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Fortnite dev launches Epic Games Store that takes 12% of revenue

274 points| richardboegli | 7 years ago |venturebeat.com | reply

229 comments

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[+] notafraudster|7 years ago|reply
One of the things Steam's 30% cut subsidizes is the generation of unlimited free license keys for developers to do with what they please. So, for instance, if I am an independent developer, I can sell my game on Steam. Say I sell 5,000 copies. I can then turn around and generate 25,000 keys gratis, and sell those on my website (paying maybe a 5-8% fee to my payment processor, but otherwise taking everything). Those keys activate on Steam, at which point my customers get the benefits of Steam and I pay nothing for the bandwidth or upkeep.

This also allows me to give keys to other vendors, like Humble or GreenManGaming, who do take a cut (in some cases close to Steam's 30%, in other cases closer to 10-12%). Those vendors may choose to discount my game beyond the discount I offer by giving up more of their margin to the consumer.

It is not uncommon to see games on Steam where the origin of user reviews is 50% Steam purchases, 50% off-site key activations, which implies that Steam's effective margin may be as low as 15%.

Now, I think most independent developers are willing to sell on any platform who will have them and for whom the marginal costs of submitting / uploading are lower than gross sales, so certainly I don't think Epic is making a bad move here and I suspect they'l get decent developer uptake, but I also think the sort of "topline sticker comparison" obscures some of what's going on.

To some extent there may be value in having this discussion a week from now when Epic has rolled out the store and we have a better idea of how other considerations stack up.

[+] opencl|7 years ago|reply
The keys are not unlimited. They cracked down on this quite a while ago. You have to submit a request for keys which Valve may or may not approve, and they will definitely not approve a request for 25K keys on a game you have sold 5K copies of.
[+] hesdeadjim|7 years ago|reply
I've heard rumors from people I trust that they are going to crack down even further on keys, possibly to the point of making it so you can't resell elsewhere.
[+] beerlord|7 years ago|reply
Those other stores only made sense because they offered a lower commission than Steam.

If you already have the lower commission, you don't need the ability to print keys.

Instead of going through a bundle, which yielded about 50c per copy then sunk your later sales since tens of thousands of keys ended up on G2A etc, just sell your game for 95% off - same result (mass appeal, even to people who are not really interested in your game), doesn't impact your future sales, and probably yields more revenue.

However, the one gap I can see is from Kickstarters - backers need some method to access the game on Epic Store.

[+] Reedx|7 years ago|reply
Official announcement - https://www.unrealengine.com/en-US/blog/announcing-the-epic-...

"Developers receive 88% of revenue. There are no tiers or thresholds. Epic takes 12%. And if you’re using Unreal Engine, Epic will cover the 5% engine royalty for sales on the Epic Games store, out of Epic’s 12%."

"From Epic’s 12% store fee, we’ll have a profitable business we’ll grow and reinvest in for years to come!"

This is great news for indies who Steam seems to be ignoring[1] lately in favor of AAA. Maybe that will eventually put enough pressure on them to at least reduce their cut. There's been increasing concern over whether it's worth it for indies given the lack of visibility. If you have to push an audience there anyway, is it worth the 30%? Jason Rohrer[2] and Positech Games[3] for example have been successful outside of Steam keeping a much larger piece of the pie.

1. http://greyaliengames.com/blog/steams-discovery-algorithm-ki...

2. https://www.gamesindustry.biz/articles/2018-03-12-jason-rohr...

3. https://www.positech.co.uk/cliffsblog/2018/11/23/selling-gam...

[+] notafraudster|7 years ago|reply
"This is great news for indies who Steam seems to be ignoring[1]"

Your citation suggests that in this context, ignoring means "potentially offering them fewer page referrals from advertising slots, relying on them to generate organic traffic".

I mention this, because the interview with Tim Sweeney posted in response to your comment says: "Generally, we want to enable a more direct relationship between developers and gamers, and more efficient economics and discovery. Developers will control their product pages, free of advertising for competing games."

