Epic Games Store - 88% split goes to devs


#801

If you believe that I said anyone is “blindly stumbling around like morons”, I kindly suggest you might want to stop internalizing or projecting. In the words of the immortal Steve Hofstetter, “I’ve never flown a helicopter. But if I saw one in a tree, I could still be like, ‘Dude fucked up. It’s not supposed to be up there.”

Epic may turn out to be wildly successful for some games and developers. Quite often the first in a venture has the best opportunity to be either exceptionally successful or an incredible failure. The increased exposure is the main attraction. The flip side of this is that it is almost always a high risk strategy to put all of your eggs in one basket, especially when that basket has absolutely no track record of success.

Look at what just happened to Thronebreaker. Launching on GOG, which is a well-established platform, it was a sales disappointment despite critical praise. So it was then launched on Steam because that is where the customer base is.


#802

They’re not competing with 15 years ago Steam though, they’re competing with Current Steam. It’s a completely fair criticism that features are missing (and again, some of these - the ones that I would argue most benefit consumers to making more informed decisions - are intentionally missing).


#803

That’s fair. And I apologize for including you in a broader group. It’s a feeling I see expressed often though.

But do you think my assertion that you might not have all the information to judge whether it’s a reasonable business decision is incorrect?

I certainly wouldn’t believe that my experience building and selling games would give me any special insight into consulting on business software, or what would be required to be successful there as an entity that sold it.


#804

And to that point, we haven’t hit the tree yet. You’ll have to wait a little longer for the fuckup moment. This helicopter’s just lifting off the pad. :)


#805

I entirely allow for the fact that there may be information to which I am not privy that can make this a logical business decision. For instance, perhaps Epic has paid certain developers some guaranteed amount for exclusivity. Depending on the size of the developer a six- (or even seven-figure) revenue guarantee would be a very attractive incentive. If a developer received a guarantee of something like that then good for them. But then again I know that Epic cannot do that for long and still stay in business so that could only apply to a very limited subset of products within a very limited time frame. A loss-leader cannot be the entire business model for very long. The DotCom boom-and-bust proved that.

As for my expertise I agree that I am not a consultant for the gaming market. I also know that there are certain business principles that apply regardless of industry. The evaluation of proper risk is often an exceptionally under-considered one. The numbers are what they are. In the absence of any revenue guarantees a game on Epic must sell 80% of the copies that it would have sold on Steam and other associated gaming stores to break even. Unless Epic is paying me handsomely to make my game an exclusive that is not a risk I would be willing to take.


#806

OK, I’m gonna tackle some your concerns in an effort to illustrate that hey, we think about stuff like this in some detail - more than I’m going to get into here, for sure.

It’s not an all in one basket thing. We have console releases in parallel, and exclusive is timed. And our sales are, unlike brick and mortar, not all up front. We sell our games for years. As far as store/platform risk, Epic has unbelievably deep pockets and a history of making good moves on behalf of developers, and doing the long, hard work of building a platform. (see: Unreal Engine see:back-paying asset creators for their work after the rev split change)

I’m pretty sure for most of the games on the store, the above applies.

I think you can read between the lines that Epic is investing in the success of their platform, too - right? With a slate of exclusives and free games on a schedule?

And you’re right, Thronebreaker WAS a launch disappointment on GOG. Now let me illustrate some of the critical differences - GoG has been a shadow to Steam since inception, its userbase is relatively tiny, with its main differentiating factor being DRM-free software and a slate of older games that are hard to get running. That’s a limited subset of people. And it feels largely static. Does it feel to you like GoG is investing heavily in GoG to make it dominant, or is that money probably going to Cyberpunk 2077 instead? There was nothing developer-attractive about it to drive its adoption or to get studios to award it exclusive content. Contrast that to Epic Store on day one and the studios that have signed on. Extrapolate.

If GoG was 18% instead of Epic and that was it - do you think any of these studios would have launched there? I can probably guarantee ‘no’ unless there are other factors. You can pretty reasonably assume there have to be, right?

