Epic Games Has Lost Hundreds of Millions on Its Game Store
The Epic Games Store has made a lot of headlines since first going live in late 2018. As well as the many high-profile exclusivity deals that Epic has signed with developers, the company is also embroiled in an ongoing legal battle with Apple after the latter removed Epic's flagship title Fortnite from the App Store last summer. Now, in a recent court-filing that's connected to the aforementioned dispute, some interesting information regarding the store's finances has come to light.
Despite the store having over 160 million registered accounts and more than 56 million monthly active users, things aren't going quite as well as some might expect. Although it has generated revenue of almost $1 billion over the past few years with more than a quarter of this coming from in-app purchases alone, the store itself is currently operating at a rather substantial loss.
Since launching in December 2018, Epic has reportedly lost more than $450 million on the Epic Games Store; a figure that is likely to increase beyond the half a billion mark before the end of 2021. According to reports, the store cost Epic around $181 million in 2019, $273 million in 2020 and is currently projected to lose another $139 million in 2021.
These losses are largely the result of the company's strategy of front-loading its user acquisition costs to increase its market share. This includes expensive initiatives like EGS exclusivity deals, as well as the many free games that are available to EGS users. The company is adamant, however, that the 12% revenue share agreement that it has with developers is sufficient to cover the basic running costs of the store and expects it to become profitable by 2023.
The filing comes as part of an antitrust trial that's currently scheduled to begin in May, although the dispute between Apple and Epic dates back to almost one year ago. Hostilities first began last August when Apple pulled Fortnite from the App Store after Epic implemented a new system which allowed iOS users to make in-app purchases using its own payment system, circumnavigating the app store's in-app purchases system entirely.
It's perhaps understandable why Epic were so keen to do this, with Fortnite players having reportedly spent around $750 million on in-app purchases on the iOS version of the game alone; the vast majority of which was spent by players whose only history of in-app purchases on the platform came in Fortnite. At the time, Apple had been taking 30% of this amount as part of its standard revenue share, although the company has since announced a 15% reduction for smaller developers who make less than $1 million in annual sales on the store.
Post a Comment