by Zack Zwiezen, Kotaku
Epic is going to lose at least $330 million as a result of all those Epic Game Store exclusives and free games. But on Twitter, Epic CEO Tim Sweeney considers this an investment and seems surprisingly excited about losing hundreds of millions of dollars.
This information was spotted and reported by PC Gamer from new court documents that have emerged from the ongoing legal fight between Apple and Epic. While these two big companies battle each other in court, we all get a new insight into the Epic Game Store’s financial situation. It’s not great!
Epic spent $444 million on grabbing up exclusives and free games for the store. This money went towards a bunch of “minimum guarantees” for publishers and devs. These minimums were paid out to publishers regardless if a game sells well enough to cover it, which is why so many companies took Epic Game Store deals. A guaranteed bit of cash is better than a possible loss. For example, to get Control on the Epic Game Store as an exclusive Epic paid out $10.5 million. If we look at Epic’s own 2020 end-of-year report and do some math, we discover that players spent $700 million on the Epic Games Store in 2020, but third-party games, the ones Epic made deals for, only accounted for $265 million of that big number. So that leaves millions in advances and minimums that Epic has yet to recoup. If you include the 2019 deals, Apple estimates it at $330 million.
According to Apple, in total, including pricey exclusives, free games, and all other expenses, the Epic Game Store will cost the Fortnite developer about $600 million in losses by the end of this year, and that the store won’t become profitable until 2027.
Epic, in a rebuttal, spins this a different way. Its lawyers explained that this is all part of the plan. That this is just a big (VERY BIG) investment into growing the store and userbase rapidly. Epic also claims that even with its smaller 12% revenue cut of transactions the store will start turning a profit in 2023.
In response to IGN reporting on the massive losses, Tim Sweeney seemed fine, even excited about all the money Epic was losing. “That’s right!” said Sweeney, “And it has proven to be a fantastic success in reaching gamers with great games and a fantastic investment into growing the business!” He also tweeted a big ol’ infographic which looked nice but also didn’t include how much money Epic was losing on the store.
The ongoing legal battle between Epic and Apple started back in August 2020 after Epic quietly added in a feature to Fortnite that allowed players to buy in-game V-Bucks via its own payment system, bypassing Apple’s system and the phone maker’s usual cut. This is a big no-no and soon after doing this the game was ripped from both the Apple App Store and Android’s Google Play Store.
Since then it’s been a back and forth in court between the two companies. Epic says it and other devs should be free to sell their own apps and services on devices like the iPhone without Apple’s involvement. Apple says nah. And so the legal fight continues.