Life is strange sometimes. Three days ago, I was openly wondering what gaming service might emerge to provide a better set of features and capabilities than Steam. This week, Epic Games announces that they’re coming out with their own service — and they’ve got at least one serious hook ready to land right between Gabe Newell’s eyes.
This is a true store, not just a landing page for Epic’s own products, though obviously, it’ll take time to populate things. Where Steam takes a 30 percent cut of all developer earnings, Epic has slashed its own take, to just 12 percent. The company writes that developers will receive 88 percent of revenue, with no tiers or thresholds. Epic takes 12 percent, and if a developer uses Unreal Engine, Epic will cover the 5 percent engine royalty for sales on the Epic Games store out of Epic’s 12 percent, the company said.
Suddenly, Steam’s recent ill-considered revenue sharing change makes a lot more sense. Last week, Valve announced that it would demand a few ounces less of flesh if your game managed to clear a certain revenue threshold. Games that clear the $ 10M threshold will only have to pay 25 percent of revenue, while games that make it to the $ 50M threshold owe Valve 20 percent. This understandably angered a lot of indie developers, who pointed out that the people who actually need that revenue the most are the same people who are unlikely to break a $ 10M threshold.
Epic believes it can easily handle the 12 percent cut. When asked why the company was using 88/12 instead of 70/30, Tim Sweeney had this to say:
The math is quite simple: we pay around 2.5% for payment processing for major payment methods, less than 1.5% for CDN costs (assuming all games are updated as often as Fortnite), and between 1% and 2% 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% are marking up their costs by 300% to 400%. But with developers receiving 88% of revenue and Epic receiving 12%, this store will be a profitable business for us.
And there it is. Valve isn’t a game developer. It’s a gate-keeper that exploits its position in the PC market, knowing the chances of anyone going elsewhere are slim, because where would you go in the first place? Services like GoG, Origin, and uPlay can work for some titles, but Steam has been the virtual storefront for most of PC gaming. The problem is, virtually none of the wealth poured into the company on a yearly basis actually seems to go to making games. Or a Steam client redesign. Or content moderators. Or OS development. Or hardware development. If you love DoTA, Valve is great. If you cared about Portal, L4D, Half-Life, Valve’s practically dead already.
Obviously, it’s still early days. Epic Games’ service might suck, or refuse to offer refunds, or be catastrophically buggy. But this is the biggest change we’ve seen in years for someone to compete more effectively with Valve. According to Sweeney, the Epic Games store will be giving out a free game every two weeks in 2019, so keep an eye out for announcements.