Who provides the bandwidth for Steam?

[desura]

With many steam games selling for under $5, you'd think that steam would lose money when you take into account the cost of bandwidth. Yet, it seems that the cost of bandwidth is pretty minimal for them. They don't seem to make any attempt to limit the # of times you can redownload a game.

How does this all work? Do they own the servers? have some sort of special deal? Or do they simply lose money?

 

[darkswordsman17]

I don't think Bandwidth is that expensive (just because most telecomms totally screw consumers on it doesn't mean much).

Hmm, no idea who does the servers. I would guess they probably use someone like Amazon or maybe someone else where they get more control. Netflix uses Amazon and they account for a ridiculous amount of traffic, and Netflix is only what $8 for unlimited streaming, so bandwidth couldn't be that big of a cost that it Steam would lose money due to that.

Keep in mind that the sales must also be good for publishers/developers otherwise they'd have long ago stopped participating in them, so that means there's likely enough margins that everyone can be happy with the deals.

 

[Grooveriding]

Maybe they are not paying for bandwidth traditionally but pay outright for dedicated pipes. ISPs and dedi server providers tend to charge for bandwidth but themselves do not actually pay for bandwidth usage. In the case of our ISPs it is just an outright cash grab.

When you pay for a commercial fiber line, you generally pay a flat price for that line and whatever its maximum speed is. Whether you constantly saturate it or let it stand idle, it costs the same amount. Steam could easily be saturating numerous OC links at their various hosting locations.

 

[CuriousMike]

Common provider: http://www.akamai.com/

 

[CPA]

Common provider: http://www.akamai.com/

I don't see Valve listed as a customer. Do they go be a different name?

 

[CuriousMike]

I don't see Valve listed as a customer. Do they go be a different name?

I don't know that Valve uses them.

I know that they are common in the games industry as a content server.

 

[alcoholbob]

True business cost of bandwidth at this level is negligible, we're talking maybe a few cents per gigabyte--to the owners of the cable fibers its probably tens or hundredths of a penny per GB; I imagine in this business like any other labor/customer service is the majority of the business expense.

 

[w0ng3r]

Whoever it is, I hope they charge less so valve can afford 100+ tick servers

 

[JEDIYoda]

Al Gore

 

[cbrunny]

True business cost of bandwidth at this level is negligible, we're talking maybe a few cents per gigabyte--to the owners of the cable fibers its probably tens or hundredths of a penny per GB; I imagine in this business like any other labor/customer service is the majority of the business expense.

I agree with this. I live in Ontario, where the major telecoms providers absolutely screw their residential customers into oblivion. Bandwidth cap, and $2 per GB if you go over - typical. Thankfully I've switchced my service to a third party company, which gets installed tomorrow. Quite a few games on Steam that I have bought but not downloaded due to bandwidth costs. <- stupid!

Bandwidth is intensely cheap to maintain, but to install I'm sure it is very expensive. Fiber can't be cheap to purchase and install coming from last mile, but once it is in the ground it should be good. There should be basically zero maintenance on it. Where I work we had considered laying our own fiber between buildings (apartments), so perhaps it is the cost of the customer in some cases. I would assume that Steam has paid for fiber installed right up to their servers. If they own the infrastructure, I would assume it would be significantly cheaper for them to "purchase" internet connectivity. They may even be their own ISP.

That being said, I've seen something about google internet which runs fiber right up to your house. But last I saw this was a veritable beta test in only a few locations. Seems pretty cool - probably the future of wired internet is this. I think Bell is on this too with their Fibe packages, but I don't think the fiber goes all the way to the house with Bell. I'll bet they decide to do it before Rogers though.

 

[sourceninja]

The prices just keep dropping for business connections and the burdens placed on consumer connections.

My employer upgraded from a 45mb connection to a 500mb connection without raising what they pay (getting off a 3 year contract). I've been paying the same for my same 25mb connection for 7 years.