The reduced margin will definitely benefit all developers, but the Grey Alien guy recently tweeted that margin wasn't the problem because 30% of nothing is nothing, and his issue is no one discovering his games.

I would say who the Epic approach benefits is sort of "Big Indie" -- developers large enough to self-generate momentum but small enough not to benefit from the improved revenue split. Thinking of teams like Double Fine and games like Stardew Valley here.

[+] ksec|7 years ago|reply
This is actually a genius move. Everyone is so concerned about the 12% and its rivalry between Steam, and not see this from an Unreal Engine perspective. Instead of Getting 5% from the Game sold as EPIC are currently used to now, they are now getting 12% with an additional Gaming App Store. That is an 240% increase in revenue with very little additional offering.

Unfortunately I think Unity May see this as a threat, Now what if Unity decide to make an App Store for 7% revenue, which should effectively be a non profit model after you take away the 3% Credit Card charges and CDN cost.

Anyway both would be good as we continue to push forward the Middleware Gaming Engine.

[+] laythea|7 years ago|reply
"...if you’re using Unreal Engine, Epic will cover the 5% engine royalty for sales on the Epic Games store, out of Epic’s 12%."

So there is a bias in the Epic store towards Unreal titles then, contrary to what I just read.

[+] drharby|7 years ago|reply
The timing of yesterdays hn post and this announcement...hhmmmmm. almost as if it was coordinated.

Hmmmmmmm

Edit - i love the silent dv brigade for making an observation and starti ng dialogue.

Dont go changing onme hn!!!

[+] CivBase|7 years ago|reply
They've made their argument for why developers should publish there. Now, why should I want to use the Epic Games Store as a launcher?

Don't get me wrong. There's plenty of room for Steam to improve. I want launchers to compete for its users, but all they ever seem to compete for is publishers. For all of Steam's problems, people love it because it offers a huge feature set out of the box.

- Achievements - Friends lists - Voice and text chat - Family sharing - Streaming - Multi-drive support - A decent refund policy - User reviews - An easy-to-use mod workshop - Cloud saves - User-generated tags - Independent curators

The list goes on...

So-called "competitors" never bring even half that feature set to their new platforms. Instead, they force users to switch by making games exclusive to their platform.

A lot of people have talked about publishers having incentives to distribute games on multiple platforms, but history has shown us that they simply don't.

I don't know what the solution is. I guess I just wanted to vent.

[+] ryandrake|7 years ago|reply
> - Achievements - Friends lists - Voice and text chat - Family sharing - Streaming - Multi-drive support - A decent refund policy - User reviews - An easy-to-use mod workshop - Cloud saves - User-generated tags - Independent curators

Do people really care about this stuff? I've started holding my nose and grudgingly using Steam, and really all I want is a way to buy a game and get it on my hard drive. I don't need a middle-man to launch it for me or clutter my system up with achievements and friends and yet-another-chat-app. Every time I run a game, Steam even shows that little pop-up--as if I needed a reminder that it's constantly sitting there in memory, eagerly waiting for me to hit SHIFT-TAB and "engage" with it. Can't I just play the damn game I bought without the distributor trying to insert itself into the experience at every opportunity?

[+] billfruit|7 years ago|reply
I keep repeating this: two things Steam does right are effortless no-questions-asked refunds, localized prices in many regions of the world, so that people in poorer countries pay affordable prices.

I do think that Steam is only going to grow bigger, because most of the growth in game sales are going to come from China, Russia, India, Indonesia, Bangladesh, Africa, Mexico, Brazil etc than US and Europe. But most other stores does not seem to understand that expanding to these markets is key, and seems to be operating in US&Europe centric strategy.

(Off-topic: Incidentally Indonesia is not far behind the US in population, but current predictions show that they aren't going to overtake the US anytime soon, however Nigeria is on track to overtake both US and Indonesia to become the 3rd most populous country by 2050).

