The Epic Games Store lost $454 million in the past two years

jsilva

Posts: 44   +0
Staff
In context: Epic Games has been spending the big bucks to compete against Steam. From free game offerings to signing exclusivity deals with third party developers, Epic has been somewhat successful at pulling more customers to its platform, but at what cost? As detailed in the company's court filings in the lawsuit against Apple, Epic reported a $181 million loss in 2019 and $273 million in 2020 on the Games Store alone.

Epic Games and Apple's legal feud has been going on since last August. Back then, Apple decided to remove Fortnite from the App Store after the developer introduced an alternative payment method to bypass the App Store's 30% cut. In preparation for the upcoming trial, scheduled for May 3, 2021, both Apple and Epic have filed their respective "Proposed Findings of Fact and Conclusions of Law," unveiling some interesting data.

In 2019, the Epic Games Store (EGS) lost about $181 million, but in 2020, the expected loss is even bigger at roughly $273 million. As for 2021, the projected loss is supposed to cut 2020's figure by half, to around $139 million.

To recover the three year losses, roughly $600 million, Apple says it will take Epic Games at least six years. On the other hand, Epic predicts it will start to be profitable much sooner, in 2023. According to Epic, the "EGS's 12 percent transaction fee is sufficient to cover the variable costs of running EGS, including payment processing, customer service and bandwidth."

The reason behind Epic's losses seems to be related to its timed exclusivity deals. The filings indicate that Epic Games paid game developers $444 million during 2020 in minimum guarantees. A minimum guarantee is a payment in advance to a developer/publisher that agrees to make its game a timed-exclusive (usually one year) at the EGS. One such example is Epic's payment of $10.5 million to Digital Bros for 1-year exclusivity of Remedy's Control in its store.

Epic Games made $700 million in revenue from EGS in 2020, but "only" $265 million were from third-party games. When comparing these values to the $444 million from minimum guarantees, the exclusivity deals seem to pack quite the punch in Epic's finances.

The filing further details that "the incentives and investments it has made in an attempt to grow EGS will result in 'unrecouped costs'," from which $330 million are from minimum guarantees. This figure suggests that there were a lot of games that didn't break even.

Epic also states that all this spending is part of its business plan. The developer believes that it's not losing money; it's investing. Considering the store is only 3 years old and already has 160 million registered users and 56 million monthly active users, Epic's plan might actually be working.

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hypertotoro

Posts: 17   +50
And still they are not willing to spend a little money to make their game launcher convenient. No tags, no categories, no marking games as favorites even... The more games they give away for free, the harder to keep track of which ones I tried, which I completed and which I abandoned. If not for the free games, I would give up on their store after the first try because their launcher is simply bad.
 

Watzupken

Posts: 125   +96
Registered users and active users don't say a lot about the health of the platform. Most people created an account for the purpose of getting the free games. As for active users, are people active in paid or free games? While 12% commission is great for us since that savings will likely be passed on to consumers, I am not sure if their investors will be pleased when you are making losses. Unless they decide to do something drastic to turn themselves profitable otherwise 2023 is really not that far away.
 

envirovore

Posts: 144   +343
TechSpot Elite
I only registered to get GTA5 free. Installed it and never played it.
Got Tacoma as well.

Then I built a new PC with all new drives in it and haven't re-installed EGS at all.
Got Tacoma again on Steam during the last sale, while my brother gifted me the Steam copy of GTA5 recently as well, as I'd rather just run everything through one platform.

GOG is the only other 3rd party store front I'll use.

EGS is a joke of a storefront, to say the least. Maybe instead of focusing on adding pop culture icons to Fortnite, they should focus on putting some useful features on their store if they want to actually compete in any way.
 

m4a4

Posts: 2,283   +2,482
TechSpot Elite
Yeah, not surprising. They've been throwing around their Fortnite money to give away free games and be annoying with buying (timed) exclusives.

Which, some of the free games I'll snag (costing them), but no way am I spending money in their bare-bones store/platform.
 

Shadowboxer

Posts: 1,441   +1,040
Epic games store is great, it’s the best store around at the moment. It has the cheapest prices and the best free games and the launcher works fine with no issues. It’s much better than Uplay and Xbox/EA desktop, GOg galaxy etc.

They may have lost a lot of money but they have established themselves, it’s how this industry works.
 

Adi6293

Posts: 758   +1,016
Epic games store is great, it’s the best store around at the moment. It has the cheapest prices and the best free games and the launcher works fine with no issues. It’s much better than Uplay and Xbox/EA desktop, GOg galaxy etc.

They may have lost a lot of money but they have established themselves, it’s how this industry works.

