Apple claims the Epic Games Store won't see any profits 'until 2027, if ever'

[Cal Jeffrey]

In context: It's no secret that the Epic Games Store has been operating at a loss since opening. Apple has leveraged this fact in court, suggesting that the EGS may never see profitability. It claims the store is nothing like the App Store and is unsustainable. Meanwhile, Epic continues to dump resources into its marketplace, confident that it will have a very profitable distribution platform in just a couple of years.

We're approaching the one-year mark since Epic began its antitrust legal battle with Apple over it forbidding it and other companies from operating independent stores on iOS. In the latest round of legal wrangling, Apple's defense lawyers went on the offensive attacking the Epic Games Store (EGS), saying that it is "unprofitable."

"Epic Games Store is unprofitable and not comparable to the App Store," Cupertino's legal team told the court. "and will not be profitable for at least multiple years, if ever."

As harsh as the statement sounds, it is not without merit. Epic Games Store reported $454 million in losses in the past two years and doesn't expect to profit until 2023. In 2019, it lost $181 million, then another $273 million the following year.

"Epic committed $444 million in minimum guarantees for 2020 alone, while projecting, even with 'significant' growth, only $401 million in revenue for that year," Apple's lawyers contend. "Epic acknowledges that trend will continue in the immediate future: Epic projects to lose around $139 million in 2021."

The defense team also postulates that given the store's "unrecouped costs," it does not believe that the EGS can see a cumulative gross profit until at least 2027, four years longer than Epic estimated. Epic argues that even with its lower 12-percent take on sales, it is enough to cover EGS operating costs, bringing its profitability around much sooner than Apple contends.

Furthermore, Epic seems to be flush with capital, largely thanks to Fortnite. It has not hesitated to dump money into timed-exclusivity deals to make the store more attractive to consumers. It spent $10.5 million alone to make Remedy's Control an EGS timed exclusive. It has also offered numerous freebies since opening, adding further to the store's losses. Epic is clearly not afraid of spending money on the gamble that it will eventually see hefty profits.

Permalink to story.

https://www.techspot.com/news/90720-apple-claims-epic-games-store-not-see-profit.html

 

[supra5mge]

To: Epic

Kidding aside, I welcome the competition, even if I don't really like it personally.

 

[punctualturn]

Of course apple, thanks to your draconian control of the app store.

Allow sideloading for the apps not blessed by zombie Jobs and lets see how it goes.

Edit actually, Tim "Dont be poor" Cooks is a way bigger a**hole than Jobs, so perhaps zombie Jobs should be excused here.

 

[Dimitriid]

Depends on how you define "store"

If profits going through Fortnite microtransactions count, and given the court case they should, then I seriously doubt they're not getting a profit.

Yes they're investing it back heavily into promotional free games and exclusivity deals but the minute they scale back on those they still have TONS of cash coming in from Fortnite.

So they don't really need to do too much to be profitable, they just needed an initial boost for the store to make sure people paying for Fortnite stick around and I can say they've pretty much accomplished that already.

 

[m4a4]

Sounds desperate. Apple is pretty much implying that they can be monopolistic/draconian because it's profitable...

 

[HotToz]

Mostly all business are not profitable at the beginning since they spent a lot in branding and stock. EGS is taking the long route, building trust with customers and inviting more and more customers through incentives (free games and exclusives). In business is something call a long term investment

 

[Burty117]

EGS is taking the long route, building trust with customers and inviting more and more customers through incentives (free games and exclusives).

What? I'd argue Epic are one of the less trustworthy companies out there. If their goal was to build trust, they lost it when they started paying off devs to make games exclusive to their store, the store that didn't have a cart function...

Come to think of it, how do you spend half a billion dollars and not have a decently functioning store front?

 

[kiwigraeme]

What? I'd argue Epic are one of the less trustworthy companies out there. If their goal was to build trust, they lost it when they started paying off devs to make games exclusive to their store, the store that didn't have a cart function...

Come to think of it, how do you spend half a billion dollars and not have a decently functioning store front?

So who doesn't have exclusivity - Steam , Gog etc

However Sony , MS, Apple ,Nintendo all do - they are only games - wait a year - hey presto it's on Steam

 

[p51d007]

Of course apple, thanks to your draconian control of the app store.

Allow sideloading for the apps not blessed by zombie Jobs and lets see how it goes.

