minimum fee of $0.01)

#3. Direct Fees for developers to distribute games (Steamworks)

Another fee Steam charges its gaming developers are what they call a Steam Direct Fee.

Steam Direct Fees are what Steam charges a developer each time they want to distribute a new app, for sale and play, onto the Steam platform.

As noted above, Steam has more than 50,000+ games on its platform. Some quick math would suggest Steam made $5+ million USD so far off of this 1 fee alone.

How much is the Steam direct fee? (Steam distribution fees)

  • $100 USD fee for each app a developer distributes onto the Steam platform

Note: Steam makes money from its developers in a few ways. By first charging them a Direct Fee to distribute the game onto Steam, and then also collecting a percentage of each game sale once it’s distributed.

#4. Licencing Fees (through Steam PC Café Program)

Steam also makes money from the licensing fees that gaming developers pay Steam to make their gaming content available to be licensed for commercial use on Steam PC Café.

Steam PC Café is a program that allows public venues like internet cafés, schools, clubs, museums, and galleries to license content from Steam’s library of commercially-licensed Steam and SteamVR titles to use in their own venues.

And to make a developer’s content available to be commercially licensable in these settings, they must pay Steam a one-time installation fee and an ongoing monthly fee to make it possible. Which you can see below.

How much does Steam PC Café cost? (Steam licensing fees)

  • $29.99 USD (one-time installation fee), then $9.99 USD per month, per license to keep the licence(s) active

#5. Selling Physical Products (Steam Store)

Lastly, Steam makes money selling its own physical products through its official online Steam Store.

Here, they sell Steam VR headsets, controllers, the Steam Deck, and more gaming hardware and replacements that can range in price between $39 to $999+ with new products being added to the store.

Steam profit and revenue

Steam has not released any official reports in regards to company earnings.

Note: Because Steam is a privately held company, they are not required to make their annual reporting, such as Form 10-K’s, pubic.

What is the Steam business and revenue model?

Steam makes money through a few revenue models that they combine within their company, they are:

  • Commission based business model
  • Subscription business model
  • Fee for service (FFS) based business model
  • Transaction based business model
  • Licensing business model
  • Business to business (B2B) business model
  • B2B2C (partnerships) business model

Steam funding, net worth, and valuation

Steam’s Crunchbase profile shows Steam has not raised any money to date.

Steam subsidiaries, acquisitions, and exits

To date, Steam has not made any acquisitions, investments, or exits.