[+] benologist|7 years ago|reply
Their refund policy is good but it's worth nothing they only give those refunds because they were taken to court in Australia, where a judge said their previous refund policy was designed to give no refunds and used to deny an estimated 21,000 refunds just within Australia. They changed their policy and escaped punishment everywhere else.

https://www.smh.com.au/business/companies/video-games-websit...

[+] Rebelgecko|7 years ago|reply
Valve's refund process is certainly better than nothing, but it's not consistent. I don't think you can get a refund for Artifact (Valve's own game). You can do a credit card chargeback, but then they'll ban your entire account.
[+] beerlord|7 years ago|reply
The question will be: how will developers respond to this lower commission? Will it result in cheaper games for the end user?

Personally I'm being conservative, that the Epic Store will lack of a lot of features upfront and need a higher advertising budget, and some additional support costs if I have to self-administer cloud saves (eg. via AWS) if Epic don't have that feature yet.

So I've budgeted for about 10% lower sales, 50% increased advertising spend, about $10k extra development costs. I come out slightly less profitable than Steam, but I calculate that the risks of launching on Epic are much lower, since there's a chance that the game can just flop and die immediately on Steam on launch, whereas at least on Epic I have the boost from being selected. Plus, the potential upside on Epic is much higher.

[+] mywittyname|7 years ago|reply
GoG does both of these, and have done so for much longer than Steam.
[+] jsgo|7 years ago|reply
Pulling from what I said in https://news.ycombinator.com/item?id=18600248

I guess this explains Valve improving the revenue share a bit on Steam recently.

Also, at first I wasn't thinking this would be much of anything (yet another storefront), but the kicker per the article is that those developing in Unreal Engine would not pay a percentage for the use of Unreal Engine (~5%) on top of the store cut (~12%). That would probably be huge for developers so I could see this one actually taking off.

[+] EamonnMR|7 years ago|reply
I wish Valve had pushed harder to compete with Origin, but this looks like the end of its complete dominance. Once EA demonstrated that anybody could hack together a launcher, it's become a free for all. As a consumer it's been a worse and worse experience since increasingly small companies felt the need to replace steam with technically inferior solutions. But this is different-now we get a competitor which is willing to sell more than just its own titles, and this will be a major blow to steam (because indies will go for this-fortnight will be the killer app for this new store just as Half Life 2 was for Steam.) I was really rooting for Valve because they where making a linux gaming future look possible.
[+] guitarbill|7 years ago|reply
> this will be a major blow to steam

we'll see. i'm in no hurry to rush out and buy anything that isn't on Steam. all these articles talk about the cut Epic will take, but as a customer, I couldn't care less. what i do care about is e.g. Steam's excellent return policy. maybe i'm just getting old and am not that interested in games, but i'm happy to pass up games if they aren't on Steam.

i'd venture a guess that Steam and Epic Games Store may not be competing for quite the same market; Steam is likely to remain dominant for PC gaming (maybe rightly so, they have worked hard to get there), and Epic Games Store might focus more on mobile gaming instead. so it's a bigger threat to the App Store/Google Play than Steam IMO.

[+] bliblah|7 years ago|reply
I don't think it will be a major blow. Ubisoft followed suit and just sells games on Steam but tacks on their awful DRM on top of steam. Origin is a joke in terms of functionality and ease of use. The only advantage it has is the library of games if you so happen to like EA games, which has been very mixed in the last few years to say the least. I only own two games from there and would rather just buy a used PS4 copy than have to deal with that bad store.

GoG is the only good alternative but they don't even aim to compete with steam since they offer a service of maintaining old games to be played on modern OS's. I was shocked that Steam sells games that quite literally do not work on anything more modern than XP!

[+] wernercd|7 years ago|reply
> Technically inferior solutions

It wasn't just EA - Blizzard, uPlay, GOG, etc. All with different strengths and weaknesses.

