Epic Games Store Keeps Losing Money, Expected Unprofitable Until 2027, Even with a Massive $500 Million Investment Behind It

[AleksandarK]

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.


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[ilyon]

Such a surprise...

 

[zlobby]

In. Da. Face.

 

[TheDeeGee]

In. Da. Face.

Funny how some people prefer Steam monopoly.

 

[dj-electric]

Even with the amounts of good karma EGS gained giving dozens (hundreds?) of games for free, and actively funding indie studio game development projects, somehow many people still view it as evil incarnate. Astounding how this stupid double standard with Valve's steam keeps existing.

 

[laszlo]

indeed this is "epic"

 

[ExcuseMeWtf]

Turns out giving out dozens of games for free doesn't make for a strong business model.
Who knew?
Expect it to become less generous over time if not stop altogether...

 

[64K]

Steam gives away a game sometimes and so does GOG but Epic is giving away 2 games every week. That's a lot of games. They are giving away A Plague Tale: Innocence right now which is supposed to be a good game. That's a $40 game on Steam.

Even with the amounts of good karma EGS gained giving dozens (hundreds?) of games for free, and actively funding indie studio game development projects, somehow many people still view it as evil incarnate. Astounding how this stupid double standard with Valve's steam keeps existing.

The 3 main reasons that gamers cite when they are criticizing EGS is Epic's policy about making games exclusive to EGS. Their store isn't as feature rich as Steam. Their ties to Tencent in China (they fear their personal info will be harvested by the Chinese Government). None of these really bother me.

 

[john_]

By the time EGS is expected to become profitable, we will have over 500 free games to play.

 

[Gundem]

Funny how some people prefer Steam monopoly.

So true. Often the first to complain but last to try something new or different.

 

[Deleted member 24505]

Thing is, when you have spent so much money on one system, say steam, and have a lot of games on it, there is pretty much no way any other is going to be anything but secondary. Also if you could get the game on your primary system, steam, chances are, you would.

I have hundreds of games on steam, so i primarily only look on there for games.

 

[ZoneDymo]

Keep at it Epic Store, we need competition

 

[Valantar]

If anything, this just demonstrates why someone with significant financial resources was needed to bring the fight to Steam, and how hollow the "but you can buy Steam keys anywhere" argument is. Good on Epic, being willing to fund this (presumably through their game earnings) until it grows to a scale where it's actually competitive. The launcher still needs some work (a shopping cart would be nice!), but the more they can bring the fight to Valve, the more open the market will be to other alternatives as well. It's a win-win-win for everyone buying games.

Thing is, when you have spent so much money on one system, say steam, and have a lot of games on it, there is pretty much no way any other is going to be anything but secondary. Also if you could get the game on your primary system, steam, chances are, you would.

I have hundreds of games on steam, so i primarily only look on there for games.

While I understand having a "default" place you check first, why should "I have hundreds of games there already" affect where you look for games next? There's no actual logical relation between those two elements, after all.

 

[sepheronx]

I am OK with Epic game store. I am not entirely sure with the hate for it.

I just think they would have become popular, while also profitable (or semi at least) if they just offered free obscure games (or really old) every month at least and discount coupons (which they already do).

 

[Space Lynx]

Uplay has the best optimized launcher/smoothness/library/points RPG system for in-game rewards you can't buy with real money, makes me WANT TO DO ACHIEVEMENTS (unlike Steam which I just ignore achievements there)
Steam has best social/UI (I love Small Mode)
Origin is a resource hog and a shame on the industry
Epic Games gives me free games so I'm cool with that
GoG let's me snuggle at night in comfort in-case there is an apocalypse, as long as I have solar panels and DRM free I will still be ok. Thanks for the snuggles GoG.
Bethesda Launcher was initially required for Gwent card game, so I said **** Gwent card game and went back to
Magic the Gathering Arena launcher is ok, sure is a cash machine of a game though, makes Gaben look like he works for the Red Cross
Battle Net launcher is just a mess, news thrown in your face whether you want it or not, not friendly to end user at all, shame almost as bad as Origin, but only almost.

@lexluthermiester you in particular will like the GoG line

 

[Vayra86]

Thing is, when you have spent so much money on one system, say steam, and have a lot of games on it, there is pretty much no way any other is going to be anything but secondary. Also if you could get the game on your primary system, steam, chances are, you would.

