Epic CEO Tim Sweeney explains how store exclusives will ‘ultimately benefit gamers’
Epic founder and CEO, Tim Sweeney, has waded in with yet another tweetstorm espousing the benefits of platform exclusives. The Epic Game Store has, obviously, built up quite the reputation for moneyhatting exclusive games not available on other PC storefronts. There’s a core contingent of gamers which certainly aren’t happy with the situation. If you happen to be one of these unhappy folks, have no fear – Sweeney has kindly explained how Epic Store exclusives “ultimately benefit gamers”.
Now, you’re probably going to have to strap in and make a cup of joe for this lengthy explanation, one in which Sweeney once again combs over the 70/30 revenue split and explains why us, the customers, will ultimately stand to gain from Epic’s current attempts to shake up the PC gaming industry.
“We believe exclusives are the only strategy that will change the 70/30 status quo at a large enough scale to permanently affect the whole game industry,” began Sweeney. “For example, after years of great work by independent stores (excluding big publishers like EA-Activision-Ubi), none seem to have reached 5% of Steam’s scale. Nearly all have more features than Epic, and the ability to discount games is limited by various external pressures.
“This leads to the strategy of exclusives which, though unpopular with dedicated Steam gamers, do work, as established by the major publisher storefronts and by the key Epic Games store releases compared to their former Steam revenue projections and their actual console sales.”
On this front, we’d tend to agree. Valve has a stranglehold on PC gaming that’s going to be difficult to shake. Offering up exclusive experiences is one of the very few ways to tempt people to other stores. The others would be offering a significantly better feature set (which seems a tall order), or offering something unique, such as GOG’s DRM-free policy and the unifying capabilities of GOG Galaxy 2.0.
Epic has gone all-in of the exclusives rather than offering improved features, resulting in an aggressive publishing stance which has irked many gamers. The big question for Epic now will be – was it all worth it?
“In judging whether a disruptive move like this is reasonable in gaming, I suggest considering two questions: Is the solution proportionate to the problem it addresses, and are gamers likely [to] benefit from the end goal if it’s ultimately achieved?” Sweeney continues.
“The 30% store tax usually exceeds the entire profits of the developer who built the game that’s sold. This is a disastrous situation for developers and publishers alike, so I believe the strategy of exclusives is proportionate to the problem. If the Epic strategy either succeeds in building a second major storefront for PC games with an 88/12 revenue split, or even just leads other stores to significantly improve their terms, the result will be a major wave of reinvestment in game development and a lowering of costs.”
More revenue for developers and publishers sounds like an obvious win, but there’s a big question mark hanging over whether this is good for the gamers themselves. After all, Epic isn’t interested in giving devs a higher profit share only for these savings to be passed onto gamers themselves. Sweeney has literally said the current 30% margins usually exceed the entire profit a game makes. This extra 18% is going in the pocket of the developers, yet Sweeney is simultaneously suggesting it will result in price reductions for the customers/gamers. All in all, we’re left a little confused by Sweeney and Epic’s angle. They’re handing out benefits to developers, publishers, and customers alike, and yet these things aren’t mutually compatible.
Anyway, Sweeney goes on to question whether “ the resulting 18% increase in developer and publisher revenue [will] benefit gamers? Such gains are generally split among (1) reinvestment, (2) profit, and (3) price reduction. The more games are competing with each other, the more likely the proceeds are to go to (1) and (3).
“So I believe this approach passes the test of ultimately benefitting gamers after game storefronts have rebalanced and developers have reinvested more of their fruits of their labor into creation rather than taxation. Of course, there are LOTS of challenges along the way, and Epic is fully committed to solving all problems that arise for gamers are for our partners as the Epic Games store grows.”
I guess the real barometer of just how much Epic Games cares about the smaller developers is what happens if the market shifts to an overall 88/12 revenue split. The cynic in me believes reducing the revenue share that other storefronts take is just an avenue to provide more headroom for raising the price of using Unreal Engine.
If the revenue share were to change wholesale, suddenly developers would have 18% more revenue which could theoretically be diverted to game engine costs, a feat which just wasn’t possible before. I’m not saying I can envision Epic jacking the price right up, but that 5% share could easily double to 10% and developers would still be coming out on top of where they are right now. The second benefit drills into Sweeney’s point that an 18% increase in revenue means greater reinvestment, more profits, and more games. More games, simply enough, means more developers using Unreal Engine 4.
It’s all conjecture, of course, but nothing a company the size of Epic does will be an act of altruism. They’re not going to be doing it for the good of the little man. They’re not gaming samaritans, they’re a pretty ruthless multi-billion dollar company whose end goal will always be greater profits for Epic itself. That’s how big business works. Whatever moves they’re doing, the eyes should always be on how they intend to make money out of it, rather than some notion of benevolence.
The dangling question left hanging over all this is whether Valve blinks. We’ve already seen a slight shift to 80/20 revenue share for some of the most successful games on Steam, but it remains to be seen whether Valve perceives the EGS to be enough of a threat to drop it all the way down to 88/12.
What are your thoughts on this whole situation then, do you believe Epic has some noble aims hidden underneath paying for exclusives? Do gamers ultimately stand to benefit? Let us know your thoughts on the situation below!