Steam, Epic, and Itch.io: What Indie Studios Actually Agree To in Distribution Contracts

How PC Game Distribution Deals Actually Work — The IP License You're Granting

When a developer lists a game on Steam, Epic, or Itch.io, they are not selling distribution rights or transferring intellectual property. They are granting a license. That distinction is the foundational legal concept every indie studio needs to understand before clicking through a platform's terms of service.

Under Valve's Steamworks Partner Program, developers retain full copyright ownership of their game. What the platform receives is a non-exclusive license to distribute, reproduce, and market the title — scoped to the functions the platform needs to operate. The Steamworks SDK Access Agreement makes Valve's own approach explicit: Valve grants developers "a nonexclusive, royalty-free, terminable, worldwide, nontransferable license" to use the SDK. The same structural logic applies to the distribution grant flowing the other direction — the developer grants Valve a license, not title.

Non-exclusive means the developer retains the right to distribute through other channels simultaneously. Nothing in Steam's distribution agreement prevents a studio from also listing on Epic or selling directly from its own website. That is the upside of the non-exclusive structure. The downside — explored later in this article — is that platform MFN clauses and price parity requirements can constrain how you exercise that freedom in practice.

The enforceability question matters as much as the license structure. Platform agreements are clickwrap contracts — binding through an affirmative act of assent (clicking "I agree") rather than a handwritten signature. Courts have consistently enforced clickwrap agreements when terms are presented conspicuously and the user has a reasonable opportunity to review them before assenting. The governing standard comes from Specht v. Netscape Communications Corp., 306 F.3d 17 (2d Cir. 2002), where the court invalidated a clickwrap agreement because users lacked adequate notice before downloading. The converse holds: where notice is adequate and the click is affirmative, the agreement is enforceable.

The practical implication: clicking through a platform's developer terms constitutes a binding contract regardless of whether the developer actually read it. "I didn't know what I was agreeing to" is not a defense once adequate notice was given and an affirmative act of acceptance occurred. The three major PC platforms — Steam, Epic, and Itch.io — each satisfy the clickwrap enforceability standard through their partner onboarding flows.

Understanding the license structure — what you are granting, to whom, and on what terms — is the starting point for analyzing everything else in these agreements.

Valve's Steam Distribution Agreement — The 30/70 Split and What Else You're Agreeing To

Steam controls approximately 75% of the PC game distribution market. That figure, cited in the Wolfire Games v. Valve antitrust litigation, is why the Steam Distribution Agreement functions as a take-it-or-leave-it contract for most developers. Understanding what you are agreeing to is not optional — it is the minimum competence the agreement demands.

The revenue tiers are widely known but commonly misread. Steam's current structure, unchanged since November 2018, operates as follows:

• 70/30 split (developer/Valve) on the first $10M in lifetime net revenue per game
• 75/25 on revenue from $10M to $50M
• 80/20 on revenue above $50M

The tiers are calculated per game, not per developer account. A studio with five titles generating $2M each never unlocks the 75/25 rate — only a single game crossing $10M in lifetime net revenue triggers the improved split for that title. The reduced rate applies to incremental revenue above each threshold, not retroactively to all revenue.

Before revenue is calculated, Steam deducts refunds, chargebacks, and applicable taxes from gross receipts. The monthly payment report — not the real-time Sales & Activations dashboard — reflects actual net payout figures. Payment arrives by the 30th of the month following the sales period, subject to a $100 minimum threshold. Steam's refund policy — automatic approval for purchases within 14 days with under 2 hours of playtime — creates a structural exposure for short games. A title completable in under two hours can be fully refunded after a player finishes it.

Steam Direct's $100 per-product listing fee is recoupable once a game earns $1,000 in adjusted gross revenue, with a mandatory 30-day waiting period after payment before release.

The provision most developers miss is the unilateral amendment clause. Under the Steam Subscriber Agreement, Valve may amend the distribution terms "at any time in its sole discretion," with the amendment effective 30 days after posting. Continued use of the platform after that period constitutes acceptance of the new terms. A developer who does not monitor agreement updates and does not cancel within the 30-day window is bound by whatever changes Valve implements — with no negotiation and no compensation.

The 30% cut is the detail everyone focuses on. The amendment clause is the one that quietly changes the deal.

Valve's Right to Remove Your Game — Content Policy Risk and Delistings

In July 2025, Steam added Rule 15 to its Steamworks Onboarding guidelines: no content that may violate the standards of Steam's payment processors, card networks, or internet network providers. Within 48 hours, over 100 games were marked "retired" from the storefront — removed not because of Valve's editorial judgment but because Mastercard applied pressure. Valve confirmed the connection publicly.

That event is the clearest illustration of what delisting risk actually looks like in practice. The removal authority Valve exercises is not limited to its own content rules. Third-party financial relationships that are entirely outside a developer's control can trigger removal with no advance warning and, based on the 2025 pattern, no individual notice before the game disappears.

