Monday, September 23rd 2019
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Exclusivity Costs: EPIC Games Store's Control Cost $10.5 million to Become PC Exclusive
Control is one of the better single player releases of this year already, and has been enough of a success for Remedy and 505 Games to launch a content roadmap stretching all the way to 2020. The game is being served on PC exclusively through the EPIC Games Store, which, besides offering developers higher revenues than Steam, has also launched an all-out campaign to secure high-profile exclusives such as Control and Metro: Exodus (even if some of them are timed exclusives).
Now, an Italian earnings report from 505 games highlights that the developers received a lump, $10.5 million upfront from EPIC; according to the report, "Revenue comes from the computer version of Control (...) The game was released on August 27 but the structure of the marketplace who requested the PC exclusivity has made possible to gain the revenue starting from this quarter." It appears EPIC is offering a safety net for developers in exchange for the exclusivity deals, paying upfront the amount of revenue developers expect to receive from the games' sales throughout the PC platform. In this case, the $10.5 million correspond to a total of 200,000 individual sales of Control. Until that number is achieved, EPIC keeps the full revenue from every sale. Any units sold starting from 200,000, and the revenue is split between the developer and EPIC. It's a win-win, really: EPIC gets more and more traction and publicity on its store, and developers guarantee they get the minimum amount they'd expect to earn by selling the game across the full spectrum of PC marketplaces.
Source:
Ars Technica
Now, an Italian earnings report from 505 games highlights that the developers received a lump, $10.5 million upfront from EPIC; according to the report, "Revenue comes from the computer version of Control (...) The game was released on August 27 but the structure of the marketplace who requested the PC exclusivity has made possible to gain the revenue starting from this quarter." It appears EPIC is offering a safety net for developers in exchange for the exclusivity deals, paying upfront the amount of revenue developers expect to receive from the games' sales throughout the PC platform. In this case, the $10.5 million correspond to a total of 200,000 individual sales of Control. Until that number is achieved, EPIC keeps the full revenue from every sale. Any units sold starting from 200,000, and the revenue is split between the developer and EPIC. It's a win-win, really: EPIC gets more and more traction and publicity on its store, and developers guarantee they get the minimum amount they'd expect to earn by selling the game across the full spectrum of PC marketplaces.
129 Comments on Exclusivity Costs: EPIC Games Store's Control Cost $10.5 million to Become PC Exclusive
variety.com/2019/gaming/news/epic-talks-exclusives-tencent-metro-backlash-1203169615/ You may be right that Newell is waiting to see how much exclusives hurt Steam.
Steam does the same from the beginning with Valve published games but they almost never get any flak about it anymore.
imo one day when Sweeney is happy with the number of customers his store has he will most likely raise his cut but I doubt he will go as high as Steam and he will most likely use the excuse that he failed to help out the other Publishers so he might as well raise EGS cut some.
1) engine developer and licensor: this business is suffering because the market is an ocean wide and a drop deep. Epic can't collect money on indies that aren't selling because they don't have anything to give. The big developers aren't using their engine because they're using in house engines. There's this group in the middle of multi-million dollar games that are too big for indie but too small for big publishers. Private Division was created by Take-Two Interactive to work with this group. This is the group UE4 should be making all of its bank on but they...fail to launch. There's not enough money for them to get the project across the finish line and if they do, they don't sell because they don't have money to market it. UE4...basically...isn't making any money right now because all of the markets for it are sickly or uninterested.
2) publisher: Epic loath the idea of paying 30% of their hard earned work to stores like Steam and GOG. What did they do to deserve that huge of a stake? If the game flops, what do they actually lose? Developers and publishers go bankrupt...not distributors.
3) developer: games cost so much money to make to get a degree of polish that will be a commercial success. They...really don't make many games now except as tech demos for Unreal Engine. And why would they for the reasons above? Getting investment for games is like pulling teeth and then 30% of gross goes straight to distributors. You're damned if you do, so it's better to just don't except like Unreal Tournament where it cost shares with engine development.
4) digital store: Epic is the new kid on the block the middle of the slums. They had to come up with a way to address all of the points above and drum up business for their fledgling store.
