Porter's Five Forces for indie games: a worked example

Applied to indie games on Steam, Porter's Five Forces shows a tough market: rivalry and the threat of new entrants are very high because about 20,000 games launched on Steam in 2025, while supplier power (mainly Valve), buyer power and substitutes are all high. The practical response is to pick a genre with visible demand, build an audience before launch, master Steam's discovery systems and price against your closest rival.

What are Porter's five forces?

Michael Porter's five forces model, set out in his Harvard Business Review article "The Five Competitive Forces That Shape Strategy", explains how profitable an industry is likely to be by looking at five pressures: rivalry among existing competitors, the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, and the threat of substitutes. The stronger a force, the more of the value it takes away from the businesses in the middle.

Most write-ups of Porter's five forces for the video game industry look at console makers and big publishers. This one narrows the lens to the market most small studios actually work in: premium indie games sold on Steam for PC. Each force below gets a rating, the evidence behind it and what it means for a studio deciding what to build.

How intense is rivalry among indie games on Steam?

Rating: very high.

Steam's release volume is the defining fact of the market. How To Market A Game counted 20,282 games released in 2025 using VGInsights data, an 11% increase on the previous year. Most of them found almost no audience: GamingOnLinux, using SteamDB's figures, found 9,269 of 19,008 tracked 2025 releases had 10 or fewer reviews.

At the top, competition is concentrated in time as well as genre. When Hollow Knight: Silksong was dated for 4 September 2025, Game Developer reported that several other games, including Demonschool, CloverPit and Baby Steps, moved their dates to get out of its way. One release can reshape a month for an entire genre.

Rivalry is high because products are close substitutes for each other within a genre, prices are low and fixed costs are already spent by launch, so studios compete hard on discounts and visibility.

How easy is it for new games to enter the market?

Rating: very high threat, with a twist.

The cost of getting onto Steam is tiny. Steam Direct charges $100 per app, recoupable once the product reaches $1,000 in adjusted gross revenue. Engines are free to start with: Unreal Engine charges a 5% royalty only on lifetime gross revenue above $1 million, and Unity cancelled its proposed Runtime Fee for games in September 2024.

Small teams can also build fast. Peak, from Aggro Crab and Landfall, came out of a month-long collaboration in early 2025 followed by a few months of work, according to GameDiscoverCo, and went on to sell 4.5 million copies within weeks of its June 2025 launch.

The twist is that the barrier has moved from publishing to being noticed. Anyone can release; few can earn wishlists, streamer attention and algorithmic visibility. For an existing indie, this means your moat is not technology. It is audience: a community, a recognisable brand, a wishlist base and a track record that new entrants do not have.

How much power do suppliers have?

Rating: high, concentrated in one supplier.

For a PC indie, the most important supplier is the storefront, and on PC that mostly means Valve. Steam takes 30% of revenue by default, falling to 25% after $10 million and 20% after $50 million, per the tiers Valve introduced in December 2018. Most indies never reach the first threshold, so they pay the full 30%. Valve also sets the rules for capsule art, tags, discounts and events that decide visibility.

Steam's power comes from its audience: more than 42 million concurrent users in January 2026. Alternatives exist. Since June 2025, the Epic Games Store has charged a 0% store fee on the first $1 million of revenue per app per year, then 12%. Better terms elsewhere weaken Valve's position somewhat, but for most indies the bulk of PC sales still happen on Steam, so the leverage stays with Valve.

Other suppliers have less power. Engines compete with each other and with open-source options such as Godot. Freelance artists, composers and porting studios are plentiful, though the best ones book up early. Publishers can act as suppliers of money and marketing; their power rises the more a studio needs funding.

How much power do buyers have?

Rating: high.

Individual players have little power alone but a lot collectively, through four mechanisms:

• Refunds. Steam lets players refund most games within 14 days of purchase and under two hours of playtime. A game that does not hook players in its first two hours pays for it directly.
• Reviews. The review score sits next to the price on every store page and capsule hover. Players read it before they buy.
• Waiting for discounts. Wishlists notify players when a game goes on sale, which trains a share of buyers to wait.
• Price anchors. Players compare against what similar games cost. Peak's team set its base price at $8 because Content Warning cost $8.

There is a second buyer for many studios: publishers and investors who "buy" a game through a signing deal. Their power is high when many studios are pitching and capital is scarce, and lower when a game already has proof of demand such as strong wishlists or a popular demo.

How serious is the threat of substitutes?

Rating: high.

A substitute is anything that meets the same need in a different way. For a $15 indie game, the need is a few evenings of entertainment, and the substitutes are everywhere: free-to-play games that players already have friends in, live-service games that absorb hundreds of hours, the unplayed backlog in a player's existing library, subscription catalogues, and watching other people play on YouTube or Twitch.

Substitutes are not purely a threat. Watching can become buying when a game is fun to watch. GameDiscoverCo's Peak interview lists "watchability" among the reasons the game spread. Designing for clips and streams turns a substitute into a marketing channel.

What does the five forces picture look like in one table?

Worked example: a roguelike deckbuilder pitched in late 2026

Imagine a three-person studio pitching a roguelike deckbuilder to publishers in November 2026. Running the five forces exposes the problem quickly.

1. Rivalry: the genre's leader returned in force. Slay the Spire 2 entered Early Access on 5 March 2026 and passed 330,000 concurrent players, and Balatro sold a million copies within a month of its February 2024 launch. Players in this genre already own excellent games.
2. New entrants: card games are cheap to prototype, so many teams chase the same success. Supply is crowded.
3. Buyers: deckbuilder fans are experienced and judge depth quickly. The two-hour refund window rewards a strong first run.
4. Suppliers: nothing special here; Steam remains the main channel.
5. Substitutes: the biggest substitute is another run of a game players already love.

The conclusion is not "do not make a deckbuilder". It is that the pitch needs a hook the leaders do not offer, such as a theme, a mechanic or a co-op mode, and evidence that players want it. A studio could check how crowded the genre is on the market trends page, compare its concept against the closest rivals with competitor analysis, and look for publishers that sign this genre in the publishers directory before writing a single slide.

What should an indie studio do with this analysis?

The forces point to the same set of actions: choose a genre where demand is visible and supply is not overwhelming, build an audience before launch, learn Steam's discovery systems as well as you learn your engine, price against your nearest rival, and make the first two hours count. If you are still at the idea stage, the plan a new game tool turns a genre and a few reference games into price, wishlist and checklist estimates you can test against this framework.