They do not have investors constantly forcing maximization of short term profits at the cost of literally everything else.
I fantasize about the idea of starting private companies for things currently dominated by public companies, with the sole idea of not being greedy and shitty.
Probably the biggest advantage they have is that they can sell devices at cost or even at a loss and still profit from increased Steam game sales, like how other console makers operate.
3rd parties can’t compete with that. Not even close. If there’s no profit from the device itself, there’s no motivation to make it. And apart from the hardware cost, they also need to pay for the R&D and corporate maintenance. They can’t compete with the Steam Deck. If they made an exact Steam Deck clone, they’d have to make it, idk ~$40 more to make a profit, but no one would buy it because the Steam Deck is the same for less. They have to give it slightly higher specs to give it a niche. That might take hardware cost up to $500 and then charge $150 more to make up for the distributor fees and then $100 to make it actually profitable. But at that point, they’ve already lost most budget and casual gamers, they might as well aim at whales and enthusiasts and make profits $300. If a $950 device sells half as well as a $750 device, it’s still more profitable.
The Steam Deck is not sold at a loss. The initial pricing for the 64 GB unit was barely profitable, but this quickly changed with production ramping up.
This was confirmed by Valve themselves in an interview that happened months after Gabe’s famous comments about the pricing.
So yes, Valve profits from the games too, but that’s not used to subsidize the Steam Deck’s price.
Yep, this is a good explanation of more of the nitty gritty of it in more granular detail!
When you can afford to eat some of the cost… or… you don’t have shareholders telling you not to do that… well, then you get good ole ‘how capitalism is supposed to work! ™’.
Problem of course being that uh, you can just chase the luxury market for greater profit margins, stop making shit for the poors… this can work well in the short/medium term, but in the long run… if everyone does that…
… then you destroy your customer base, and the entire economy, and probably yourself.
And that’s not even getting into how companies have their own version of ‘keeping up with the joneses’… its called going into massive debt to fund an expansion because your competitor just did that… and then going into more debt to finance a stock buyback… but hey nbd, companies can fail and go bankrupt, no problem, everyone other than those helming the ship get fucked, they get golden parachutes.
Sure would be neat if we maybe had some other kind of system idk
I honestly don’t understand why most companies aren’t private instead of public. Like which founder looks forward to answering to investors when they could just be answerable to themselves and their employees and maybe board, like are they looking for a massive exit payout by going public or to raise funds to become a bigger company, but I argue if you are making enough to be profitable why chase being bigger
Two things massively help Valve:
Steam is a goddamned money printing machine, they are the most profitable software company per capita, per employee… possibly bar none.
Also… they’re not publically traded.
They do not have investors constantly forcing maximization of short term profits at the cost of literally everything else.
… So they can afford to … not price gauge everyone.
They must be too busy enabling children gambling on hats
I fantasize about the idea of starting private companies for things currently dominated by public companies, with the sole idea of not being greedy and shitty.
Probably the biggest advantage they have is that they can sell devices at cost or even at a loss and still profit from increased Steam game sales, like how other console makers operate.
3rd parties can’t compete with that. Not even close. If there’s no profit from the device itself, there’s no motivation to make it. And apart from the hardware cost, they also need to pay for the R&D and corporate maintenance. They can’t compete with the Steam Deck. If they made an exact Steam Deck clone, they’d have to make it, idk ~$40 more to make a profit, but no one would buy it because the Steam Deck is the same for less. They have to give it slightly higher specs to give it a niche. That might take hardware cost up to $500 and then charge $150 more to make up for the distributor fees and then $100 to make it actually profitable. But at that point, they’ve already lost most budget and casual gamers, they might as well aim at whales and enthusiasts and make profits $300. If a $950 device sells half as well as a $750 device, it’s still more profitable.
Edit: more realistic numbers
The Steam Deck is not sold at a loss. The initial pricing for the 64 GB unit was barely profitable, but this quickly changed with production ramping up.
This was confirmed by Valve themselves in an interview that happened months after Gabe’s famous comments about the pricing.
So yes, Valve profits from the games too, but that’s not used to subsidize the Steam Deck’s price.
Could there be an argument about the R&D costs not being factored in there? So for companies that can’t compete, its literally a skill issue.
Yep, this is a good explanation of more of the nitty gritty of it in more granular detail!
When you can afford to eat some of the cost… or… you don’t have shareholders telling you not to do that… well, then you get good ole ‘how capitalism is supposed to work! ™’.
Problem of course being that uh, you can just chase the luxury market for greater profit margins, stop making shit for the poors… this can work well in the short/medium term, but in the long run… if everyone does that…
… then you destroy your customer base, and the entire economy, and probably yourself.
And that’s not even getting into how companies have their own version of ‘keeping up with the joneses’… its called going into massive debt to fund an expansion because your competitor just did that… and then going into more debt to finance a stock buyback… but hey nbd, companies can fail and go bankrupt, no problem, everyone other than those helming the ship get fucked, they get golden parachutes.
Sure would be neat if we maybe had some other kind of system idk
I honestly don’t understand why most companies aren’t private instead of public. Like which founder looks forward to answering to investors when they could just be answerable to themselves and their employees and maybe board, like are they looking for a massive exit payout by going public or to raise funds to become a bigger company, but I argue if you are making enough to be profitable why chase being bigger
You don’t want to be profitable. You want to be rich