Epic Games Store collectively tackles all of these things:
1) 88% share + exclusivity gets these middle budget games across the finish line and markets them so they turn into success stories instead of failures.
2) 12% is reasonable to publishers so they'll consider launching their games on EGS in addition to their own platforms.
3) Indie developers can afford to not just eat Ramen Top Noodles.
4) More business, more of a threat to competitors still running at 30%.
Everybody wins...except Steam (and everyone else still at 30%). If that were the case, the revenue share would still be 30%. 12% is a huge deal. By the way, Discord is 10%. Sweeney wants the 30% model to die because it's killing the industry. I suspect Newell knows it too, but he's not going to act until he must (because he is self-serving :P).
Evidence proves the Sweeney hate is undeserved. He sees a problem and he's trying to fix it. Gamers benefit in the long term even if some are butthurt they have to wait six months to get a game on their preferred platform. Their bullheadedness is part of the reason why we have this mess in the first place.
Steams cut is on a scale. Any game that has earned over $10 million on Steam since October 1st, 2018 will provide developers a 75 percent cut of future revenue rather than the usual 70 percent. If they make at least $50 million, they'll take home 80 percent on any subsequent earnings.
Let me put it this way:
Steam is to 2005 as EGS is to 2019. Steam changed the market for the better with the 30% share over a decade ago but like the exorbitant cut publishers wanted before Steam, Steam's rate has become draconian. EGS (and Discord) are offering a rate that makes sense for 2019. Distribution costs keep falling while production costs keep rising. It's only fair that distributors reflect that. To not do so is self-serving for distributors. The games that need relief the most will never get close to $10 million gross. Even then, EGS beats it from the first transaction to the last at 88%. Even for AAA publishers, they'll pocket 8% more than Steam will ever give them.
Also if you are like most gamers then you have most of your games on Steam simply because it is a higher quality service. That's worth something to Publishers because they can count on the increased exposure from such a quality service as Steam.
At the end of the day it is pretty clear that had 505 Games not been paid by Epic then Control would be on Steam as well. When Epic stops paying for exclusives and raises their cut then it will be clear what their strategy is right now and I don't believe for a minute that Sweeney is acting out of concern for his competitors.
2) Discord has a 10% rate and has shown no intention of changing it.
3) #1 + #2 suggests EGS' rate has a greater chance of going down (which publishers would sign in a flash) than up.
Imagine if Steam dropped to 15% or even 12% rate, EGS would be inclined to drop to 11%, for example. This is what competition should do. Steam/GOG/Microsoft/Sony/Play Store/App Store are effectively price fixing with their across the board 30% rate. My library on Steam is big because that's where the games went. Why did they go there? Because Steam curation is cheap and easy compared to the rest. That's also why their store is full of shovelware. That edge cuts both ways. That was true five years ago. It isn't anymore. Only the top 1% of games on Steam get any promotion by Steam. The recent changes at Steam have reduced exposure to indies from hardly anything to virtually nothing (there's a thread about this already). Yes, and it probably would have lost money.
I also don’t mind going to Origin or Uplay for their games either. I just want to play the games . Heck, GOG games are direct installed, and I don’t even use the Galaxy launcher.
So really, the fact there are awesome games on EGS too just makes me go get them and play them. Steam has done nothing personally for me, other than be the launcher for a number of years for many games, simply because they were the only one. The only loyalty I have is to the games, with a slight leaning to GOG because games there are actually owned.
I have around 2.5 times more games on Steam than on GOG. I also have games on Origin and EGS and the MS store but not Uplay but I did need to sign up for an account there but I don't recall why now. It says that I own Far Cry 3 in My Games there but I actually bought that from Steam. I have a Rockstar account as well. I don't have any concern about having so many accounts. I'm just waiting on Epic to fulfill their commitments and prove that they are here to stay and run their store properly before I spend much money there.