Edit actually, Tim "Dont be poor" Cooks is a way bigger a**hole than Jobs, so perhaps zombie Jobs should be excused here.

Which is one of the reasons I stick with Android.
Oh, I do think the Apple "ecosystem" is pretty good. Android is catching up, but with Apple pretty much anything you do per se, is also copied to your mac computer, tablet etc.
In theory it is much safer to have an Apple locked down system...IF you don't know how to protect yourself.
I've had Android, since version 4. Never had a ransomware, virus or any other issue. Every phone, unlocked, stock firmware, sideload anything I want.
It is MY device, I'll run it as I see fit.

 

[Tams80]

What? I'd argue Epic are one of the less trustworthy companies out there. If their goal was to build trust, they lost it when they started paying off devs to make games exclusive to their store, the store that didn't have a cart function...

Come to think of it, how do you spend half a billion dollars and not have a decently functioning store front?

They never said that they wouldn't pay developers for exclusive rights to games... it's not their fault that a few gamers decided to make that 'commitment' up in their heads.

And they aren't unique in that regard either. Other companies, especially the console makers, do it too. Legally of course they can. And morally... well they paid for a product just like you do.

On top of that, if we're talking about trust...

While Epic do scan for files on your computer, you can at least a) prevent that if you suspect it is doing too much or b) run their client contained or c) just uninstall their client.

Meanwhile, Apple are going to force everyone's iOS devices to be scanned.

 

[Ravey]

Providing Epic show that their losses are reduced year on year, they should continue to attract investment to pull themselves into profit. But investors will only hang around for so long and 7 years to see compounding profit is a long time for some.

 

[Puiu]

The cancer called "third party exclusives" takes a lot of money to grow.

 

[Tams80]

Providing Epic show that their losses are reduced year on year, they should continue to attract investment to pull themselves into profit. But investors will only hang around for so long and 7 years to see compounding profit is a long time for some.

They aren't a start-up reliant on investors. They have very good income from, yes, Fortnite, but also the Unreal Engine. They are not a new company in the slightest.

They are more like Amazon. They reinvest their profits in order to grow. It allows them to grow at an incredible rate, but yes, does reduce their profits and therefore returns to investors (in the short term) and their contributions to their coffers/rainy day funds.

 

[Bobbydpue]

What? I'd argue Epic are one of the less trustworthy companies out there. If their goal was to build trust, they lost it when they started paying off devs to make games exclusive to their store, the store that didn't have a cart function...

Come to think of it, how do you spend half a billion dollars and not have a decently functioning store front?

What's wrong with paying developers to make games exclusive to a platform that doesn't have a cost to consumers? To access the Epic Game store all a person has to do is create an account, download the launcher and log in. It's not like a person has to buy a different console to play these exclusive games. I don't see how anyone could be that upset about having to download another launcher. Epic is giving away games for free, giving developers a much better cut of profits and you're complaining about exclusives on a free platform or not being as developed as a platform that's been around for 18 year?

 

[Bobbydpue]

The cancer called "third party exclusives" takes a lot of money to grow.

Why is this such a big deal? What am I missing here? If there is a game I just have to have downloading a launcher and creating an account doesn't sound like that much effort.

 

[Tams80]

Why is this such a big deal? What am I missing here? If there is a game I just have to have downloading a launcher and creating an account doesn't sound like that much effort.

Entitlement. It's entitlement and the gaming community seems to have a disproportionate amount of it.

Hell, you can even see it in the response to the Switch (OLED) 'vs' the Steam Deck.

 

[Puiu]

Why is this such a big deal? What am I missing here? If there is a game I just have to have downloading a launcher and creating an account doesn't sound like that much effort.

Entitlement. It's entitlement and the gaming community seems to have a disproportionate amount of it.

Hell, you can even see it in the response to the Switch (OLED) 'vs' the Steam Deck.

It's not entitlement, people who say this are just ignorant of what is happening around them and I'm not joking or being mean. It's just the sad truth.

Exclusivity deals such as these are as anti-consumer as it gets. It's a cancer that has the potential to grow faster than streaming services (how many are there now?) if EGS proves that it is a successful business model on PC.

You will be forced to buy from one store only with only one price. Zero options to pick and choose the best offer and platform you like. I don't think ppl understand the implications competing not through innovation but brute force.

And before others start calling me a steam fanboy, most of my games were bought from GOG and Humble Bundle (and some gmg or amazon). For first party titles I even used Origin (and other platforms)... imagine that. --> this is what "entitlement" allows me to do.

