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Epic: Bribe or Bust

You are probably aware of the Epic Game Store’s predilection towards bribing indie developers with fat stacks of cash to get them to sign one-year exclusivity deals, sometimes after Steam has been giving the same developers months of free advertising by being listed (and even preordered!) on the store. That can be considered an erosion of consumer surplus or clever use of game (business) mechanics, depending on how you feel about the taste of boots. What has hitherto been unmentioned is Epic’s stick on the other end of the carrot: declined exclusivity will keep you off the Epic store.

On July 27th (Saturday) I uploaded a new trailer anouncing Steam launch date. On July 30th (Tuesday) I was contacted by the Epic Store, proposing that I enter into an exclusivity agreement with them instead of releasing DARQ on Steam. They made it clear that releasing DARQ non-exclusively is not an option. I rejected their offer before we had a chance to talk about money.

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Now, maybe there is a less nefarious reason for why the Epic store “is not in a position yet to open the store up to games that simship.” Perhaps it is related to the reasons why a Shopping Cart or Wishlist are apparently impossible to implement even with bigdick Fortnite money in a digital game store in 2019. Maybe Tim Sweeney is just an odious asshole, celebrating a “multi-store future” with GOG – a competitor in financial trouble – but not with Steam, which would invite embarrassing comparisons.

The bottom line is that the developers of DARQ turned down Epic’s exclusivity deal and now they will not be able to sell their game on Epic. Because “reasons.” It makes me slightly more sympathetic to the (indie) developers of these games, as it was not just the ready cash, but also the threat of losing out on tens of millions of other eyeballs on other storefronts.

As a reminder, none of this exclusivity bullshit is necessary. Epic could simply undercut the Steam price by 5% forever AND grant developers a larger percentage of the cut, and I would buy all my games in the Epic store. I do some ridiculous shit to save $1-$2 after all. Maybe that’s Plan B for when they run out of exclusivity money?

Oh well. Let’s see how they spin this.

Dog Catches Car

It’s a real shame that Borderlands 3 isn’t coming out until next year…

Borderlands3_Steam

So many game delays this year, amirite?

Memes aside, I won’t rehash why (Epic) exclusives are bad. Instead, I wanted to talk about Rohan’s closing paragraph about the subject:

Ultimately, I think Epic’s exclusives strategy was entirely predictable. It’s also possibly the only strategy with a chance of breaking Steam’s hold on the market. I expect that while Epic may pay lip service to complaints about exclusives, they’re going to ignore the community clamour, and follow this strategy until they get established.

It’s already been admitted/established that Epic is doing this because they have an inferior product with no hope of creating better value for customers. But what struck me with the above paragraph was what happens if it succeeds. Like, they get X number of people to buy Borderlands 3 (etc) in the Epic store. So… now what?

I guess the hope is that each time you log into Borderlands 3 or whatever, you see whatever handful of other games Epic is selling. Okay. But we’ve kinda already established that the people buying from the Epic store are those who don’t really care about storefronts – they are just following specific games. And at the moment, Epic isn’t actually competing on price either. Metro Exodus is $50 instead of $60, but it’s not a “deal” because you can’t buy it anywhere else.

The endgame, such as it is, appears aimed squarely at game publishers just eventually not ever listing their games on Steam anymore. Which wouldn’t make much sense until the userbase of the Epic store is much higher, which these exclusives are attempting to achieve. But, again, there’s nothing really keeping customers coming back. Steam has a social ecosystem between reviews, forums, modding (i.e. Steam Workshop), chat, streaming, and so on. That and Steam sales. Epic so far has… exclusives… bought with Fortnite money.

I suppose the real best-case scenario here is that Epic bribes enough developers that Valve eventually responds by lowering their percentage ratio for everyone across the board. Epic could still buy timed exclusives, but it’s possible the bigger fish no longer bite as the Steam install-base remains in the tens of millions. In which case… fantastic? It’s not as though Valve actually makes games anymore, so them losing revenue doesn’t actually impact anything.

But in the meantime, fuck Epic and this ridiculous storefront war waged at the expense of consumers.

Epic “Competition”

The Epic Game Store has poached another high profile new release from Steam: The Outer Worlds.

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As if trailers weren’t already misleading enough.

As with Metro: Exodus, this is a timed exclusive meant to expire after 1 year. Unlike Metro though, Outer Worlds is also slated to be released on the Windows Store as normal. So if you really wanted to play it Day 1 without using the Epic Store, you can. Of course, that means… you have to use the Windows Store, which comes with its own issues.

The backlash from the continued poaching of games is pretty widespread on Reddit (and Youtube comments, etc) although there is also a tremendous amount of counter-backlash. Most of the counter-arguments seems to boil down to “why so serious?” Which should not be unexpected from /r/SubredditDrama or /r/GamingCircleJerk users, of course. Nevertheless, it is question worth asking.