EGS launched almost 10 months ago and they are moving kind of slowly with their planned feature goals.
trello.com/b/GXLc34hk/epic-games-store-roadmap
The only thing that is missing as far as I am concerned is a wishlist. Even the best launcher/store (IMO), Uplay doesn’t have a wishlist. So I’m good. I don’t spend a lot of time on anybody’s launcher. They exist in my mind for two things: to buy and play games.
games are now in my opinion being updated like 12gb with no difference in game play …. I use steam because I have too
Did you read that wiki links of EPIC's games. They made a ton of games for MS DOS, fewer windows games, and hardly any modern games. They have more games for console then they do PC games designed for windows 10. The guy has such confidence in the PC platform the number of EPIC games on the platform saw a massive drop in favor of consoles. It's far more logical he made business decisions in favor of his finances.
"Guess what? EGS is the same way. So is GOG. So is Discord. These distributors acknowledge that that the publisher owns the IP so the distributor can't be seen as restricting access to their own IP or their relationship will sour fast. "
Oh really? Last I checked, GMG charges $59 for Borderlands 3: www.greenmangaming.com/games/borderlands-3-pc/
That's a mighty discount of $1. So how exactly is this the same as steam? It appears to me that 3rd party marketplaces are paying some sort of fee because 3rd party steam games are certainly cheaper. Just an FYI, over 30% of steam sales are 3rd party, if you do the math the effective steam revenue split is very close to EPIC's when you include these sales. I'm going to need some proof that EPIC is actually providing a 0% rate for 3rd party marketplace sales, otherwise their effective split including 3rd party sales is nearly equal to steam for AAA titles.
"What? Either you buy a timed exclusive on EGS or you wait and get it at your store of choice. Why is that a problem? "
/faceplam
It eliminates competition. 80% of a game's sales will be in the first month.
"For the record I don't like any of the stores but I am familiar enough with the industry to know that Steam has become cancerous to developers and EGS is providing a solution. "
Yet you make this claim without submitting evidence.
"They're doing both. Steam actually reduced their profit share on their big sellers as a direct response to losing business to EGS and everyone jumping on the EGS bandwagon is making more bank than they ever did on Steam. "
1. No, they didn't. They reduced their share before EPIC even opened their store
2. Another assumption with no proof? Let me guess, you took EPIC PR at face value saying they sold a ton of copies yet they haven't released the sales numbers. No conflict of interest for EPIC to make vague statements without supporting facts.
3. You don't seem to understand that being able to only get a product at a single place is not competitive. People love to complain about the amount of games on steam but curation has it's own set of issues.
1. There's no guarantee that curation equals quality. Apple and Google play are AMPLE example of that.
2. Curation limits and censors games that may be released. Adult games? Likely not on EPIC. Games with depictions of homosexuallity? Perhaps someone at EPIC decides they don't like that. Too much violence? No Nudity? I'll pass on some random guy's judgement how thinks they know what PC gamers should and should not play.
3. Curation done by hand costs money, meaning more overhead. Apple and Google charge 30% and they've done a terrible job. I have to wonder if they even review each case. The cost of which would balloon if EPIC become popular. Shenmue III. You mean the game that promised it's backers it would release on steam and didn't? I don't particularly know how you can call an unreleased game good either. Ethical concerns about the developer aside. What exactly are you basing this on? Anyone can look at the numbers on paper but how many developers that haven't been paid by EPIC for exclusitivity have actually reported success stories? Unless you are a dev, there is a lot more to video game dev costs then just the marketplace fee. People tout EPIC's on paper numbers but the prices of games haven't dropped a bit and I haven't heard of single dev that wasn't written a check singing EPIC's praises. I remember EGS fans stating how the prices of games would drop yet AAA games are still $60. Most AAA games would sell well regardless of what store they are on. It's in the interest of big studios to move to as low a fee marketplace as possible. They don't have a need for the exposure tools steam provides. Likewise, I don't see features on the EPIC store for game discovery. There's the front page and that's about it. It's easy to categorize a store when it's small, the problem comes when you get bigger and have to make sure smaller titles get discovered. Again, Naive. People said the same thing about Walmart and then Amazon. Walmart went on to dominate the industry and eventually amazon did as well. It's called a loss leader and is used to quickly gain customers and get rid of competition. If EPIC were to ever control the digital distribution market, it would certainly provide the minimum level of service required and maximize profits. This is business 101. As another poster pointed out, you don't become a billionaire by being ignorant of how to make money.
