Monday, August 9th 2021
Epic Games Store Keeps Losing Money, Expected Unprofitable Until 2027, Even with a Massive $500 Million Investment Behind It
Epic Games Store, one of the many products of the Epic Games company, is the current number one contender of Steam game store, which used to be Valve's monopoly in the gaming market. Having another contender is nice and competition is always welcome, however, it doesn't seem like running a games store is a cheap venture. In the recent legal dispute between Apple and Epic in California state, we have discovered some interesting details about Epic Games Store (EGS) and its financial background. According to the documents appearing in the court, EGS is not considered profitable until 2027, at least.
Apple has told the court that "Epic lost around $181 million on EGS in 2019. Epic is projected to lose around $273 million on EGS in 2020. Indeed, Epic committed $444 million in minimum guarantees for 2020 alone, while projecting, even with 'significant' growth, only $401 million in revenue for that year. Epic acknowledges that trend will continue in the immediate future: Epic projects to lose around $139 million in 2021." This information shows that Epic has sunk a lot of cash in the store, however, the company expects EGS to become profitable at some point, where the original investment will be returned.
Source:
via PC Gamer
Apple has told the court that "Epic lost around $181 million on EGS in 2019. Epic is projected to lose around $273 million on EGS in 2020. Indeed, Epic committed $444 million in minimum guarantees for 2020 alone, while projecting, even with 'significant' growth, only $401 million in revenue for that year. Epic acknowledges that trend will continue in the immediate future: Epic projects to lose around $139 million in 2021." This information shows that Epic has sunk a lot of cash in the store, however, the company expects EGS to become profitable at some point, where the original investment will be returned.
172 Comments on Epic Games Store Keeps Losing Money, Expected Unprofitable Until 2027, Even with a Massive $500 Million Investment Behind It
I like the digital era. To me it is almost perfect. You get things like GOG updating old games to run properly on modern hardware, but on the other hand you get bullshit like exclusivity or publishers removing music from games because of expired licenses.
Linux comparison still stands, and I won't whitewash it away. Linux lacks Windows features. EGS lacks Steam features. Whether you desire them or not they are there and provide users with more functionality and usability. Whether or not you ignore doesn't mean they aren't there. I haven't changed my argument on this at all.
Using Steam means I don't need EGS for any reason. I don't need both when one offers less, not more. Not hard to understand.
I've said it before, I'll say it again: it seems that there is a group of people who don't use storefronts/launchers to download/play games, but instead use games to... play storefronts/launchers.
Similar to how audiophiles use music to listen to their equipment, instead of vice versa (like normal people). Exactly this.
So many people dismiss the tangible benefit that Epic's policies have towards developers simply because they're Epic's policies. I'm willing to bet money if Valve/Steam had introduced these policies on their own accord, people would be singing their praises for months. There would probably songs written.
Somehow, in the minds of these people, especially those who consider themselves gamers, a multi-billion multi-national corporation (Valve) is more deserving of their support than the very people who make the games (you know, the thing we go to these stores for!), people with ideas, desire and passion who want to share those with others via their creations.
It boggles the mind.
You mentioned projecting things, you are projecting both of the following:
- You are projecting I am saying people should not use EGS. I have never said anyone should not use EGS. I have said EGS is not a platform I consider using based on the facts I have stated, and I never said you or anyone else shouldn't use it for whatever valid reason you have.
- You are projecting that there is a group of people who play distribution platforms. Maybe so, but again you constantly assume things.
You keep claiming that I am making a projection or that it seems like I am saying something I am not, when in fact you are the only one projecting narratives.The facts are the facts in the comparison, if that seems like I am telling someone not to use a store to you then perhaps you are self-examining your own thoughts. Use what makes you happy.
If the features that Steam has but Epic's launcher doesn't are of critical importance to you, then yes, Epic's launcher is inferior.
If those extra features are useless to you, then for all intents and purposes Epic's launcher is not inferior, it is equal, as it offers everything you need.
These "some people" in your example are "putting up" with the service, because it is completely sufficient for their needs.
Again, just because you need or use a certain feature in a software product or service (in this case Steam), doesn't mean that everyone else does. People are different, with different preferences and requirements of the products/services they purchase and use.
Why is this such a difficult concept to grasp? What?
Do you not realize that the "food" in your metaphor is the equivalent to the games that the storefronts sell.
Are you implying that the games are better when purchased on Steam, compared to Epic?
Unless the "food" actually refers to the launchers themselves, but that would mean that you are spending money NOT to play the games, but to use said launchers. Although that would neatly lead me back around to my previous argument that some people actually "play" their launchers, and games are a means to an end.
But comparing 30% vs 12%, but ignoring processing fee is then a bullshit comparison. At that rate, you're paying more for a EGS game than the same on steam.
and again, if it's the dev cut you care about, your better off buying steam keys directly from the devs.
But some people can't swallow that so they go outrage mode :) Good luck to them, though I like how the tone of discussion has moved in this topic, we're still talking argument based. Its about understanding the market for distribution correctly, I think, in a general sense, and how it is changing. At the same time, for us customers being so very aware of what's happening is also a good thing. Be hypercritical. Judge with your feet. But also: be flexible and open to new information. In my personal view... I'm just as ready to delete EGS tomorrow if they start acting funny.
Like, the point of a platform charging less commissions is to enable developers offering their stuff for cheaper on those which in turn would translate into a competitive advantage for said platform. In the case this doesn't manifest then yeah, it's them being retarded.
And again: I'm not against Epic. I wish they will improve on their service and start offering something of value over the competition in the future. I'm just simply not buying their exclusive deals and marketing crap. You do realise that when you're buying a game online, you're also paying for the maintenance of said online service, right?