> compete with Origin

Origin is garbage and a reason I won't own games that are connected to it (I really wanted to play ME3 and the newer FarCry's) - as is u(dont)Play (couple games ruined by uPlay that were purchased via Steam... boo)

bNet is decent in that it's contained to only Blizzard so it's very contained.

Valve still has the best platform, hands down.

Now, their gaming division on the other hand... Half Life Episodic content? HL3?

[+] kgwxd|7 years ago|reply
I'd be more excited for this much needed competition if it weren't a company that survives by taking advantage of children's naivety of money and natural impulses to sell virtual outfits and animations at sickening prices. App store cuts are ridiculously high, but at least they're not taking candy directly from babies.
[+] hardwaresofton|7 years ago|reply
I absolutely welcome the competition, but it's going to take a lot for me to trust the Epic Games Store as much as I trust Valve.

Lots has been written about Valve (employee handbook, supposedly-not-there-but-actually-just-hidden political hierarchies), but I don't think of them as a normal for-profit company though they most certainly are. They've taken bets like steam for linux, the steam controller, steam boxes, their crazy no-hierarchy structure (no matter how misguided) and I just don't see other game companies or platform companies doing the same. They have my respect. I've also never seen them do anything blatantly greedy/money grubbing on a large scale (though their excuse is usually that they're a small company) and the gaming community absolutely loves to get out their pitchforks.

Maybe I've just been marketed to really well but I think it takes a certain kind of company to be who Valve is -- they're like a mozilla in my eyes.

[+] criddell|7 years ago|reply
If Apple loses their anti-trust case in court and is forced to open iOS to alternative app stores, does that mean the consoles would be forced to open up their platform as well? It would be nice to have some of these alternative stores on the PS4 and XBox.
[+] bluetidepro|7 years ago|reply
That's an interesting thought, but I wonder if it's a different context. Today, you can go to many physical stores to purchase console games, you don't HAVE to use the PS4/Xbox digital stores only. You can even purchase the digital codes from many stores to redeem. I don't know much about the Apple case, but I assume that's maybe different because you HAVE to use Apple's iOS store. There isn't alternatives like physical stores to buy your apps to load them onto your phone.
[+] Eridrus|7 years ago|reply
Correct me if I'm wrong, but my understanding is that console hardware is usually sold below cost to get people into the ecosystem and make that back as people buy games.

So forcing console makers to allow other stores would probably have a much more dramatic impact on the console market.

And while IANAL, it seems a bit of a stretch to apply anti-trust law here.

[+] kabdib|7 years ago|reply
It's very unlikely for the consoles to be opened up in a technical sense. At least on the Xbox, the store is not very pluggable, and allowing third parties to sign code just ain't going to happen.

I would expect relief here to be financial. No way is MS going to relinquish platform control.

[+] bliblah|7 years ago|reply
Sounds interesting but I don't think so. My reasoning stems from the fact that App stores are pretty much the only way to download and purchase software on iPhones. Meanwhile console games can be bought in the digital marketplace and Physical with physical being much more open option. This pretty much breaks any monopoly that sony could hope to have. Theoretically, if the next generation of consoles aims to follow suite with PCs and do away with Physical copies then we could see a stronger case.
[+] bubblethink|7 years ago|reply
I think it's going to end up the other way round. Apple will cite consoles as an example and not lose the case (at least as far as opening up the platform is concerned). The alternative scenario would have too many far reaching effects making it extremely unlikely.
[+] a13n|7 years ago|reply
At first glance, I thought Steam was in big trouble. Last MAU numbers I could find were 90m for Steam and 75m for Fortnite.

A game store is a marketplace, in startup terminology. Epic already has a lot of the consumer side, and 60% lower fees is a huge incentive for the developer side.

But UX-wise, so many games are built on top of Steam. In Rocket League, you get logged in with your Steam account. You invite friends to party via Steam.

And how would migrating work? Would Epic let me launch the game because I already own it in Steam? Or would I have to re-purchase? (No way people would do that)

If I'm playing on Epic, and my friend is on Steam, would we be able to party?