I have hundreds of games on steam, so i primarily only look on there for games.

Its a strange phenomenon, to me, that.

Why would you limit your power and influence as a consumer like that. Speak of shooting yourself in the foot. Installing a launcher is what, 10 seconds? (Well, if its not Uplay or Origin, which can take well over 10 minutes). You can run the games from their original icons like back in the old days. You can also combine all games into something else like Playnite or even Steam itself.

And then there's all the games that don't even pop up on Steam, or Epic. You're gonna be having more launchers anyway. Even per game was the norm not too long ago. Has that really changed? I think it has actually improved. Having it all on Steam is somehow a thing now, but prior to EGS, you never heard anyone about it. Contrary even, 'double DRM' made it more attractive to play Ubisoft games on Uplay, for example. Shit would often not even work proper.

Another important point in that regard is the curation and the quality of curation of games. Steam is a cesspool in that sense. EGS is moving there. But look at GoG, now there's a team that's doing proper curating. Not 'hey users, figure it out' Like Steam does for its curators and reviewers and developers and... everyone else... but 'Hey, these are Good old Games, we know them, you know them, we make them work'.

So realistically, all these outlets have different pros and cons. Why limit yourself (tunnel vision yourself) to that single one? Its like buying all your clothes at the same store. Boring, man. And also a bit lazy.

By the by, I'm NOT trying to say you're lazy or boring - (apparently this needs clarification in 2021) and I do get what you're saying. Its what we're used to. Most/all of us. And I'm advocating we get past that as we have changed our perspective on gaming and games before.

*EDIT: I also catch myself running to Steam before EGS again lately. And part of that is the fact EGS is still clunky as hell. Early days that could be overlooked, but now, come on... it really doesn't need to be so horrible. There are multiple issues with the UI, the pop up menus and more that are just illogical, slow, or unresponsive. I wanted to uninstall a game the other day, but had half a library in need of an update. The launcher feels its necessary to first, ONE BY ONE, start downloading the updates, and keeps my uninstall on hold until they're all done. Sweeney, what did you smoke? I was cancelling each update PER GAME to finally arrive at the very last one (the first on my library list, go figure) which had the uninstall command on it. WTAF.

 

[qubit]

A couple of questions come to mind from this news:

1) What's so expensive about setting up an online store. Surely, it's mostly automated. You just need a developer or two to keep it current, new features and debugging and a bit of tech support to improve it and keep it running. Where's that requirement for all those millions from?

2) I can see the motivation to sue Apple over the App Store 30% fee, as they want to cover some of those losses by paying Apple less, even though they've entered into a legally binding agreement. I hope they lose this one badly.

 

[Valantar]

A couple of questions come to mind from this news:

1) What's so expensive about setting up an online store. Surely, it's mostly automated. You just need a developer or two to keep it current, new features and debugging and a bit of tech support to improve it and keep it running. Where's that requirement for all those millions from?

2) I can see the motivation to sue Apple over the App Store 30% fee, as they want to cover some of those losses by paying Apple less, even though they've entered into a legally binding agreement. I hope they lose this one badly.

Server costs and infrastructure costs are no doubt significant, but likely minor in the grand scheme of things. Commissions to payment providers take a chunk out of everything. Then there's the ancillary costs - legal and business costs for operating in dozens if not hundreds of markets. That's a ton of lawyers, accountants, IT staff, support staff, etc. But the main cost? Likely getting developers onto the platform in the first place, especially exclusivity agreements. Those easily run in the tens of millions of dollars. As can giveaways of major titles. Couple that with EGS taking a sensibly small commission on EGS sales, and reaching profitability while also growing at a rate that makes the store relevant in the grand scheme of things is likely to be a very long game.

 

[64K]

A couple of things that's nice about EGS games is that I don't even have to sign into the launcher or use the launcher. I just go to the game folder and click on the exe. Another thing is the game will launch even if my internet is down by doing this.

 

[Valantar]

Oh, and regarding the title of this news article, what does the $500M investment matter for the profitability of EGS? Every dollar spent from that investment that isn't matched by a dollar coming in as revenue is a loss. The investment just means they have cash on hand to spend without being reliant on money coming in first or credit.

A couple of things that's nice about EGS games is that I don't even have to use the launcher. I just go to the game folder and click on the exe. Another thing is the game will launch even if my internet is down by doing this.