 

[Ben90]

Whoever it is, I hope they charge less so valve can afford 100+ tick servers

Keeping things around 100tic has nearly nothing to do with bandwidth and everything to do with server load.

 

[you2]

Comcast charges something like $40 for 10Mb/s with (now defunct) 300GB cap per month. At 300GB/s you are using an average of 1Mb/s. Anyway I worked out the math once based off of BW prices and at 300GB/s comcast was making a fortune (this is not quiet true because BW cost is actually 95/5 so it is a bit more difficult to compute - at 10Mb/s @ 95/5 (that is if you use 10Mb/s 5% of the time you might actually be costing comcast closer $60 - i'm not 100% sure here because whole sale BW prices are a bit complicated - esp with peering agreements and leverage by major pipes (such as comcast). This article (2010) puts the prices at close to $8 Mbp/s
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http://gigaom.com/2010/11/16/boom-or-not-internet-bandwidth-prices-still-falling/
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I know that prices outside usa (esp japan) can be a bit higher (actually the above link shows a graph comparing several regions). I also think the rate of decline has slowed a bit the last couple of years (but not sure how much).
-
On the whole comcast makes a huge profit off of home users because only a small fraction use close to 10Mb/s 95/5 (5% on a month represents 36 hours; most people do not (for example) spend 36 hours downloading steam games a month; you might but you are not in the majority. Videos are typically 2-4 mb/s if you watch at the highest resolution.
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The real rip off (imho) are cellphones. With 4GB caps we pay $40 and you can bet the 95/5 on cellphones is probably below 500Kb/s (or $4).
-

 

[Anteaus]

With many steam games selling for under $5, you'd think that steam would lose money when you take into account the cost of bandwidth. Yet, it seems that the cost of bandwidth is pretty minimal for them. They don't seem to make any attempt to limit the # of times you can redownload a game.

How does this all work? Do they own the servers? have some sort of special deal? Or do they simply lose money?

You can't go by the price per unit. Say there is a sale a game X is sold for $5. Assuming it is a game is reputable, they could sell anywhere between 5k and 50k copies so thats 25k to 250k in revenue. Even considering Steam only gets a piece of it, chances are only a part of those sales will translate into immediate downloads. Then you have to consider the number of games sold in a day overall and also that they buy bandwidth in large quantities which leads to a cheaper price per GB due to economy of scale. In some circumstances. profit from popular titles will support the upkeep of lesser titles which increases Steam's footprint and thus brings in more popular titles. They aren't losing money.

 

[sourceninja]

You can't go by the price per unit. Say there is a sale a game X is sold for $5. Assuming it is a game is reputable, they could sell anywhere between 5k and 50k copies so thats 25k to 250k in revenue. Even considering Steam only gets a piece of it, chances are only a part of those sales will translate into immediate downloads. Then you have to consider the number of games sold in a day overall and also that they buy bandwidth in large quantities which leads to a cheaper price per GB due to economy of scale. In some circumstances. profit from popular titles will support the upkeep of lesser titles which increases Steam's footprint and thus brings in more popular titles. They aren't losing money.

The whole buy but do not download thing is very valid. I buy games all the time on steam sales because I think "I'd like to play that again and have it in steam and it's only 3.99" or "The xbox version was good, but I'd like to play it on pc". But I don't download them right away because I don't have the space. Eventually I forget and probably have 40+ games that I've never downloaded or played. At an average of $5.00 per game that adds up.

 

[Phynaz]

I don't see Valve listed as a customer. Do they go be a different name?

Doesn't mean they are not a customer. The company I work for prohibits the use of our name in our suppliers marketing.

 

[HardcoreRobot]

...Or do they simply lose money?

If this were true, do you really think that providing digital game distribution would be a cornerstone of their business?

 

[HarvardAce]

2 Mb/s upload for $60 a month comes out to about 9.5 cents per gigabyte. Assuming that the average game is 10 GB, that's 95 cents per game using expensive residential cable prices for bandwidth.