Valve's stated content prohibitions cover hate speech, malware, fraud-related applications, and similar categories. But the Rape Day removal in March 2019 demonstrated that Valve's actual removal authority extends further than its published policy. Valve pulled the game citing "unknown costs and risks" — language that does not map to any specific content rule. That vague rationale is the relevant precedent: Valve can remove a game when it perceives undefined business risk, without being constrained to its enumerated prohibitions.

The combination of these two patterns — discretionary removal based on internal risk assessment, and external financial network pressure — means developers face two distinct removal triggers, only one of which is partially foreseeable from the published rules.

DMCA takedowns operate under a different framework. When a rights holder files a DMCA claim, Steam takes down the page and notifies the developer. The developer can file a counter-notice to seek reinstatement. The Dark and Darker case (2023) established that delisted games remain accessible to users who already purchased them — but in DMCA disputes, rights holders can sometimes demand removal from user libraries as well.

The counter-notice right is the one procedural protection developers have in the DMCA context. It does not apply to Valve's discretionary content removals or payment-processor-driven delistings. For those, the distribution agreement provides no formal appeal mechanism in its publicly available form.

Epic Games Store — The 88/12 Split and Exclusivity Deal Structure

Epic's standard developer rate is 88/12 — the developer receives 88% of net revenue, Epic takes 12%. That baseline is more favorable than Steam's 70/30 for games that do not cross the $10M tier. The more significant development for indie studios came in June 2025: Epic now takes zero revenue cut on games earning under $1 million annually. Above that threshold, the standard 12% applies to the incremental revenue. For most indie games, that means Epic's effective take on EGS revenue is currently zero.

Epic's exclusivity model has evolved significantly since the early store years. The legacy deals — like the $10.49 million advance paid to secure Control as an Epic exclusive in 2019 — were structured as guaranteed upfront payments against future sales revenue. The publisher (505 Games) and developer (Remedy Entertainment) split the advance 45/55. Hades operated on a similar model, with roughly 18 months of exclusivity before the Steam Early Access release in December 2019. Those deals provided immediate capital but came with longer windows and negotiated terms.

The current Epic First Run program works differently. It offers 100% net revenue to the developer during a six-month exclusivity window at launch — no advance, no guaranteed payment. The trade is favorable rev-share during exclusivity in exchange for not simultaneously releasing on other third-party storefronts. Critically, the First Run exclusivity does not prohibit distribution through a developer's own first-party store during the window. After six months, the game reverts to the standard 88/12 split and can release on Steam or other platforms freely.

Epic also imposes ongoing compliance obligations that survive the exclusivity period. Achievement parity requires that any game with Steam achievements maintain substantially similar achievements on EGS. Update parity requires that content updates, bug fixes, and performance patches release on Epic no later than on any other platform. These are not one-time obligations — they create a continuous maintenance burden for cross-platform studios.

The practical calculus for indie studios in 2026: Epic First Run offers 100% revenue for six months with no advance. For studios that can absorb the delay before Steam release, the economics often favor participation — particularly given the zero-cut floor for sub-$1M titles.

Itch.io — The Open Model and What 'Choose Your Own Revenue Split' Means Legally

Itch.io's revenue model is structurally different from Steam and Epic. Developers choose what percentage of sales goes to the platform — anywhere from 0% to 100%. There is no mandatory cut. The default suggestion is 10%, framed as a contribution to Itch.io's operating costs, but it is not contractually required. A developer can set it to zero and pay nothing to the platform.

That commercial permissiveness does not mean the legal terms are permissive. The Itch.io Terms of Service grant the platform "a worldwide, non-exclusive, royalty-free, sublicensable and transferable license to use, reproduce, distribute, prepare derivative works of, display, and perform the content." The phrase "prepare derivative works of" is materially broader than a pure distribution license. Under Steam's structure, the platform receives rights scoped to distribution functions. Itch.io's license extends to derivative works — theoretically covering promotional adaptations, trailers derived from gameplay footage, and similar uses "in connection with the Service."

Itch.io does provide a meaningful exit right. When a developer removes content from the platform, the license terminates within "a commercially reasonable time." Steam's structure offers no equivalent clarity on exit. The caveat: users who purchased the game before removal retain a perpetual, non-exclusive license to access and use the content. Removal from the storefront does not revoke access for prior purchasers.

The payment processor chokepoint applies to Itch.io as much as Steam. In 2022, Itch.io deindexed all adult NSFW content from browse and search pages after coming under scrutiny from payment processors following a campaign by Collective Shout directed at card networks. The platform's permissive editorial stance did not insulate it from financial network pressure. Developers who rely on Itch.io's content latitude as a risk management strategy should account for the same third-party pressure that drove Steam's 2025 mass delisting.