And this-

So, if the elements of risk here are ameliorated in numerous ways (some that should be pretty obvious given what you know about Epic and the studios involved), how risky does this actually seem to you? Certainly there is risk - but is the chance of success for a situation like this better than it will probably EVER be again?


#807

Epic is worth over 14 BILLION dollars and has over 300 million dollars of revenue per MONTH from Fortnite.
They lose most game budgets in their couch cushions.


#808

To sum up your point, you have faith that Epic will put forth the resources to make its platform a success.In your case consoles may be the saving grace if Epic fails to lift off. If any title is PC-exclusive it truly is an all-in strategy. In my opinion counting on someone else’s success for your own is inherently a risky strategy. You need two things to go well to succeed (at least for the PC) - Epic’s own store and your game. Neither is guaranteed and if either fails then this was a loss (in the absence of revenue guarantees of course).

We all know most games get their exposure at launch. Counting on residual exposure to generate sales later on if Epic fails is again considerably risky. I believe that Thronebreaker’s overall sales have probably been hurt by the delayed release. So counting on the exclusive to be timed is only a small relief.

I also find the hand-waiving regarding Thronebreaker amusing. How large is Epic’s store currently as compared to GoGs?


#809

We’re ALWAYS at the mercy of someone else’s success as digital software - Steam is just a known to you. But they change all the time, as does their landscape of games.
And if you’re not comfortable with some risk you REALLY do not want to make games. At all.

Well, Epic has 200 million registered users. They’re not all on desktops, but I guarantee you it’s more people hitting the Epic launcher than GoG by a wide, wide margin.

Even given that though - I’m trying to illustrate the difference between Epic’s approach and GoGs to growing those platforms, and the resources allocated to do so. Who was the last studio that invested their fabulous wealth into making a successful store? Oh. Valve.

At the end of all this though, your ultimate stance is that I’m probably making a mistake and ignoring some established good business practices for the industry though, yes? That seems to be your conclusion? It’s the tone I’m getting anyway.

And my original post was that, boy, nobody ever seems to credit the business acumen of any of these studios that have been in business for a while, consistently succeeding.

And… we’re back to where we started. Which is probably a good cue for me to back out of this thread again. :)


#810

While $5-$8B is nothing to sneeze at Valve was worth that half a decade ago. Gabe Newell is worth $5.5B himself and owns slightly over half of Valve, so its worth is somewhere around $10B.

Epic is certainly launching at the peak of Fortnite’s success and this does make them cash rich. But like every game, Fortnite’s growth and model is not sustainable. Just like WoW and every other game before it the user count will decline and could do so precipitously. This is not the Oasis from Ready Player One and The Next Big Thing is always around the corner. Unless Epic can replicate that success with another game at some point it will not have those kinds of resources or funds. Whereas unless someone can make serious inroads into Steam Valve will continue to have their revenue source stable.


#811

https://www.wsj.com/articles/fortnite-creator-epic-games-valued-at-nearly-15-billion-1540577025

Or if they could use that wealth right now to build a separate business which would be evergreen and go hand in hand with their engine business… Hmmm.


#812

No, my opinion is that in the absence of guarantees your strategy is risky. The analysis is what it is and instead of doing so you want to take it personally. Maybe it will work out for you. Maybe it will not. Epic has little experience selling other people’s software. GoG does and could not make their own exclusive work. That is the point and while Epic may be able to overcome that due to their resources, treating it like it is not a large barrier to entry is an interesting logical approach. Nor can Epic’s funds dwarf Valve’s. Epic’s size can make them a formidable competitor but they simply cannot buy the market. Valve is privately owned and was/is worth just as much (if not more) than Epic if it ever wanted to go public.

Note this is is at least the 2nd attempt to play the victim card in the last few posts. It does not help you prove your point nor does it impart a good perception regarding your company or your product. We should be able to have a reasonable discussion without it.


