Thread: Epic will lose over $300M on Epic Games Store exclusives

Mista

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To take on Steam, Epic Games has spent the past two years shoveling Fortnite money into the Epic Games Store, making over 100 exclusivity deals and giving away free games every week. We knew Epic was spending a lot of cash to get customers onto its store, but didn't have many specifics until now. Thanks to Epic's big legal fight with Apple, we learned this week that Epic committed around $444 million to Epic Game Store exclusivity deals in 2020 alone. Phew.

More precisely, that's $444 million on "minimum guarantees" for games that release on the Epic Games Store but stay off of Steam for a year. A "minimum guarantee" is just another way to refer to an advance. It means that Epic guarantees the publisher a certain amount of money whether or not their game actually sells enough to cover it. For example, Epic put down $10.45 million for Control.

In its end-of-year report, Epic said that players spent $700 million on the Epic Store in 2020, but third-party game sales only accounted for $265 million of that spending. That $444 million in advances to third-party devs isn't close to being recouped, then. Some of those deals probably haven't started making money yet (as in, the game hasn't released), but according to Apple's learnings, Epic is going to eat "at least $330 million in unrecouped costs from minimum guarantees alone" if you consider 2019's deals, too.

 
I don't think epic is really wasting any penny on that Epic store that will be missed by them. Those fucker must be profiting tons of dollar with that fortnite and their engine. I guess this new is to gather some sympathy among gamers for epic games but i'm really not feeling it.
 
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Yeah, at first this sounded like a lot, but what is that, a month of Fortnite profits? Probably a week at it’s peak. Add in Unreal Engine being used by all of gaming and some of Hollywood, as @Barnabot mentioned, and this company is ridiculously well-to-do.
 
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Yeah, at first this sounded like a lot, but what is that, a month of Fortnite profits? Probably a week at it’s peak. Add in Unreal Engine being used by all of gaming and some of Hollywood, as @Barnabot mentioned, and this company is ridiculously well-to-do.

Probably closer to a half year or year of Fortnite revenue, which I think is closer to 30 ~ 40 million a month down from its peak.

But yeah, Unreal engine licensing likely makes up for any EGS losses many times over.
 
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This shit is the tiniest drop in the fucking bucket for Epic.

They can literally funnel money into this shit until it is successful.
 
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Not sure why it's being labeled as "loses". Epic always had planned to just massively buy games for their store front. It was always going to be a red numbers-result for the foreseeable future. They're in for the longterm and eventually it might work out. See GamePass which is only getting more profitable for MS as more gamers join their platform.

Ofc, like all good gamers, I've never bought a game on their store, but check in every Thursday evening to claim the free game! :p
 
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I never bought anything from Epic, just taking advantage of their free games.

It makes sense that Epic Games isn't making any money from EGS. I don't think it's meant to be a profitable store yet, just a market disrupter because Timmy really hates the 30% standard cut. It's also why that store also lacks a lot of basic features and is willing to throw money for exclusives. Does make me wonder where all the games will go once this store inevitably shuts down. Granted, it's been an issue I've worried about with every online store, hence why I vastly prefer DRM free games. GOG could disappear tomorrow and all my games I bought there will still work the same as the day I bought them.
 
This news is not really newsworthy. It takes time for a product to become profitable. Look at Netflix and how much debt it has accumulated in the last decade and it is only now starting to generate profit.
 
This news is not really newsworthy. It takes time for a product to become profitable. Look at Netflix and how much debt it has accumulated in the last decade and it is only now starting to generate profit.

It's interesting in terms of the numbers they're prepared to lose on this. I mean, sure they have a lot of money on hand, but given both MS and EA have thrown their lot in with Steam you have to wonder how much more they can continue to just eat the loss. Plain truth is, everyone likes the free games, but no one seemingly likes their archaic client.
 
It would be a risky procedure if they didn’t own unreal and fortnite.

Even if that weren't the case, it could still pay off. The purpose, after all, was to get people to use their service. It doesn’t need to recoup the costs because the people who used the store to buy one exclusive might just stick around to buy other games, which would more than recoup the costs down the line.

I wasn’t around for Steam’s early days, but I’ve many a story about people hating it early due to its lack of features and its then-new ‘always online’ type of service. Now it is ubiquitous PC gaming platform.

The difference, I think, is that Epic has no interest in making the improvements that Valve did. Their plan doesn’t seem to go any further than “undercut Valve with a bunch of exclusivity deals and a lower percent cut”. Does the service even have a shopping cart yet?

According to Tim Sweeney, they are focused solely on the Epic Online SDK. The store’s features don’t actually matter in comparison.

They could make a genuinely worthy competitor to Steam, and I would welcome it. They sure as shit aren’t hurting for resources to make that possible. But I think they made the store solely so they didn’t have to give Valve (and Apple) money.

They, like much of the gaming industry, are in a place where they don’t have to care about what would help the consumer or even the greater market. And that sucks.
 
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