Hm, I didn't know that. Sounds nice. Though that being said, buying EA games through EGS is a pretty nasty experience. Starting the game from my desktop launches EGS, which then launches Origin, which then sends me back to EGS before launching the game. That's ... not elegant

 

[Deleted member 24505]

Its a strange phenomenon, to me, that.

Why would you limit your power and influence as a consumer like that. Speak of shooting yourself in the foot. Installing a launcher is what, 10 seconds? (Well, if its not Uplay or Origin, which can take well over 10 minutes). You can run the games from their original icons like back in the old days. You can also combine all games into something else like Playnite or even Steam itself.

And then there's all the games that don't even pop up on Steam, or Epic. You're gonna be having more launchers anyway. Even per game was the norm not too long ago. Has that really changed? I think it has actually improved. Having it all on Steam is somehow a thing now, but prior to EGS, you never heard anyone about it. Contrary even, 'double DRM' made it more attractive to play Ubisoft games on Uplay, for example. Shit would often not even work proper.

Another important point in that regard is the curation and the quality of curation of games. Steam is a cesspool in that sense. EGS is moving there. But look at GoG, now there's a team that's doing proper curating. Not 'hey users, figure it out' Like Steam does for its curators and reviewers and developers and... everyone else... but 'Hey, these are Good old Games, we know them, you know them, we make them work'.

So realistically, all these outlets have different pros and cons. Why limit yourself (tunnel vision yourself) to that single one? Its like buying all your clothes at the same store. Boring, man. And also a bit lazy.

By the by, I'm NOT trying to say you're lazy or boring - (apparently this needs clarification in 2021) and I do get what you're saying. Its what we're used to. Most/all of us. And I'm advocating we get past that as we have changed our perspective on gaming and games before. I also catch myself running to Steam before EGS. And part of that is the fact EGS is still clunky as hell. Early days that could be overlooked, but now, come on.

I have steam, ubiconnect, and origin installed, as i have games on all 3. My point is, if i can get a game on steam, i will, if not i will look at origin or ubiconnect. I don't really want to have 4 or 5 installed, the only reason i have ubiconnect installed is FC5 requires it for steam. I am playing through BF1 atm so that is the reason for origin, I don't have many games on there i regularly play so don't usually have it installed.

It's easier to have as many games on steam as possible. I have friends on there i talk to daily. Personally i don't care about anyone elses opinions on Steam, i have never had a problem with it, and if you do, don't use it.

 

[Vayra86]

A couple of questions come to mind from this news:

1) What's so expensive about setting up an online store. Surely, it's mostly automated. You just need a developer or two to keep it current, new features and debugging and a bit of tech support to improve it and keep it running. Where's that requirement for all those millions from?

2) I can see the motivation to sue Apple over the App Store 30% fee, as they want to cover some of those losses by paying Apple less, even though they've entered into a legally binding agreement. I hope they lose this one badly.

1) If you want a half decent application that might be able to handle one or two requests end to end over existing APIs, you're already looking at a decent project with ditto price tag. And that's just a single task thing, say, handle and process a form to convert into a policy or user account; 100-300k and a few months is the very bottom already - without any of the core input your company already has (for insurance, for example, the whole calculation of premium etc.). Here we're talking about a self managed, developed store application that needs to incorporate scalable features, infra, security, responsiveness (there are realtime components), payment backend services etc etc etc. Not to mention all the backlogged features people want - just basic functionality. That's multi million dollar work. EGS is not a Wordpress template

And look at how that worked for every other digital distributor in gaming. Origin is still crap and looks like it started in Windows XP days, half the time things don't even work proper. Uplay had its share of issues, up to and including just not being able to play. Steam has always been on Valve time with rollout of features, slow and steady. But slooooow. The list goes on... apparently its not easy.

2) Wasn't the motivation to sue Apple over in-app purchases, rather than the gatekeeper fee? And how or whether that is 'circumvented' entirely by making your app free and the purchases in-app?

GoG let's me snuggle at night in comfort in-case there is an apocalypse, as long as I have solar panels and DRM free I will still be ok. Thanks for the snuggles GoG.

Oh so much this. Snuggle not sure, but comfortable it sure is to have content not locked behind an internet connection nor tied to some authenticator after purchase. Its the one thing that all other stores are missing tbh.

