Epic Games Store - 88% split goes to devs

[LeeAbe]

“Most favoured nation” is not loaded language. It’s the established technical term for the concept for contacts that disallow one party from giving better terms to a third party.

It’s used for international trade referring to nations, not game stores. Using this referring to Steam is indeed loaded language.

[Matt_W]

I wrote this awhile ago. You can’t make market-based arguments about video games. It’s not a traditional commodity market. Creative content isn’t like coffee beans. Exclusives may or may not lead to higher prices. (Probably not.) A better designer cut may or may not lead to lower consumer prices. (Probably not.)

Example? In fact, PS exclusives regularly show up as free PS+ games and are often heavily discounted during sales. Bloodborne’s first price drop was 6 months after release, and a little over a year after release, it was selling for $20. But GTAV, which was widely available on every platform from release still (except for rare small discount sales) cost full price more than 2 years after its release.

Exclusives give a publisher more control over pricing and, since they are what drive consumers to a platform, are often given sale prices as further incentives.

Video game sales are an ecosystem. And they’re creative content, not interchangeable commodities. You can’t easily make an economic argument about the role that exclusive content plays because the relationship between hardware, content, consumers, marketing, platforms, etc is complex, idiosyncratic to every title, and highly contingent on a bunch of outside factors.

[legowarrior]

How is it loaded language? What tilt am I giving by using that common expression?

It’s pretty neutral language to describe the agreement developers have with steam. That sales on steam should be equal to any sale by other vendors that sell steam keys.

[Paul_cze]

It is a kind of perverted joy to watch legowarrior’s mental gymnastics combined with goalpost moving at work :)

I remember when all he cared about were lower prices of games, but now…now games cannot be cheaper, they are already too cheap!

[LeeAbe]

The term is used in international trade for actual nations. Not businesses.

[legowarrior]

It is a kind of perverted joy to watch legowarrior’s mental gymnastics combined with goalpost moving at work :)

I remember when all he cared about were lower prices of games, but now…now games cannot be cheaper, they are already too cheap!

It’s not that hard.

Games are sold for at the lowest price point possible that still makes a good profit the the publishers are happy with. That takes into account that Steam takes 30% of the revenue for itself.

Now, if most publishers are able to reduce that one expanse from 30% to 11%, you have making more profit.

When multiple publishers are earning more, they can start to compete more on price.

What causes them to compete more on price? Greed, or the invisible hand of the market. At least according to capitalism.

Cheaper costs means less risk. Less risk means they can reduce the cost of the game to better compete with other publishers. Other publishers will need to match that if possible or risk the loss of revenue. Prices will go down, but only so far as the publishers can maintain profits. But, again, less money to the store means it’s easier to maintain those profits.

Now, I really disagree with @Matt_W. I think, I’m this day and age, games are competely disposable. You can swap out Call of Duty with some other FPS, and call it a day. I think people freely pick games within a genre and might have preferences, but whatever is hot, is what they will play. And something that is cheap is always hot.

Let me know if you have any questions.

[legowarrior]

The term is used in international trade for actual nations. Not businesses.

Sure, it’s an analogy. Still not sure how that language is loaded. It’s not particular negative or positive.

[DaveLong]

It’s very possible that games on the Epic Games Store will see price reductions more quickly due to the revenue split they have but selling a game at a lower price out of the gate is unlikely mainly because the market is conditioned to accept $59.99 as the standard rate.

[legowarrior]

It’s very possible that games on the Epic Games Store will see price reductions more quickly due to the revenue split they have but selling a game at a lower price out of the gate is unlikely mainly because the market is conditioned to accept $59.99 as the standard rate.

That is a good point. That 59.99 has followed us around for a long time. It doesn’t even make any sense. It’s been, like 20 years at that price point.

[lordkosc]

I disagree. I strongly doubt AAA publishers are going to price there games lower, if they are getting the lower 12% vs the 30% fee. They are going to pocket that extra cash. PC games will have price parity with console games.

