By the Numbers
A series of new court documents have come to light and they reveal some interesting facts about the Epic Games Store, most notably the company’s opinion that it won’t be profitable until 2023.
The Epic Games Store is still the new kid on the block and it didn’t exactly endear gamers with its business model. It’s snapped up dozens of exclusives over the years, typically locking them into a 1-year contract and ultimately preventing their sale on the more popular Steam storefront.
A reasonable person would probably guess that Epic Games has spent a fat sack of its Fortnite money on trying to make the Epic Games Store a success. Those people would be totally correct — Epic may very well hit a billion dollars in revenue share alone by the end of 2021, and that’s one of the many interesting numbers revealed in a new court document.
The Epic Games Store Isn’t Turning a Profit — Yet
The first (somewhat unsurprising) reveal in the court documents posted to ResetEra is that the Epic Games Store has not yet turned a profit. It’s still a pretty new endeavor and larger companies will spend a ton of cash to get something new off the ground. As it stands, Epic Games expects its digital storefront to actually be profitable by 2023.
More than 200 third-party developers have published over 400 games on that platform. In total, Epic Games has paid out more than $700 million in revenue share to date. This revenue share, in particular, live up to one of Tim Sweeney’s earliest claims about the storefront: its 12% revenue share is, in Epic Games’ estimation, more than enough money to make the store profitable in the long run.
That said, it hasn’t all been sunshine and lollipops. One section of a separate court document (Case 4:20-cv-05640-YGR Document 410) indicates that Epic Games might have burned through a fair amount of cash in its payouts for exclusivity:
265.2 As Epic has acknowledged, the incentives and investments it has made in an attempt to grow EGS will result in “unrecouped costs.” Allison depo. at 88:18–90:3. That includes at least $330 million in unrecouped costs from minimum guarantees alone. DX-3993 at -233. At best, Epic does not expect EGS to have a cumulative gross profit before 2027. DX-4361 at 016.
Note the $330 million in unrecouped costs from minimum guarantees. That’s money that Epic paid out to developers in exchange for exclusivity with no other requirement on the developer’s part, guaranteeing them income regardless of how well their game sells. If a game doesn’t sell well enough, Epic would lose money in the short term and it might not ever get that investment back if a game doesn’t eventually recoup the costs of that initial payout.
Either way, the Epic Games Store is definitely playing the long game here. If it can hold its current course, it will prove a very attractive option for game developers — especially once it hits the point where it’s profitable and therefore much less likely to shut down.