Do you just like to wind people up? EGS is definitely not better than GOG Galaxy and prices there are the same as everywhere else unless there is a sale...
 

envirovore

Posts: 144   +343
TechSpot Elite
Yeah, not surprising. They've been throwing around their Fortnite money to give away free games and be annoying with buying (timed) exclusives.

Which, some of the free games I'll snag (costing them), but no way am I spending money in their bare-bones store/platform.

It was totally worth waiting a year for Control to come to Steam before buying it (if a bit difficult to avoid spoilers).
Ultimate Edition for ~30 bucks, yes please.
 

Dimitriid

Posts: 371   +646
I'm still not convinced this strategy of "Have free games" it's going to pay up. It's one thing to say "sure, free's free" and have an account but from there as to regularly play well, involves a lot more trust: There's a big difference between a game I pay for, even if heavily discounted, vs a free game. I say free to any free game offered but I play almost none of them. If I pay for the game on discount I probably will play them.

So if I am putting money down chances are I am going to look in gog or steam first and yes I have even looked at "How long before this Epic games store time exclusive runs out"

At the end of the day their store, lives and dies with Fortnite. That's ok as it is an incredible success but I just don't think this effort will eventually translate into a profitable competitor to Steam.
 

HotToz

Posts: 28   +40
I only use GOG and Steam to buy games. Even when Epic games just take 10% fees their regional prices are the same or more expensive than other stores. Plus Epic exclusive tend to be pricier.
 

MaitieS

Posts: 87   +81
Lost? Is this a joke? Did Microsoft lost 7 billions by buying Bethesda? no. It's called investment and I am already sick of these double standards where you are bashing one company and another praising like they did the best investment. Actual Fy.
 

MaitieS

Posts: 87   +81
And still they are not willing to spend a little money to make their game launcher convenient. No tags, no categories, no marking games as favorites even... The more games they give away for free, the harder to keep track of which ones I tried, which I completed and which I abandoned. If not for the free games, I would give up on their store after the first try because their launcher is simply bad.
Damn I wish Steam would finally remember that I want to start my Wallpaper Engine in x64. We are in 2021 and this technology is still not ready meanwhile they are releasing POINTLESS features for not even 1% of the whole userbase.
 

Puiu

Posts: 4,478   +3,315
TechSpot Elite
Lost? Is this a joke? Did Microsoft lost 7 billions by buying Bethesda? no. It's called investment and I am already sick of these double standards where you are bashing one company and another praising like they did the best investment. Actual Fy.
Maybe, but it's still worth bashing Epic on this. The exclusivity business model should not be supported and should not be financially viable.

Damn I wish Steam would finally remember that I want to start my Wallpaper Engine in x64. We are in 2021 and this technology is still not ready meanwhile they are releasing POINTLESS features for not even 1% of the whole userbase.
You mean features like local multiplayer remote play? (released march 22nd)

"Added support to invite anyone to Remote Play Together

Now you can Remote Play Together with anyone – no Steam account needed to join your game with the click of a link. Simply launch any of the thousands of games with support for Remote Play Together, then grab an invite link from your Friends list in the overlay. Send the link to your friend on Windows, macOS, Linux, iOS or Android, and they can click your invite to join in the fun."
 
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m4a4

Posts: 2,283   +2,482
TechSpot Elite
Maybe, but it's still worth bashing Epic on this. The exclusivity business model should not be supported and should not be financially viable.


You mean features like local multiplayer feature remote play? (released march 22nd)

"Added support to invite anyone to Remote Play Together

Now you can Remote Play Together with anyone – no Steam account needed to join your game with the click of a link. Simply launch any of the thousands of games with support for Remote Play Together, then grab an invite link from your Friends list in the overlay. Send the link to your friend on Windows, macOS, Linux, iOS or Android, and they can click your invite to join in the fun."
Wait, it doesn't need a Steam account? Huh, I didn't see that. I thought using an account would be the minimum to hop in. That's awesome.
 

Shadowboxer

Posts: 1,441   +1,040
Do you just like to wind people up? EGS is definitely not better than GOG Galaxy and prices there are the same as everywhere else unless there is a sale...
GOG is definitely worse than Epic but in all fairness it’s better than Uplay, EA desktop and the Xbox app. Gogs problem is that it’s not as cheap as epic, during the epic sales nothing is as cheap as epic, some stores taking months to reach the same prices. And really the price of the games is by far and away the most important thing, provided games launch effectively and cloud saves work which they do on both Epic and GOG. P

I should also point out that if my opinions wind you up then block me. Or stop coming to this website.
 