Itch.io is a viable platform for early-stage distribution, free-to-play releases, game jams, and experimental titles. The average indie game earns approximately $1,200 in revenue on Itch.io, compared to Steam where over 500 titles grossed above $250,000 in their first month during 2024 alone. Itch.io is not a primary commercial channel for most studios — but as a supplementary platform, the favorable exit terms and zero-cut option make the legal terms worth understanding rather than ignoring.

Platform MFN Clauses and Price Parity — What You Can and Can't Do Across Platforms

Steam's most-favored-nation provision is real, enforced, and not visible in the publicly available distribution agreement. That combination makes it one of the more dangerous terms in the PC game distribution ecosystem — developers who assume that an informal policy is an unenforceable one are exposed to Steam's promotional apparatus as the enforcement lever.

The American Bar Association's analysis of the Wolfire v. Valve antitrust case frames Steam's Platform MFN (PMFN) as a dual requirement: publishers cannot (a) sell a game on a competing platform for a lower price, or (b) provide additional game content or enhancements on a competing platform. Both price parity and content parity are required. Internal Valve communications produced in litigation confirmed the enforcement mechanism: when Valve identifies a partner pricing lower on another storefront during a sale period, it withholds curated marketing — front-page placement, sale visibility, featured lists — during those times.

The 2019 Steam Distribution Agreement update added a third dimension: release parity. Games, updates, and DLC must release on Steam no later than on any other platform. A studio cannot give Epic or GOG a launch window while Steam waits. The release, price, and content parity requirements operate simultaneously.

As of November 2024, a class of approximately 32,000 game developers received class certification in Wolfire Games v. Valve — a Sherman Act challenge to the PMFN as anticompetitive. That is a significant procedural milestone. It is not relief. No U.S. court has found that an MFN provision alone violates antitrust law, and the case remains in litigation with no final judgment. Developers who assume the pending lawsuit neutralizes Steam's price parity requirement are mistaken. The obligation remains enforceable today.

Epic Games Store does not impose a broad price parity MFN on standard listings. Its parity obligations are update parity and achievement parity — timing and content equivalence, not pricing controls. The First Run exclusivity program restricts simultaneous third-party launch during the window, but that is a scope restriction on release timing, not a price floor requirement.

The practical constraint for multi-platform studios: Steam pricing sets the floor across all storefronts for games distributed on Steam. A sale or discount offered on Epic or Itch.io needs to match on Steam at the same time, or the developer risks losing Steam's promotional support — which for most titles is the primary driver of discovery.

What Developers Should Negotiate and What to Watch For Before Signing

Platform TOS agreements — Steam, Epic, Itch.io — are non-negotiable for virtually all developers. Valve does not redline distribution agreements with indie studios. Neither does Epic for standard listings or First Run. The developer's job with these contracts is to read and understand them, not to negotiate them. That is not a limitation to accept passively; it is the accurate framing for how to allocate legal review time.

Publisher and direct deals are different. Those agreements are negotiable, and the following red flags appear in enough indie publishing contracts that they warrant specific attention before signing:

• Perpetual license grants. A license to a publisher should last only as long as the publishing agreement remains in effect. Any "perpetual" license language — granting rights that survive termination of the deal — is a flag that requires negotiation or removal. If the publisher's rights survive the end of the commercial relationship, the developer has effectively transferred more than distribution rights.
• IP ownership clauses. Publishers should not own the game's intellectual property. Developers should not accept 50/50 IP splits. In North America, a 50/50 IP split effectively grants the publisher full ownership rights, including the right to create competing works using the studio's creative property without compensating the developer.
• Undefined deductions. Revenue share calculations must define what "net" means with specificity. "Other costs" without enumeration can delay or eliminate developer revenue despite strong sales. The gross vs. net distinction — and a defined deductions list — should be negotiated explicitly.
• Right of First Refusal on sequels. ROFR clauses require the developer to offer the publisher the first opportunity to take any subsequent project before shopping it elsewhere. This constrains future negotiating leverage significantly. Industry practitioners recommend fighting this clause entirely rather than accepting a modified version.
• Termination without IP reversion. Termination provisions — including "for convenience" clauses — must specify what happens to IP ownership, milestone payments, and development funding on exit. A publisher who terminates without a defined IP reversion mechanism can leave the developer without their game and without payment for work completed.

Console distribution (PlayStation, Xbox, Nintendo) operates on an entirely separate framework — mandatory certification, 6–10 week approval timelines, NDA-protected revenue terms, and a legal entity requirement for Sony's PlayStation Partners program. Any deal involving console rights merits dedicated legal review independent of the PC platform analysis.

The dividing line for when to get legal review: any agreement involving exclusivity, an advance payment, console rights, or IP provisions beyond a standard distribution license warrants attorney review before execution. Platform TOS can be reviewed independently for understanding; publisher deals should not be signed without counsel experienced in games industry transactions.