The big picture: For small developers, the compensation Microsoft provides to host a game on Game Pass or what Epic Games pays to keep a title temporarily exclusive to its PC game launcher can be a crucial safety net. However, comments from GDC 2024 indicate that offers from both companies have significantly decreased, suggesting a transition on the horizon.
According to the studios behind Slay the Spire and Darkest Dungeon, multiple indie developers at GDC 2024 claim that funding offers from Microsoft and Epic Games have dramatically diminished. The cause is unclear, but the video game market has recently encountered serious economic headwinds.
Mega Crit co-founder Casey Yano stated that at least five small developers at the event mentioned numerous budget cuts and funding cancellations from big publishers. In some cases, funding partners pulled out even after year-long negotiations.
Yano and Darkest Dungeon director Chris Bourassa reported that Microsoft has approached far fewer indies with offers to host their titles on Game Pass. Bourassa also mentioned that Epic Games has scaled down its strategy of financing indies in exchange for exclusivity on its storefront.
Although the practice of launching games exclusively on the Epic Games Store is unpopular with many customers who prefer sticking to Steam, it provides some developers with a financial cushion by helping them quickly recoup costs. This extra insurance can be crucial for small teams that might depend on the success of one game.
Industry-wide challenges could be to blame for the downward trend. Numerous game companies, including Microsoft and Epic, have contributed to a historic wave of layoffs, so further cost-cutting comes as no surprise. Unfortunately, it's potentially coming at the expense of smaller studios.
Game Pass and the Epic Games Store have faced uphill battles that generous rounds of funding haven't been able to overcome. Microsoft's subscription service hasn't acquired new paying customers as quickly as initially hoped. Xbox head Phil Spencer also noted that the console market as a whole hasn't experienced significant growth in the last couple of years. Meanwhile, the Epic Games Store hasn't achieved profitability after five years of operation.
Still, both services are showing signs of progress. Epic is preparing to launch its store on iOS in Europe after Apple banned and then unbanned the company following the debut of the European Union's Digital Markets Act. Game Pass recently received Diablo IV, the first major addition resulting from Microsoft's $69 billion acquisition of Activision Blizzard.
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