The Epic Games Store is known for its free PC games and exclusive content. However, according to Eurogamer, Epic is spending millions in its attempt to overshadow other storefronts like Steam.
While Steam still holds the PC storefront crown, Valve has some stiff competition looking to usurp it. Since its launch in 2018, the Epic Games Store has provided PC gamers with free and exciting games. Since its launch, the storefront has also gained various PC exclusives like Tony Hawk’s Pro Skater 1+2 and Oddworld: Soulstorm. However, Epic’s impressive collection of wares has come at a cost – one that amounts to millions.
The information emerged through Epic’s ongoing legal battle with Apple, with recent court documents stating that the company has $444 million in minimum guarantees for 2020 alone. A minimum guarantee is essentially an advance payment made to publishers entering into an exclusive deal. This payment is made regardless of a game’s success, which naturally means a loss for Epic.
As for Epic’s future plans, the company has apparently stated that its business practices will continue for the time being. Back in 2019, Epic’s CEO Tim Sweeney made it clear what he thought it’d take to combat Steam’s 30/70 revenue system:
“We believe exclusives are the only strategy that will change the 70/30 status quo at a large enough scale to permanently affect the whole game industry.”
While Epic seems convinced that its strategy will pay off, the Epic Games Store is currently unprofitable. According to Apple’s legal documents, Epic’s storefront is being funded through other revenue streams at the company:
“At best, Epic does not expect EGS to have a cumulative gross profit before 2027. As a result, Epic has funded, and must continue to fund, EGS through funding and capital raised by other parts of its business, which have been ‘incredibly profitable’ for ‘several years.“
Epic’s perspective on the situation is slightly different, as the company believes its store will be profitable by 2023:
“EGS is not yet profitable at its current scale and stage of development because it has front-loaded its marketing and user-acquisition costs to gain market share.”
It’ll be interesting to see how Epic’s business strategy plays out. For now, let’s hope that the PC gaming market remains competitive.
Are you surprised to learn the Epic Games Store isn’t making a profit yet, and how do you think it compares to Steam? Let us know across our social media channels!
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Featured Image Credit: Epic Games