But before I get to answering it, let’s review why Epic is doing this in the first place:

When asked for his take on these reactions, Sweeney reiterated the aim of the Epic Games Store is, “breaking the 70/30 stranglehold that’s pervaded the industry for more than a decade,” and that its methods in doing so were never going to please everyone.

“Changing the way that games are sold is a big disruption to everybody,” he says. “I understand that — I’ve personally unsubscribed from Netflix twice as their selections of movies changed. But this is a necessary step forward for the games industry if we want to enable developers to invest in building better games, and if we want the savings to ultimately be passed on to gamers in the form of better prices.

Ah, it’s all pure altruism for the good of all gamers.

On Sweeny’s Twitter though, he admits:

UbiSoft agreed to a co-exclusive on UPlay and the Epic Games store. Epic Games seeks exclusive games in order to have a unique lineup of games so there’s another reason for gamers to come to our store.

In fact, here are the brass tacks:

That’s one of the biggest complaints about the Epic Games Store: it lacks features. Indeed, it didn’t even have a search tool until recently. But Sweeney points out that there’s no use taking on a “dominant storefront” (ie, Steam) unless the exclusives, prices and developer relationships are there.

“It’s nearly perfect for consumers already… There is no hope of displacing a dominant storefront solely by adding marginally more store features or a marginally better install experience,” he said. “These battles will be won on the basis of game supply, consumer prices, and developer revenue sharing.”

It may seem like a “duh” moment, but I just wanted to reiterate the fact the Epic CEO admits there is no other way to compete with Steam on the merits. That the Steam store is “nearly perfect for consumers already.” And thus, the only way that the Epic store can hope to compete is by restricting the game supply via exclusivity agreements.

Which is a bit of a weird way to foster “competition,” don’t you think?

If you want to know why I consider Epic’s shenanigans as anti-consumer, timed exclusives is it. Competition between storefronts means I have the choice to purchase it from Steam or from Epic or whomever. For some reason, Sweeney feels like competing on price or developer revenue sharing isn’t enough. Possibly because Epic has a shitty store lacking in basic functionality. Forcing people to use said store if they want to play X game isn’t doing consumers any favors, even if it’s hypothetically “for our own good” years from now.

I get it. Disruption is required to break into mature markets. But typically – or at least ideally – the disruption comes out in favor of the consumer right away. Uber and AirBNB and Netflix and all the rest broke monopolies by offering not just lower prices, but superior service/opportunities in most cases. Uber didn’t just swing big-dick Fortnite money around and buy up all the cabs around the airport and tell people that the next five years are going to be super exciting for cab drivers.

Epic Shenanigans

In case you haven’t seen the news, the Epic Store has poached another timed-exclusive game release: Metro Exodus. The wrinkle this time is that rather than being planned from the start, Deep Silver must have been given a fat stack of secret cash because the game was already available on pre-order from Steam (which are still being honored, until removed from the Steam store). And, you know, the game was all set out to be released in 2.5 weeks.

I mentioned “fat stack of secret cash” because while the revenue split is more generous in the Epic Store, they are actually doing the only thing I said would matter in the competition space: Metro Exodus had its MSRP lowered from $60 (on Steam) to $50. Which means the gross revenue from this game would be:

  • Steam = $60 * 0.7 = $42
  • Epic = $50 * 0.88 = $44

That calculation demonstrates how a developer could still make a higher profit on the Epic store by dropping the price to $50, but here’s the thing: they are going to be losing a non-trivial amount of sales for not being on the PC’s largest storefront. Enough to matter? Remains to be seen. The Metro Redux (aka remasters) of the first two games sold 1.5 million copies back in 2016. That would be $3 million more in Deep Silver’s pocket if they sold the same amount of games… at full price… as the remasters of the last two games combined.

That $2 difference between revenue is 4.5%. If Deep Silver sells 4.5% fewer copies due to not being on Steam, then they lose almost $3 million. I mean, without even doing much calculations, you gotta know that for every Steam sale lost, they have to sell 22 copies in the Epic Store to break even. Ergo, I suspect that Epic was waving something more than simply the 88% cut in Deep Silver’s face.

And that’s kinda the baffling thing about all this. I’m not opposed to competition between companies, especially when it results in a gain in consumer surplus. Competing on price is a huge deal, and I’m sincerely amazed that Deep Silver pulled that trigger to sell at $50. But… why then yank the title from Steam as a “timed-exclusive release”? That isn’t consumer friendly or useful to anyone at all. Why not let the same title be purchasable on both platforms, and allow nature to run its course?

We’ll have to see how things shake out a year from now, when the game is finally released on Steam… presumably at a huge discount because it will have been a whole year.