Epic Games Store is still running at a huge loss for the company. New details have emerged as part of its antitrust court battle with Google.
November 6 marked the opening day of Epic Games’ battle against Google over Fortnite and app store fees. As reported by The Verge, Epic Games Store general manager Steve Allison was the first witness to testify in court.
He admitted that EGS isn’t profitable yet. So it continues to generate losses for the company ever since its launch in December 2018.
According to court documents disclosed during the Epc v. Apple trial, the company expected the Epic Games Store to remain unprofitable until at least 2025. In addition, it projected that the store’s combined loss would reach $965 million by 2027.
Epic launched its own storefront as a rival to Valve’s Steam, offering a much more generous revenue share of 88/12 in favor of developers (instead of the standard 70/30 split). As of October 2019, it planned to capture 50% of all PC revenue, and 35% if Steam reacted to its new competitor.
To achieve this goal, the company started giving away free games to EGS users every week and aggressively paying developers for timed exclusivity. Epic Games has invested hundreds of millions of dollars in these initiatives, which was also one of the reasons behind its huge losses.
For example, the company spent $210 million in minimum guarantees to acquire the first wave of exclusives (as of August 2019), which eventually resulted in expected losses of $130 million.
In 2022, the Epic Games Store topped 230 million PC users, who spent $820 million on the store and claimed nearly 700 million copies of free games. However, it is unclear how long the company can tolerate losses while sticking to its business strategy.
In September, Epic Games laid off 16% of its employees, mostly outside of core development. The main reason was that the company has been spending way more money than it earns for a while now. CEO Tim Sweeny later stated that Epic will continue to develop and support EGS, adding that he sees it as a “cure to the disease that is infecting a lot of the industry right now.”