 

[Valantar]

I have steam, ubiconnect, and origin installed, as i have games on all 3. My point is, if i can get a game on steam, i will, if not i will look at origin or ubiconnect. I don't really want to have 4 or 5 installed, the only reason i have ubiconnect installed is FC5 requires it for steam. I am playing through BF1 atm so that is the reason for origin, I don't have many games on there i regularly play so don't usually have it installed.

It's easier to have as many games on steam as possible. I have friends on there i talk to daily. Personally i don't care about anyone elses opinions on Steam, i have never had a problem with it, and if you do, don't use it.

Wait, has anyone here said not to use Steam? Nice straw man you've got there.

Also: both launchers you're mentioning are publisher specific, i.e. they have very limited storefronts. Neither are (or are claiming to be) Steam alternatives. EGS aims to be a broad-reaching store, on the model of Steam and GOG, with games from many developers. Origin and Ubisoft Connect don't compare.

As for you wanting the simplicity of looking at Steam first: that's obviously your right, but bringing this up in a thread like this can only be as an argument for EGS being useless/a bad alternative/not worth it (Steam isn't part of this topic at all, after all) - and in that sense, "Steam is easy to use, and I already have it" is a pretty weak argument overall. Presenting it as if it's not an argument, but just a common-sense non-argument is an underhanded and intellectually dishonest way of entering a debate. At least be forthright with the fact that you're arguing for something, and be honest with yourself about why. Your second post goes some way towards this, thankfully, but it's still not quite there. At least you're admitting that the only thing you care about is convenience. Though that argument is pretty weak - or at least rather lazy. I also use Steam and have plenty of games on there. I still look for games in this order: GOG -> EGS -> Steam, as I want Steam's de facto monopoly on PC games to end and want to spend my money elsewhere if I can. I really don't see this as a hassle, especially when GOG Galaxy catalogues all my games across launchers (and even on consoles!) for easy access. Nor do these launchers consume noticeable amounts of system resources. And doing a maximum of three searches vs. one? That's hardly a noticeable effort. Heck, this approach even allows for price comparisons and buying where the game is cheapest if you're interested in spending less.

 

[Vayra86]

Wait, has anyone here said not to use Steam? Nice straw man you've got there.

Also: both launchers you're mentioning are publisher specific, i.e. they have very limited storefronts. Neither are (or are claiming to be) Steam alternatives. EGS aims to be a broad-reaching store, on the model of Steam and GOG, with games from many developers. Origin and Ubisoft Connect don't compare.

As for you wanting the simplicity of looking at Steam first: that's obviously your right, but bringing this up in a thread like this can only be as an argument for EGS being useless/a bad alternative/not worth it (Steam isn't part of this topic at all, after all) - and in that sense, "Steam is easy to use, and I already have it" is a pretty weak argument overall. Presenting it as if it's not an argument, but just a common-sense non-argument is an underhanded and intellectually dishonest way of entering a debate. At least be forthright with the fact that you're arguing for something, and be honest with yourself about why. Your second post goes some way towards this, thankfully, but it's still not quite there. At least you're admitting that the only thing you care about is convenience. Though that argument is pretty weak - or at least rather lazy. I also use Steam and have plenty of games on there. I still look for games in this order: GOG -> EGS -> Steam, as I want Steam's de facto monopoly on PC games to end and want to spend my money elsewhere if I can. I really don't see this as a hassle, especially when GOG Galaxy catalogues all my games across launchers (and even on consoles!) for easy access. Nor do these launchers consume noticeable amounts of system resources. And doing a maximum of three searches vs. one? That's hardly a noticeable effort. Heck, this approach even allows for price comparisons and buying where the game is cheapest if you're interested in spending less.

allkeyshop + game is all I ever search for, tbh and its unlikely to change. One search to catch em all. If the game was fantastic and super replayable, I'll try to get it in some patched/modded/portable state...

Platforms are just middle men I can do without, but apparently need because reasons.

 

[Valantar]

2) I can see the motivation to sue Apple over the App Store 30% fee, as they want to cover some of those losses by paying Apple less, even though they've entered into a legally binding agreement. I hope they lose this one badly.

The suit isn't about Apple's 30% App Store cut, but their monopoly on in-app purchases (and in part their unequal treatment of various types of apps in this regard - there are significant exemptions) and their further 30% cut of these. IMO, that monopoly can't possibly be legally defensible, seeing how smartphones are general-purpose computers (unlike, say, consoles). Even locking them down to a single source of applications is deeply problematic.