#813

I agree, the strategy is risky but the benefits are potentially worth the risk.
a) If you have differing income streams (console releases and/or back catalog) then the risk is mitigated somewhat
b) The idea is to take an initial risk now to potentially gain a larger piece of the pie later (88/12 vs 70/30)
c) If it succeeds then it breaks a (virtual) monopoly which can only be a good thing


#814

I’m not sure I feel like much of a victim, although I do think our discussion speaks to my original point. And I thought our interaction was pretty reasonable. I’ve tried to lay out my points as clearly as I can, and I’ll leave them for you to accept or discard as appropriate.

But I’m just going to concede the hill and bow out for real. Merry Christmas!


#815

a) Absolutely true. However any reduced sales on the PC is still a loss. Opportunity cost and all that.

b) To get that larger piece of the pie you must sell at least 80% of what would have been sold on Valve (in the absence of guarantees of course). The math is still the math. I think that we can all agree that Steam’s user base and volume will be higher than Epic’s for quite some time. Attracting 80% of that base to a different platform will be quite challenging for a long while. I would dare say that Epic will have a difficult time attracting even 1/3rd the eyeballs to its store at the start and that is being generous. So a developer is counting on the better exposure (less competition) on the Epic store to make up the difference. That is a lot of ground to make up. Not impossible mind you but daunting.

c) Not always. There are monopolies out there that have public benefit. Moreover, Valve is not even a virtual monopoly. Their main strength is that they are a consolidator with many ancillary benefits (forums, workshop, cards, etc.) You can buy most Steam games from a different retailer.

Personally, if I had a choice of purchasing a game from Epic’s store (and game client) at a 20% discount or on Steam I would select Steam every time. The benefits of stability, platform familiarity, the Steam Workshop, forums, voice chat, friends list and the like make up that difference for me. I just purchased ME:A for $4 on Origin. I turned down the opportunity to buy it for $7 on Amazon a while back. Yet I know I would have purchased that game for $10 on Steam. I am a lazy consumer. I like familiarity. I like having all my games in one spot. It took that kind of discount to get me off the pot. My son has said the same thing so I know I am not the only one. Does anyone think that exceptionally rare? I am gifting Steam cards to a nephew this Christmas. That cannot be used on the Epic store. That is not rare either. Any game on Epic will have to overcome those obstacles until the Epic client hits critical mass.


#816

I cannot think of a single monopoly that has ever been good for the public. Can you give an example?
Regardless of whether you can purchase Steam games from different retailers they are the supplier. If they control 90% of the market then that gives them far too much power to be able to dictate market conditions. Competition is healthy.


#817

We have a few monopolies out there because we didn’t want the sky or the ground filled with competing pipes and wires and posts everywhere. There are sometimes finite reasons to allow finite competitors.

Steam is not really a monopoly, neither technically nor in a legal sense (which is different).

I believe the developers that went to Epic Games went with their eyes open. I just think they might have underestimated some features that are important to players, and after today’s discussion, i question if they realize it’s not my job to find them.


#818

Build it and they will come is an awfully attractive proposition especially when someone else is doing the building. In some cases that works and the early band-waggoners are rewarded. In most it does not.


#819

Infrastructure is the absolute worst place to have a monopoly. They can dictate prices/terms and you as the consumer have no choice but to purchase from them.

e.g. ISPs price/net neutrality

I was under the impression that Steam was extremely dominant in the pc game download market but from a 5 minute Google they seem to control approx 50 - 70 percent. Less than I was expecting.

What was interesting was that I stumbled across an article saying they have seen a dip in 2018. The speculation is that this is due to the increasing popularity of Fortnite and the decreasing popularity of PUBG.


#820

Way off topic, but in the US ISPs are not regulated as a utility. In fact they are extremely lightly regulated comparatively. And not at all on price.

And ironically it’s an area with ‘competitopn’, if you exclude the cartel like behavior that they use to divvy up markets into mutual non compete regions.

But @Nesrie is talking infrastructure like electricity, water, gas, sewer, even roads and rails which are regulated and standardized, and therefore are legitimate targets for monopoly, as from a practical standpoint having multiple competing gas lines with different standards, maintenance, and safety features would be a terrible idea.