Epic Whims
Epic is in court again, this time facing off with Google. And during the testimony, it was admitted that the Epic Game Store is still not profitable. Not sure of the current figures, but they had lost $330 million back in 2021. That is not always a bad thing for tech companies, who typically operate under a “if you build it, they will come” fantasy funded entirely by rich gamblers who hope to get cheap shares of the next Facebook. Still, even Epic thought their storefront would be profitable by 2023.
Interestingly though, Epic is not being funded by venture capitalists per se. They are being funded by their ridiculous, beyond-all-comprehension wildly successful Fortnite money:
When Fortnite launched in 2017, Epic was a 500-person company—known primarily for producing the Gears of War franchise and creating the industry-leading game development software, Unreal Engine. It was booking about $100 million per year in revenue. A year later, Epic made a staggering $5.6 billion in revenue. Ninety-seven percent of it was from Fortnite.
[…] According to Forbes estimates, the Cary, North Carolina-brd developer posted revenues of more than $6 billion in 2022, with the vast majority still coming from Fortnite.
Forbes (paywall)
I knew Fortnite was successful, but part of me still imagined that the Unreal engine was most of what sustained the company. That does not appear to be the case.
My question is: how long can this go on? I mean, on the one hand the Fortnite money machine is still printing. And, hey, Uber has been around for 9 years and only became profitable a few months ago. But we’ve also seen Epic lay off 16% of their staff this year and divest themselves of Bandcamp and other properties. Clearly, sustainability is a concern.
With that backdrop in mind, will they continue dropping free games every Thursday through 2024?
Beyond the freebies, this is relevant to my interests because of all the (timed) exclusives too. Dead Island 2 is still not available on Steam, and likely won’t be until next April. While the Epic Games Store has improved over the years – they have had wishlists and shopping carts for at least two whole years now! – exclusivity equals higher prices for longer. Who knew? Some of that is changing a little, as it seems Fanatical and Humble are selling an EGS key for Dead Island 2, but that’s just 1 of 2 listed key sellers to the dozens of Steam alternatives.
Not that I’m hurting for games, of course. But I do want to play Dead Island 2.
Posted on November 13, 2023, in Commentary and tagged Court, Dead Island 2, Epic Store, Layoffs, Loss Leader, Timed-Exclusive. Bookmark the permalink. 2 Comments.
While I do trust the actual figures (because the figures are being bandied about in court under professional scrutiny) I don’t trust the projections. I don’t think Epic ever thought the store would be profitable by 2023. It wasn’t a commitment, it was consequence-free speculation (by Steve Allison at the time) for the sake of the trial. Really, unless they’re deceiving Tencent, Epic can smear whatever rhetorical lipstick they like on any number of snouts.
The trends between 2021 and 2022 are interesting. Overall revenue is down, which doesn’t bode great for Fortnite’s impact on EGS, but third-party game purchases seems to be going up while fewer free games are being claimed.
Unless I’m missing something, though, they just don’t seem to be making much headway in terms of market share. The MAUs (malleable number, but at least vaguely related to Sweeney’s supposed growth-led strategy, with actual sales figures hopelessly confounded by all the gimmicks) seem to have remained steady at about 40% of Steam’s for the past three years.
Still better than Unreal’s market share vs Unity’s…
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I don’t know why I was shocked just now to see Unity at 48% vs Unreal at 13% in 2023. Perhaps mobile/indie blindness. After Unity shit the bed this year with their pricing shenanigans though, we’ll see whether Unreal (or Godot or whatever) starts taking larger slices of pie.
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