Adi6293

Posts: 758   +1,016
GOG is definitely worse than Epic but in all fairness it’s better than Uplay, EA desktop and the Xbox app. Gogs problem is that it’s not as cheap as epic, during the epic sales nothing is as cheap as epic, some stores taking months to reach the same prices. And really the price of the games is by far and away the most important thing, provided games launch effectively and cloud saves work which they do on both Epic and GOG. P

I should also point out that if my opinions wind you up then block me. Or stop coming to this website.

But epic will not be this cheap forever, they are now to get people to buy games and build up a library so when the deals end you won't mind the price so much because you already have games there also price is not the most important factor unless you are on a budget, I don't mind paying a little extra for a better experience all together, especially on GOG, its the only store in which you actually own the games you buy, you don't even need the launcher you installed, you can download all your games on the site, I wish all games were sold there :(
 

Shadowboxer

Posts: 1,441   +1,040
But epic will not be this cheap forever, they are now to get people to buy games and build up a library so when the deals end you won't mind the price so much because you already have games there also price is not the most important factor unless you are on a budget, I don't mind paying a little extra for a better experience all together, especially on GOG, its the only store in which you actually own the games you buy, you don't even need the launcher you installed, you can download all your games on the site, I wish all games were sold there :(
Of course epic won’t be this cheap forever. But whilst it is I will buy the games. I mean who doesn’t buy a cheap product because they reckon the same store will up its prices in the future?

Yeah not needing the launcher is cool but personally I would rather have the launcher! I did try using gogs feature to pool all your games in one place but it didn’t really work and in some cases I’ve got free games on epic that I already had on steam and then it tries to launch two instances, it was a mess. And GOGs cloud saves are temperamental, in older games they often don’t work which is ironic. Fortunately I didn’t mind losing that dungeon keeper campaign that much!

All launchers launch games, have a list of them quickly accessible and they cloud save. They also all uninstall your games, except EA Desktop, which does not currently support uninstalling games. The EA desktop/Xbox partnership is woefully implemented, I don’t really understand why Epic with its perfectly functional launcher is getting all the hate whilst The EA-MS abomination is going on.
 

Adi6293

Posts: 758   +1,016
Of course epic won’t be this cheap forever. But whilst it is I will buy the games. I mean who doesn’t buy a cheap product because they reckon the same store will up its prices in the future?

Yeah not needing the launcher is cool but personally I would rather have the launcher! I did try using gogs feature to pool all your games in one place but it didn’t really work and in some cases I’ve got free games on epic that I already had on steam and then it tries to launch two instances, it was a mess. And GOGs cloud saves are temperamental, in older games they often don’t work which is ironic. Fortunately I didn’t mind losing that dungeon keeper campaign that much!

All launchers launch games, have a list of them quickly accessible and they cloud save. They also all uninstall your games, except EA Desktop, which does not currently support uninstalling games. The EA desktop/Xbox partnership is woefully implemented, I don’t really understand why Epic with its perfectly functional launcher is getting all the hate whilst The EA-MS abomination is going on.

I don't hate on epic per say I just hate the segmentation in general, I was against steam too at first because I knew from the start where this will take us ( Renting games at full price for unknown amount of time ) but because of the sales I did came around, but now I have Origin, Uplay, Steam, GOG, Epic, Blizzard, Xbox app, its getting ridicules!! this is what I annoys me, I'm not advocating for monopoly but it was much much easier when we only had steam :p
 

NoLifeDGenerate

Posts: 22   +8
I don't hate on epic per say I just hate the segmentation in general, I was against steam too at first because I knew from the start where this will take us ( Renting games at full price for unknown amount of time ) but because of the sales I did came around, but now I have Origin, Uplay, Steam, GOG, Epic, Blizzard, Xbox app, its getting ridicules!! this is what I annoys me, I'm not advocating for monopoly but it was much much easier when we only had steam :p

Exactly. Steam, MS, and GOG should be plenty. Every goddamn publisher should NOT have their own digital store. We're seeing the same nonsense with streaming services now because these companies are all greedy ***** who could care less about customer convenience.
 

m4a4

Posts: 2,283   +2,482
TechSpot Elite
I don’t really understand why Epic with its perfectly functional launcher is getting all the hate whilst The EA-MS abomination is going on.
Easy, because it keeps trying to compare to Steam. The whataboutism here isn't needed when it's framed as Epic vs Steam.

Also, I see what you did there. Functional is a pretty low bar these days, as most game launchers/stores work as intended...
 

Markoni35

Posts: 1,015   +406
Steam is considered a "perfect launcher"??
And EPIC one is even worse?

OMG. The level of programming on PC is sinking faster than I anticipated. How hard can it be to make a freaking app launcher???