Maybe my example lacks some refinement... let's say you have the option to buy food at a supermarket that's next to your house, clean, offers a wide range of products, and the shopkeeper smiles at you every time you walk in. You can buy the same piece in another supermarket 2 miles down the road that's not as clean, offers less variety, and the shopkeeper is always busy playing on his phone instead of helping you. The price is the same, but the not-so-pleasant store claims to help local farmers more. Which one will you choose?I forgot to add this to my previous comment for some reason. Never mind. :oops:
I don't notice a 1% performance decrease due to background processes, but I do notice a decrease in available disk space. You might argue that the disk space loss is tangible too, but why should I keep something installed that I don't need?
To be perfectly clear, I'm not thrilled about exclusivity, I get no orgasms from Epic having exclusive games, but I understand why they are doing it. It is a... "necessary evil", if you will.
If it were up to me, all games would be released on all stores at launch. Unfortunately that isn't how the world works. I completely realize that, and I acknowledge that this is the case.
However, the game is still the most important element of the transaction. If I want to purchase let's say BioShock, when I go to the checkout I'm going to see the name "BioShock", not "BioShock + maintenance fee" or "Steam account fee + BioShock", or the charge being broken down into multiple items (with maintenance being among them).
It is naive or disingenuous to argue that the maintenance of the online service is even remotely close to the importance of the actual product (game) the user is purchasing.
I feel silly having to explain this. Without the games the online service would have no reason to exist. Steam was created for the very reason to distribute Valve's games. Your analogies are either just wrong or deliberately manipulative.
Firstly, how is Steam the equivalent to a smiling and polite shopkeeper, whereas Epic is the equivalent to an always busy shopkeeper? Are you implying that shopping on Steam is easier? Faster? More enjoyable? How does that even work? Neither Steam, nor Epic is "smiling" at me. I mean, neither storefront makes me glad to be shopping there. It's just a user interface, I make the necessary clicks, and that's it.
Secondly, the distance argument falls flat, because while in real life that is a factor, online it isn't. Unless Epic's services are for some reason slower where you live, but that would most likely be an ISP problem.
Apart from the lack of a shopping cart, shopping at Epic isn't any different compared to Steam: open the client, find the game, make several clicks, choose payment method and enter necessary information, done. What is the problem?
I also fail to see what the big deal is about the lack of a shopping cart. Yes, technically, that is a drawback. Having a shopping cart is better than not having it. But is it really that much of an issue? Do people really purchase so many games so frequently that they need a shopping cart that badly? Especially considering how many people who complain about that are the same people how more or less vow to never shop there because Epic = bad.
If your primary storefront is going to be Steam, and you are going to go to Epic on that very rare occasion when they have what you want, how much use are you going to get out of a shopping cart?
I'm not saying it shouldn't be implemented, quite the contrary, it should, I just find this issue blown way out of proportion.
The supermarket that's next to your house with the friendly shopkeeper is the distribution service you've been registered to since ages ago, you know its user interface, you know how it works, etc.
The supermarket far away is the service you have to register to, learn how it works, and so on.
I guess the difference in variety explains itself. EGS doesn't have a shopping cart? I didn't even know. :eek: Not the end of the world, but I imagine it would be very uncomfortable to use it with my shopping style. When I see a game that I like, I move it to my wish list. During big sales, I take a look at my list, and buy several, most often heavily discounted games at the same time. One more reason to stay with Steam and GOG, I guess.
There are obvious reasons for EGS only getting "Timed" exclusive deal instead of "Real" exclusive (Like PS5 exclusive)
The developers knew putting games on EGS will generate significantly less revenue over time.
So they set the same price.:)
The notion that one needs to "get used to" a game launcher is ridiculous to me. They are not complex, anyone can figure out how they work. One does not interact with them constantly like for example a chat/communication program so that if it isn't intuitive, the experience suffers significantly.
I'm not saying users cannot find a certain UI more convenient, but the issue is hugely blown out of proportion, as if Steam is flawless, and Epic's launcher is unusable.
Why do advocates of Epic have to assume that whoever doesn't want to register is a fanboy of Steam and hates EGS for no reason? I don't hate EGS. I just find their marketing BS and lack of innovation perplexing. Why is it wrong to be happy with Steam and expect something new from EGS and other potential newcomers?
1. Lower fees - This move have not really forced Steam to lower their fees. And over a prolong period, you can certainly tell it is taking a toll on the company. I suspect the lower fee is really just a carrot at the start, and hopefully if they gain market share, then they will start increasing it. In short, it is not sustainable. If I were to try and find a comparison, it is those days where Uber first started and throwing money away with great deals. I guess everyone should recollect how it went over time.
2. Free games to build up a new library - There are some good games for sure, but not every free game is one that people like to play. Assuming I visit EPIC every week for the free game, I would have a massive library now, but how many do we actually play? Everyone have their preferred genre of games to play, so visually I have 100 games in my library for example, there are only but a handful of titles that will interest me. Its free, so people just grab without hesitation. As compared to a library of 20 games in Steam which many of us would have considered before paying real money for it. So on the surface it is 100 vs 20 games in my example, but chances is that you will still go back to Steam for that 20 games. I believe a lot of people visiting EPIC is mainly for free games unfortunately.
3. Exclusive titles - This probably contributed the most to EPIC, but at the same time, also cost the most for them. So how much are they making from it, i.e. profit?
I don't know about everyone, but I am just looking to game. Where most of my games are (ones that really matters), that is likely the main platform I use. It is not like I buy a game every other day that the cost really matters. In my opinion, if EPIC just continues on the same path, the results will not change. They know it and they are on borrowed time with the current success of Fortnite. If that last defence falls, they will need to rely on external loan/ investment all the time to keep up with the bleeding.