The PC game distribution business could experience a giant shakeup in the coming months and years following the news that Fortnite creator Epic Games has built its own store. This new developer-friendly model offers a dramatically more favorable revenue split than rival marketplaces like Steam, but beyond that, we still have questions about how this Epic Games Store operates. Who better to answer our questions than Epic Games founder Tim Sweeney?
The PC marketplace already offers a lot of choice to gamers with Steam, GOG, the Microsoft store, etc. What market conditions led you to believe there is an opportunity for another storefront?
The 70/30 percent split was a breakthrough more than a decade ago with the advent of Steam, the Apple App Store, and Google Play. But today, digital software stores have grown into a $25,000,000,000+ business worldwide across all platforms, yet the economies of scale have not benefited developers. In our analysis, stores are marking up their costs 300 percent to 400 percent. We simply aim to give developers a better deal.
How did you determine the revenue split percentage, and is this a locked number moving forward?
While running Fortnite we learned a lot about the cost of running a digital store on PC. The math is quite simple: we pay around 2.5 to 3.5 percent for payment processing for major payment methods, less than 1.5 percent for CDN costs (assuming all games are updated as often as Fortnite), and between 1 and 2 percent for variable operating and customer support costs. Fixed costs of developing and supporting the platform become negligible at a large scale. In our analysis, stores charging 30 percent are marking up their costs by 300 to 400 percent. But with developers receiving 88 percent of revenue and Epic receiving 12 percent, this store will still be a profitable business for us.
The Epic Games store is a long-term effort that we’ll be extending and improving for years. Ultimately, we hope competition between stores means better deals for all developers!
What other platforms are you trying to extend the store to? Are you talking about mobile and console?
The Epic Games store is launching on PC and Mac in 2018, and Android later in 2019. We’d like to launch on iOS in 2019, however, that is in apparent conflict with current Apple policy.
We believe all general purpose computing devices, such as PCs, smartphones, and tablets, should be open to competition between stores.
Consoles are a different market, with dedicated game machines whose hardware costs are often partly subsidized by software revenue. Epic doesn’t seek to operate a storefront on console platforms, but as an engine maker we do everything we can to enable cross-platform interoperability.
Will the Epic Games store be a dedicated website, a part of the Epic Games launcher, or another distinct launcher?
The store will be accessible both through Epic Games launcher and on the web. A user will need to install Epic Games launcher to download and update games from Epic Games store.
From the gamer's perspective, why should they shop at the Epic store as opposed to the marketplaces they already buy from?
It’s a lightweight storefront that’s convenient to use, and gives developers a better deal.
How important is curation to this new platform? Does Epic plan to be fastidious to not overwhelm the marketplace with every game under the sun or do you want an ocean deep pool of games where quality isn't necessarily a factor for a game to appear on the platform?
The Epic Games store is launching with a small selection of handpicked games and will grow over time. As we work toward opening up generally to developers in mid-2019, we plan to set a reasonable quality threshold.
How does the economics of the Support-A-Creator program work? Could you provide an example?
Creators earn a share of revenue from each attributable sale (either by link or by manual creator tag entry, like in Fortnite). Developers set the rate of the revenue share and Epic pays the first 5 percent for the first 24 months. Developers get immediate access to thousands of creators who can promote their titles with no friction, and they can automatically give creators free access to their games if they choose so.
We believe this will make a more direct and sustainable connection between game developers and content creators such as streamers and video makers.
Does the store use any style of digital right management, and can players play these games offline or is an internet connection required?
We do not have any store-wide DRM. Developers are free to use their own DRM solutions if they choose.
Does the store have any sort of achievement system?
Not at launch, but we’re working on these kinds of features.
Is there a mechanic in place that allows users to sell or trade used games?
What sort of exclusive games are going to come to this platform? Is exclusivity something you are thinking about?
Epic’s own games are exclusive to the Epic Games Store on PC and Mac, and we’ll sometimes fund developers to release games exclusively through the store.
Will the store have a virtual reality component to it as well? If so, which headsets are supported?
The Epic Games store doesn’t have any sort of VR user interface, however, games released on the store can support VR if they choose.