Epic Games may lose millions after struggling to recuperate costs from the Epic Games Store, following its fight to gain market share from Steam.
The Epic Games Store releases free games every week, and has snapped up a number of eye-catching PC launch exclusives since it went live in December 2018.
Epic Games has spent the past two years shoveling Fortnite money into the Epic Games Store, making over 100 exclusivity deals and giving away free games every week . We knew Epic was spending a lot of cash to get customers onto its store, but didn’t have many specifics until now. Thanks to Epic’s big legal fight with Apple, we learned this week that Epic committed around $444 million to Epic Game Store exclusivity deals in 2020 alone.
Epic said that players spent $700 million on the Epic Store in 2020, but third-party game sales only accounted for $265 million of that spending. That $444 million in advances to third-party devs isn’t close to being recouped, then. Some of those deals must be for exclusives releasing in the future, but according to Apple’s learnings, Epic is going to eat “at least $330 million in unrecouped costs from minimum guarantees alone” if you also consider 2019’s deals.
Apple’s filing reveals Epic lost around $181m on the Epic Games Store in 2019, and it projected to lose around $273m on the store in 2020. Even with “significant” growth, revenue for last year was projected at $401m. Epic has confirmed $700m was spent by PC players on the Epic Games Store in 2020, although only $265m of that was spent by players on third-party PC games in the Epic Games Store. So its $444m in minimum guarantees for 2020 alone is a big loss-leader.