You are assuming that because EGS's rates are lower that Sweeney is more philanthropic but in fact EGS HAD to set rates lower in order to fight steam. What you assume is coming for the kindness of Sweeney's hearts is in fact a business decision. It certainly makes far more sense if you frame it in that context as well. Perhaps you could ask the same question of Amazon when it takes a 28% cut of every laptop purchase or of the app store or google play? By your definition, every modern online marketplace is a completely ripoff. You single out steam but in fact their rates are below what other app stores charge, especially when you add in 3rd party marketplace sales that carry a 0% rate for steam.
Normally, Valve takes around 30 percent of all game sales on Steam, with some exceptions for games from smaller developers in its Steam Direct program. That will remain the case for the first $10 million in sales a game maker or publisher earns. For all sales between $10 million and $50 million, the split goes to 25 percent. And for every sale after the initial $50 million, Steam will take just a 20 percent cut.
Plus Steam also offers a well functioning network.
www.techpowerup.com/forums/threads/steams-indiepocalypse.256704/ 1) Three days before. I don't believe in coincidences.
2) Control numbers were outed additionally the fact they're still signing exclusivity contracts. Sweeney said they're going to have parity with consoles in regards to game ratings so they won't publish anything Adults Only. Epic did one sales event so far. Considering it's only 10 months old, that's not surprising.
It isn't about the price for consumers, it's about how much developers/publishers get to keep. Yes, they could turn that into a lower MSRP but they won't because unless you're very successful, you're probably barely breaking even. Epic was created to give developers/publishers breathing room by reducing the share distributor takes. Bare in mind that the $60 MSRP debuted with the Xbox 360 in 2005. $59.99 in November 2005 is worth $77.89 in August 2019. MSRP should be $80 now, not $60. That difference has to come from somewhere and...sadly...that's mostly developers getting pinched (the bottom feeders of the chain). EGS reducing their revenue share means an additional $10.80 goes to the publisher instead of the distributor. That's more than half of the amount they should be charging for games so the price can stay at $60 a while longer. Apple was sued over the 30% cut they take on the Apple Store and they won the right to sue (have standing). Once the lawsuit concludes, it's possible that app stores (including Steam) are going to have to make some major changes to avoid anti-trust lawsuits.
30% is draconian everywhere that it is a digital product being sold. It is no mere coincidence that every company with a successful app store is rolling in money (Apple, Google, Microsoft, Steam).
- Diferrent platforms, being able to choose where to buy based on *better conditions*, democracy...? Cool, count me in.
vs
- Crammed bullshit exclusivity, lackluster platform, security issues just half year ago? Hell no!
The fair policy would be for example an action price on titles Epic wants ppl to buy, and to *better their service as opposed to the other providers*. Not damn half-year exclusitivity to the upcoming titles, and that being said, again, on also a preposterously feature lacking online service Epic is and has been for the past year!
They lost me and thousands if not milions of others. I wish Epic changes it's approach to the game market, and to the people. I wish they stop this crap, they make their service better, offer better prices or whatever else can be deemed fine. Then and only then many ppl return to happily use the different online stores, Epic being one of them again.
www.slashgear.com/borderlands-3-becomes-2ks-fastest-selling-game-despite-epic-exclusivity-23592581/ Complain all you want, Epic Games Store is here to stay. The results speak for themselves.
Reply:
rtwjunkie
U are full of crap sir. Crappity crappity crap :D Please go and enjoy ur version of Capitalism, and I will laugh once you wither from it.
Forums are full of people disagreeing...and debating, which is the presentation of thoughts followed by civilized counterpoints, each side discussing. I asked for your examples, not internet hyperbole and your response was an insult.
I do suggest you read TPU’s forum rules before you post further.
in the meantime, I will not be wasting the finite years of my life trying to “stick it to the man” and not play games from his launcher because the game is not on Steam. All that does is minimize the enjoyment part of my life I get from gaming. Not playing only hurts me and makes me older...still without having played said games that are in dispute.