According to a recent IGN report, Epic Games is set to lose hundreds of millions in its fight to gain some of the market shares from Steam.
Epic Games Store spend around $444 million in 2020 on creating an attractive platform for PC gamers, the strategy is giving away titles for free and exclusivity deals like Metro Exodus, The Division 2, Control, Detroit: Become Human, and World War Z.
It’s reported that the company spends big on offering “minimum guarantees” to publishers releasing games exclusive to the Store. Under this arrangement, games remain exclusive to the PC storefront for at least one year. The minimum guarantee means that developers and publishers receive an advance from Epic regardless of the sales of the game.
IGN reports that players have spent over $700 million on the Epic Store in 2020, only $265 million were spent on third-party games exclusive to it.
Apple has warned Sweeney that his strategy won’t prove to be profitable until 2027, Tim Cook’s company claims that Epic could lose around $600 million by the end of 2021. In response, Tim Sweeney affirms that Epic Games Store is a “fantastic investment into growing the business.”
That’s right! And it has proven to be a fantastic success in reaching gamers with great games and a fantastic investment into growing the business! https://t.co/MN8OjM5FEP pic.twitter.com/Yl0LmCZjKB
— Tim Sweeney (@TimSweeneyEpic) April 10, 2021
Back in March 2020, Epic announced the Epic Games Publishing, offering developers full creative freedom and ownership of their creation, where developers hold 100% of all intellectual property. The publisher covers up to 100% of development costs, from salaries to go-to-market expenses such as QA, localization, marketing, and all publishing costs. As if that wasn’t enough, developers will earn at least 50% of all profits.
“We’re building the publishing model we always wanted for ourselves when we worked with publishers,” said Tim Sweeney, Founder and CEO of Epic Games.
“gen DESIGN, Remedy, and Playdead are among the most innovative and talented studios in the industry, with strong visions for their next games,” said Hector Sanchez, Head of Epic Games Publishing. “They will have full creative control, while Epic will provide a solid foundation of project funding and services.”
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