Stephane Rappeneau

2024-06-03

Steam Platform Revenue Planner Tutorial

Welcome to the Steam Platform Revenue Planner tutorial! This guide will help you understand the key parameters that influence your game's sales and revenue estimates over the next three years. We will break down the parameters into four main parts: Funding from Studio and Publisher, Game Distribution, Wishlist, and Discounting Strategy.

1 - Funding from Studio and Publisher

Adequate funding from both the studio and publisher is crucial for a successful game launch and sustained sales. The recoupable costs and revenue shares determine the financial dynamics between the studio and publisher.

Studio Investment: The amount of money the studio is investing in the game's development and marketing. This capital allocation helps develop the game, potentially enabling the studio to negotiate lower revenue sharing percentages with publishers.
Publisher Funding: The amount of money the publisher is contributing to the game's development and marketing. Publishers invest for a share of the revenue, which can enhance the game's marketability and reach, though it requires profit sharing.
Publisher Recoupable Production Costs: The portion of the publisher's funding allocated to production that must be recouped from sales. These are costs the publisher aims to recover from the game’s revenue before the studio starts receiving its share of profits.
Publisher Recoupable Marketing Costs: The portion of the publisher's funding allocated to marketing that must be recouped from sales. Similar to production costs, these marketing expenses must be recovered before profit sharing with the studio.
Studio Share Until Recoup (%): The percentage of revenue the studio receives until the publisher's costs are recouped. This determines the studio's share of early revenue, affecting their initial financial return from the game. If studio share before recoup is low and the game underperforms, it increases the risk of bankruptcy.
Studio Share After Recoup (%): The percentage of revenue the studio receives after the publisher's costs are recouped. This percentage impacts the long-term financial benefit to the studio after the initial expenses are covered by sales.

2 - Game Distribution

Effective distribution strategies can significantly enhance your game's reach and sales. Choosing the right release date, platforms, and localization options, combined with a strong marketing campaign, can drive higher initial and long-term revenue. Please note that our revenue planner doesn’t use localization and platform availability, as those sales enablers can be adjusted after a successful launch for increased reach.

Release Date: The planned release date of the game. Timing affects sales due to competition, seasonal trends, and gaming events, with a well-timed release maximizing visibility and sales.
Platform Availability: The number of platforms (PC, console, mobile) on which the game will be available. Releasing on multiple platforms broadens your audience and can significantly increase sales.
Localization: The number of languages the game will be translated into. Translating your game into multiple languages makes it accessible to a broader audience, thereby expanding your market reach.
Marketing Budget: The amount of money allocated for marketing. A larger budget allows for more extensive advertising and promotional activities, boosting game awareness and potential sales.
Distribution Fee: The percentage fee taken by the distribution platform (e.g., Steam). This fee is deducted from sales revenue, representing the cost of hosting and selling the game on the platform.
Taxes (VAT, %): The value-added tax percentage applied to sales. This tax reduces the net revenue from sales as it is paid out to the government.

3 - Wishlist

Wishlists are a strong indicator of potential sales. High wishlist numbers and conversion rates can lead to a successful launch, while ongoing growth in wishlists suggests sustained interest and future sales.

Steam Wishlists at Launch: The number of users who have added the game to their wishlist at launch. A higher number indicates strong pre-release interest, suggesting strong potential sales.
Gross Wishlist Variation per Week: The change in the number of wishlists per week. This metric tracks ongoing interest in the game, with variations influenced by marketing efforts and game updates.
Week 1 Wishlist Conversion Ratio: The percentage of wishlisters who purchase the game in the first week after release. This reflects the initial sales strength and how well pre-launch interest translates into actual sales.

4 - Discounting Strategy

A well-planned discounting strategy can significantly boost sales, especially during periods of decline. Balancing discounts, understanding the inflection points, and maintaining positive user reviews are crucial for maximizing long-term revenue.

Normal Price: The regular selling price of the game. This is the base price at which the game is sold without any discounts, setting the standard valuation of the game.
Virality Multiplier Due to Discounting: The increase in sales due to the viral effect of discounts and generally better visibility due to platform algorithms. Discounts can significantly boost sales through enhanced visibility and word-of-mouth.
Number of Weeks Without Discount: The duration the game is sold at its normal price before applying any discounts. Selling at full price initially maximizes early revenue from dedicated fans.
Duration of the Discount in Weeks: The length of time the discount is active. While long discounts can sustain sales, they may also reduce the perceived value of the game.
Refund Rate (%): The percentage of sales that are refunded. High refund rates can negatively affect net revenue and may indicate issues with the game's quality or customer satisfaction.
Inflexion: The point in time when the sales start to decline, which can also model a sudden popularity explosion with a positive inflexion slope. Identifying this helps plan effective discount strategies.
Steepness of Decline: The rate at which sales decrease after the inflection point. This affects how aggressive your discounting strategy needs to be.
Week of Decline (Inflection Point): The specific week when the decline in sales begins, crucial for planning timely discounts and marketing efforts.
User Review: The average user review score, impacting sales and public perception. Positive reviews enhance sales and reputation, while negative reviews can deter potential buyers.
Min Discount: The smallest discount percentage applied during sales promotions. Smaller discounts can still boost sales without significantly reducing revenue per unit.
Max Discount: The largest discount percentage applied during sales promotions. Larger discounts can increase the volume of sales but may reduce per-unit revenue, affecting overall profitability.

By understanding these parameters and how they interact, you can better plan and predict your game's financial performance on the Steam platform. For other distribution platforms such as Epic Game Store, you can tweak parameters such as distribution fee (Epic fee is lower at ~12%) and adjust user review scores to similar values. Effective use of funding, distribution, wishlisting, and discounting strategies can significantly enhance your game's success.