This introduces a ton of complexity, and while certainly troubling for Steam in the long run (once new games come out), I think their moat is still very strong.

Also 40% of Epic Games is owned by Tencent, so this would mean China's market share of the world's gamer market growing, for better or for worse (depending on your political opinions).

[+] bearcobra|7 years ago|reply
Obviously there's a non-zero cost for developers to publish thru multiple stores, so it makes sense to try to incentivize them with a greater share of revenue. It would be interesting if they tried to leverage the popularity of Fortnite to also do this on Android.
[+] anoncake|7 years ago|reply
There's also a cost for the customer; they have to use multiple launchers.
[+] taormina|7 years ago|reply
Ditto, I'd love to see this pushed out to the mobile platforms as well.
[+] swarnie_|7 years ago|reply
Just wait until digital distribution services catch up to console levels of bullshit and start licencing exclusives or "exclusive for X months after launch" for bigger titles.
[+] ocdtrekkie|7 years ago|reply
Epic seems to be really trying to kill the 30% cut game. First by bucking the Play Store on Android and now offering their own competitor to Steam on PC. Sort of impressive, glad to see we aren't going to be cemented into these cuts forever.

If everyone who has Fortnite has the Epic Games Store by default, there will be a huge initial market penetration as well.

[+] k__|7 years ago|reply
Just yesterday I read a rant by an indie-game dev on Twitter, he complained that Steam would flush out good indie games by catering more to AAA studios and simultaneously watering down everything else with Steam direct.

Don't know if this is right and I don't know if the Epic Games Store has a solution to this problem, but more competition in the space is probably a good thing.

[+] needle0|7 years ago|reply
Everyone seems to be talking about Steam but the forthcoming Android store feels to me like a much, MUCH bigger deal.

I mean, nobody stops anyone from setting up a new PC game store, and the Epic PC store is just another entry added to the already long list of stores all competing with Steam. But on Android (outside China), the Google Play Store pretty much has a complete monopoly that they made sure was virtually impossible to break while still being able to be technically called "open." Sure, Amazon Appstore and a few other stores exist, but they haven't really been able to make any real impact due to Google erecting so many hoops for both developers and users to jump through in order to stray from the Google Play path. (eg. Google Play Services, "Unknown Sources" checkbox buried in Settings app, etc.)

But now Epic is forcibly prying it open by using Fortnite as their lure to induce people to actually jump through Google's hoops that were supposed to be insurmountably high user friction. Of all the past alternative Android app stores, this one sounds like it could actually work.

The ensuing Google/Epic all-out war should make last year's Google/Amazon Chromecast/FireTV/YouTube feud look tame. Break out the popcorn.

[+] snarfybarfy|7 years ago|reply
In my opinion taking a percentage cut on something that is not strongly correlated with any special effort, borders on scam.

And yes the scammers are everywhere: your bank, broker, recruitment agency, financial adviser, real estate agent, etc...

Call me bitter, but I paid way to many years 20% of my paycheck (yay, work for free on Fridays!) to some agency because they, for no good reason at all, somehow are into this percentage margin business as well.

The country I live in all major stockbrokers will charge you the higher of $90 or 1% (discount brokers take about half that), whereas a lot of other countries have enough competition that you get actual flat prices per trade.

You are selling some service, then please put some actual price on it. E.g. $2000 to review your game and put it onto our platform.

If the service requires ongoing efforts than put some price on this as well.

Without price there can not be any free market.

[+] alphakilo|7 years ago|reply
I think we're going to see a lot of Unreal Engine games on this store. With the UE royalty being absorbed by Epic, it seems like a no brainer.
[+] max76|7 years ago|reply
Are game launchers becoming a race to the bottom?
[+] preommr|7 years ago|reply
Well this makes me feel awkward as a Unity dev.

I saw that they'll allow unity based games on their new store but I wonder if that's just for the short term. Kind of makes me wonder if I should've chosen Unreal.