 

[Burty117]

So who doesn't have exclusivity - Steam , Gog etc

However Sony , MS, Apple ,Nintendo all do - they are only games - wait a year - hey presto it's on Steam

Yeah, what do you think I've been doing. It's great as well as they then release far less buggy and normally as "GOTY" editions with extra's in or DLC.

My initial complaint was when games like Metro were on the Steam Store, just weeks before release and they suddenly pull it because Epic gave them a wad of cash. That to me, isn't how you build trust.

On top of that, if we're talking about trust...

giving developers a much better cut of profits and you're complaining about exclusives on a free platform or not being as developed as a platform that's been around for 18 year?

First of all, this "developer makes a better cut" argument is completely hollow, Devs make plenty of money, some of them are worth billions. From a consumer standpoint we just shouldn't care, it's more about the price of the end product of which, EGS is usually the same price as Steam, GoG or anywhere else, the cheapest places tend to be third party websites selling keys.

My complaint with exclusives is due to the way they got introduced, Metro being an example, as per my comment above. My bigger issue is if it catches on and limits our ability to buy games from other competing stores.

Now when it comes to platform development, that's EXACTLY where all their effort should have gone. That's how you actually compete, I wouldn't expect them to have in-home streaming, Mod support or even game save backups, but a cart so I can buy multiple games at a time? That's an incredibly basic feature, All they had to do was get the basics right and have games on sale for slightly cheaper than the competition. Remember that games can come out on multiple stores at the same time, Metro, Borderlands, Valheim, Cyberpunk. Publishers / Devs have the option to sell their games on multiple store fronts, if you want your store to compete with another store, at least be able to sell more than a single product at a time and at least be cheaper than your competition.

If I was to place money on anything, the reason no other store is even close to Steam in terms of features is because it actually costs money to develop and run. EGS wasted half a billion dollars trying to force people to use EGS, rather than spending half a billion to make a better store...

 

[GLenn63]

Has anyone lost saved games by saving to their cloud, it sucks that you can spend hours only to have to start all over again.

 

[Cubi Dorf]

They are lose money because of give away so many free game. Not that different from Apple TV+ giving away free content. It is proving nothing. Epic is free to do whatever they are wanting with their money, just as Apple is. How they got their money and what they spend it on is two different matter however.

 

[Puiu]

They are lose money because of give away so many free game. Not that different from Apple TV+ giving away free content. It is proving nothing. Epic is free to do whatever they are wanting with their money, just as Apple is. How they got their money and what they spend it on is two different matter however.

The free games are chump change. They are losing big bucks with AAA exclusivity deals.

 

[Xallisto]

One of the main issues with all this is that Apple has fooled everyone into thinking that countless millions of hardware/handset owners--none of which is actually Apple--is Apples platform, and folks tend to defend them on this basis "it's their platform!!" they will say, well it's not, their platform belongs to the actual hardware owners.

Apple counts on the fact that nobody calls them on this and leverages the fact that their OS just happens to be installed on that hardware to gatekeep access to that hardware and those users.

The sooner people stop thinking of this platform as belonging to Apple, the less they will be able to leverage that position.

 

[metecritical]

Let us assume this case has merit and Epic does win this case can we see Playstation, Xbox and Nintendo Switch, Wii U, PSP to be side loaded? I think not! Epic is clearly day dreaming.

 

[nodfor]

What's wrong with paying developers to make games exclusive to a platform that doesn't have a cost to consumers? To access the Epic Game store all a person has to do is create an account, download the launcher and log in. It's not like a person has to buy a different console to play these exclusive games. I don't see how anyone could be that upset about having to download another launcher. Epic is giving away games for free, giving developers a much better cut of profits and you're complaining about exclusives on a free platform or not being as developed as a platform that's been around for 18 year?

If every game was exclusive to some platform, all those retailers (online and/or with physical stores) would go bust.
Doesn't sound too good for a competitive market.

 

[kiwigraeme]

I've noted some points on Exclusivity . With gaming there is some - a lot get out to Steam etc eventually - even Sony talks about bringing games to PC - especially as Xbox/PS converge .
I think the problem is nothing like Movie/TV streaming platforms - who gets South Park , who gets Friends etc - Even then you have the option of changing platforms every few months . Still if HBO has only one thing you want - it may send people back to piracy - so interesting dynamics