It turns out that the war on Steam is expensive. Epic Games (you might have heard of them because of a little game called Fortnite) has been aiming to shift the balance of power on PC storefronts for a few years with their Epic Games Store. However, in that quest to unseat Valve as the premier place to buy games on PC, it has led to some outstanding loss figures.
Epic has been trying to close the market share on Steam through a number of moves that, while they haven’t led to great figures, are decidedly pro-consumer and pro-developer. The 30% cut that Steam takes through game sales is only 18% on the Epic Games Store, giving more of the cut to developers, something that Epic has been able to because of the massive profits that have been raked in by Fortnite. They also have frequent free game giveaways as part of an effort to keep gamers coming back and potentially spending on their store rather than Steam.
Figures released in documents that are part of Epic and Apple’s long-running dispute have revealed that Epic has splashed $444 million chasing Steam on exclusivity deals this year alone. These deals are “minimum guarantees” that provide Epic with timed exclusivity on the Epic Games Store and are like advance payments that are paid to developers that are irrespective of if the game makes enough money back to cover that payment.
In their end-of-year report, Epic said that gamers spent around $700m on the Epic Games Store, but only $265m was spent on third-party games.
Apple also believes that the Epic Games Store will also not be profitable for “years, if ever.” The findings from both Apple and Epic themselves show that Epic lost around $181 million on the store in 2019, and projects a loss of $273m in 2020, and $139m in 2021 (including spending $330m in unrecouped minimum guarantees). At this rate, the Epic Games Store, according to Apple, won’t become “profitable” until around 2027. Yikes.
Epic has responded to Apple’s claims, saying that they expect 2023 to be the year where the store turns itself around and that the 12% is enough for the company to cover the costs of running the store. They seem to be doing okay, they did recently just buy a mall, after all, and have bought Rocket League-dev Psyonix and software developers Capturing Reality.
Is this unhealthy for Epic? Leave a comment.