Amazon charges 12 cents / GB for the first 10 TB, but it quickly scales to 5 cents / GB as you increase the bandwidth amounts.

Average around the end of 2012 for content delivery networks was about 7 cents per GB, but I would guess it's under a penny per GB for such a huge user like Steam.

 

[Sureshot324]

My usenet provider sells blocks of 1TB for $92, which works out to 9 cents per GB. I'm pretty sure it costs Valve a lot less than that.

 

[AyashiKaibutsu]

Gabe personally gives it to them cause he's such a nice guy.

 

[BrightCandle]

Valve appears to host themselves. If you trace the steam website and the CDNs you will find it ends the following:

17 * * * Request timed out.
18 179 ms 172 ms 171 ms 205.196.6.34
19 188 ms 172 ms 172 ms fw01-core.tuk.valve.net [208.64.202.21]
20 178 ms 177 ms 176 ms 208-64-202-69.valve.net [208.64.202.69]

The 205.196.6.34 gives the following whois information:

NetRange:       205.196.6.0 - 205.196.6.255
CIDR:           205.196.6.0/24
OriginAS:       AS32590
NetName:        VALVE-V4-3
NetHandle:      NET-205-196-6-0-1
Parent:         NET-205-0-0-0-0
NetType:        Direct Assignment
RegDate:        2012-01-25
Updated:        2012-01-25
Ref:            http://whois.arin.net/rest/net/NET-205-196-6-0-1

OrgName:        Valve Corporation
OrgId:          VC-2
Address:        10900 NE 4th St, Suite 500
City:           Bellevue
StateProv:      WA
PostalCode:     98004
Country:        US
RegDate:        2010-11-12
Updated:        2010-11-12
Ref:            http://whois.arin.net/rest/org/VC-2

OrgAbuseHandle: NGANM-ARIN
OrgAbuseName:   Ngan, Milton 
OrgAbusePhone:  +1-425-889-9642 
OrgAbuseEmail:  milton@valvesoftware.com
OrgAbuseRef:    http://whois.arin.net/rest/poc/NGANM-ARIN

OrgTechHandle: NGANM-ARIN
OrgTechName:   Ngan, Milton 
OrgTechPhone:  +1-425-889-9642 
OrgTechEmail:  milton@valvesoftware.com
OrgTechRef:    http://whois.arin.net/rest/poc/NGANM-ARIN

OrgNOCHandle: NGANM-ARIN
OrgNOCName:   Ngan, Milton 
OrgNOCPhone:  +1-425-889-9642 
OrgNOCEmail:  milton@valvesoftware.com
OrgNOCRef:    http://whois.arin.net/rest/poc/NGANM-ARIN

Looks to me like Valve have their own CDN and website infrastructure and host themselves. Not all that surprising for such a large firm, we wouldn't ask who hosted Google for example, or facebook. Because when you are at that scale of website you do the hosting.

 

[CPA]

Doesn't mean they are not a customer. The company I work for prohibits the use of our name in our suppliers marketing.

Good point. Mine does the same. Didn't think about that.

 

[KentState]

http://blog.highwinds.com/blog/bid/201931/Valve-Leverages-Highwinds-CDN-for-Steam-Platform

Not sure if things have changed since then.

 

[desura]

If this were true, do you really think that providing digital game distribution would be a cornerstone of their business?

I'm talking about sales of like 8gb games for $5

 

[blackwhiskers]

bandwith doesn't cost anything, it's the connection that has technical and service costs. of course, you can calculate cost per GB/s or whatever, but it shouldn't amount to more than a small part of a cent, and, realistically, is not relevant. wires do not get worn out by sending information (not any more than electricity wires wear out). asking money for bandwith is simply a business practice for ripping off those, who can't get proper connection.

but it all has already been said in this thread.

8 gb for 5$? real cost for bandwith: micropennies, probably. certainly 5$ more than enough cover these costs.