Tim Sweeney, the head of Epic, wants to dismantle Steam’s monopoly. To do this, he is investing a lot of money. Thanks to the lawsuit with Apple, it was revealed just how costly the exclusive Epic titles are and how much loss is incurred.
What kind of battle is this? In 2019, Epic began bringing games exclusively to their store. The exclusivity was mainly aimed at ensuring that the titles are not released on the competitor Steam.
Sweeney stated at the time that he wanted to smash Steam’s monopoly:
- Specifically, it is about Steam not keeping 30% of the revenues from games on their platform.
- This is a disastrous situation for developers and publishers that also leads to poor games.
- Epic sees exclusives as “disruption strategies” and only takes 12% of the revenue itself.
- Epic also states: We will stop exclusive deals when Steam only takes a 12% share.
Even now, Epic has announced more than 100 additional exclusives for the next 2 years, including Chivalry 2 and Far Cry 6.
However, the battle with exclusives is very costly, as recently revealed through the lawsuit with Apple.
How much is Epic investing? According to PC Gamer, the exclusive deals alone cost a minimum guarantee of 444 million dollars in 2020. This arises because Epic promises developers a certain level of earnings. If that does not happen, Epic pays the missing amount itself.
In contrast, there are only 265 million dollars in revenues from the games.
According to Apple’s documents, the losses are said to amount to at least 330 million dollars, as the numbers from 2019 are taken into account.
Epic is taking on everyone and has to pay a lot for it
Where do these numbers come from? The numbers come from a document that Apple prepared during the lawsuit with Epic (via scribd). It was created to show that the Epic Store cannot be compared to the iOS App Store.
The documents state, according to Steve Allison, the Vice President and General Manager of Epic Games Store, and Joe Kreiner, the Vice President of Business Development, that Epic with the store:
- lost 181 million dollars in 2019 and 273 million dollars in 2020
- is projected to lose another 139 million dollars in 2021
- In total, the Epic Store accounts for almost 600 million dollars in losses
The company assumes that the Epic Store will not become profitable before 2027. However, Epic does not label this as a loss, but as an “investment”.
Losses also due to the lawsuit: Epic is not only competing with Steam but also fighting against Apple’s App Store.
In August 2020, Epic decided to sell the currency V-Bucks directly in the iOS version of Fortnite. Previously, the currency had to be purchased through the App Store, which resulted in 30% of the revenue going to Apple.
- Apple removed Fortnite from the App Store and Google followed suit.
- Subsequently, Epic Games sued Apple and Google.
- Fortnite has since not been available in the App Store or the Play Store.
Sweeney revealed in an interview in February 2021 that he is trying to change the industry with Epic Games. Here, too, he is fighting against Apple taking 30% of the revenue.
He also admits that the lawsuit is very costly. However, he emphasized that Epic is an independent company, which is why they are able to conduct such a lawsuit and incur the losses. While Sweeney still holds the majority of the company, approximately 48.4% of the shares belong to the Chinese giant Tencent.
Robin Hood for some, villains for others
Epic Games and Tim Sweeney present themselves as Robin Hood. They want to take money from the wealthy companies that only offer games on their platform and give it to the poor – the developers and publishers. However, this only works to a limited extent.
Because the game of the year 2020 on Steam shows that players prefer a platform. Red Dead Redemption 2 was released on Epic Games in November 2019 and only in December 2019 on Steam. Nevertheless, it was much more successful on Steam than on Epic.
Many players see Epic and Sweeney as the villains who take games away from them. The most common criticism is that Epic should impress with the development of a better store rather than with exclusive titles. Nevertheless, it is frequently used. Reports suggest that over 108 million accounts were created in the first year:
Hardly anyone liked the Epic Games Store – but it is doing well
