Epic Is Losing Hundreds of Millions As it Battles To Gain Market Share from Steam

Epic is set to lose at least $330 million in its battle to gain market share from Steam, mainly due to it offering exclusive games and free titles on its Epic Games Store.As reported by PC Gamer, Epic’s legal fight with Apple has given us insight into how much Epic is spending to build up the Epic Games Store, including that it committed around $444 million to exclusivity deals in 2020 alone.This money was spent on “minimum guarantees” for games that are exclusive to the Epic Games Store for a year. Since these games will not appear on Steam, Epic is offering these guarantees as advances to publishers whether or not their games sell enough to cover it. For example, Epic paid 505 Games $10.45 million for Control exclusivity back in 2019.

In Epic’s end-of-year report, Epic confirmed that players spent $700 million on the Epic Games Store in 2020, but these third-party games only accounted for $265 million of that total. This reveals that Epic has yet to earn back the $444 million in advances to these third-party publishers and, even though some of these deals are surely for games in the future, Apple claims Epic is going to lose “at least $330 million in unrecouped costs from minimum guarantees alone,” if 2019’s deals are thrown in as well.

Apple’s projections, which can be seen here, hint that, when factoring in exclusives and all other expenses, the Epic Games Store may lose somewhere below $600 million in total by the end of 2021. It also suggests that the Epic Games Store will not be profitable until 2027.

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These estimates from Apple are from its summary of the arguments it plans to bring to court in May 2021 as it defends itself against Epic’s antitrust complaint.

Epic has already responded to these findings, and it shared that it expects the Epic Games Store to start earning annual profits in 2023. Furthermore, while Apple claims Epic is “losing money,” Epic claims it is “investing money,” and that this and its 12% revenue share are all part of the plan to take on the behemoth that is Steam.

“EGS is not yet profitable at its current scale and stage of development because it has front-loaded its marketing and user acquisition costs to gain market share,” reads Epic’s filing, citing CEO Tim Sweeney.
Epic and Apple are set to go to an in-person trial on May 3, 2021, over issues that all began when Epic implemented a direct-pay system into Fortnite that bypassed the Apple App Store and its 30% cut.

Apple removed Fortnite from the App Store, and Epic then filed a lawsuit against the company, while also beginning its #FreeFortnite campaign.

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Adam Bankhurst is a news writer for IGN. You can follow him on Twitter @AdamBankhurst and on Twitch.

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