[legowarrior]

I disagree. I strongly doubt AAA publishers are going to price there games lower, if they are getting the lower 12% vs the 30% fee. They are going to pocket that extra cash. PC games will have price parity with console games.

If that is the case, then what does any of it matter? Then store competition is meaningless.

[DaveLong]

What do you disagree with?

[AK_Icebear]

I also am taking too much joy in watching him contort himself to support EGS at all rhetorical costs. It’s like the game store version of Andy from that P&R thread.

[Matt_W]

Then store competition is meaningless.

Except on features and content, which is the whole point of contention in this thread.

[legowarrior]

I also am taking too much joy in watching him contort himself to support EGS at all rhetorical costs. It’s like the game store version of Andy from that P&R thread.

Man, that hurts. That’s a real shitty thing to say.

Anyway, I prefer the term nuisanced.
But, tell me what you are struggling with, and I will try to clear it up for you. Communication is a two way street after all.

[Matt_W]

Now, I really disagree with @Matt_W. I think, I’m this day and age, games are competely disposable. You can swap out Call of Duty with some other FPS, and call it a day. I think people freely pick games within a genre and might have preferences, but whatever is hot, is what they will play. And something that is cheap is always hot.

Something that is new is always hot. Established brands and titles are hot. Call of Duty absolutely outsells other FPS titles, even at its premium price point. Games are not, in most gamers’ perceptions, interchangable commodities any more than books and movies are.

[lordkosc]

That the MSRP is going to be lower for the consumer on the EPIC store. Even if the game was sold on Steam and or Uplay. The base price will be the same on all stores regardless of the cut the store is taking.

I mean why isn’t Ubisoft charging 12% less for games on their store?

Division 2 was $59.99 on EGS, $59.99 on Uplay. Why didn’t Ubisoft charge 12% less on Uplay and pass that savings to the customer? They would have made the exact same profit on a sale as they did from the game sold on EGS.

[legowarrior]

Who is forcing them to sell the game for less?

Currently the meta price for AAA games is 59.99. Only one publisher was brave enough to sell it for less, and that was Metro Exodus.

We won’t see significant price drops until multiple publishers feel safe enough to drop there prices, which is sort of a chicken or the egg type thing.

And course, developers will want to maintain parity to the real cash cow that is console titles.

[legowarrior]

Now, I really disagree with @Matt_W. I think, I’m this day and age, games are competely disposable. You can swap out Call of Duty with some other FPS, and call it a day. I think people freely pick games within a genre and might have preferences, but whatever is hot, is what they will play. And something that is cheap is always hot.

Something that is new is always hot. Established brands and titles are hot. Call of Duty absolutely outsells other FPS titles, even at its premium price point. Games are not, in most gamers’ perceptions, interchangable commodities any more than books and movies are.

People play the games their friends play. The cheaper a game is too play, the more likely your friends will be playing it. Which is why Fortnite and other free to play games are so popular.

Sure, it first needs to be a good game, but after that, it just needs to be popular.

[DaveLong]

@lordkosc

Ok, but I didn’t say that. I said it’s likely that the price would remain at $59.99 for new releases. That’s because you’re conditioned to pay it.

The point I made is the revenue for the publisher/developer at that price given Epic’s favorable terms is $1,000,000 more for the first 100,000 copies sold. I think that may easily result in a quicker price reduction on something that sells that much but has slowing sales than you’d see at a lower revenue split. They’re making $52.80 per game instead of $42. If they decide to run a sale at $40, they’re going to make $35.20 per game sold instead of $28 under Valve’s terms. Let’s say they sell another 100k at that price… that’s $3.52 million in revenue compared to $2.8 million. It’s a significantly better deal for the publisher developer and that $40 price is certain to grab more fence sitters.

The store hasn’t existed long enough to see that sort of thing happen, but if sales were to slide on a game I’m selling on the Epic Games Store, then running a sale doesn’t seem so bad as it did on Steam where my revenue split wasn’t nearly as good. At $40, I’m still making $700,000 more on 100k sales. Combine that with that first run $60 revenue and you’re going to come out way ahead even if you resort to sales to keep momentum going.