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Here"s how much money Epic is burning khổng lồ make the Epic Games Store a Steam competitor.

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To take on Steam, Epic Games has spent the past two years shoveling Fortnite money into the Epic Games Store, making over 100 exclusivity giao dịch & giving away free games every week. We knew Epic was spending a lot of cash to lớn get customers onkhổng lồ its store, but didn"t have sầu many specifics until now. Thanks to lớn Epic"s big legal fight with Apple, we learned this week that Epic committed around $444 million to lớn Epic trò chơi Store exclusivity deals in 20đôi mươi alone. Phew.


More precisely, that"s $444 million on "minimum guarantees" for games that release on the Epic Games Store but stay off of Steam for a year. A "minimum guarantee" is just another way lớn refer to lớn an advance: It means that Epic guarantees the publisher a certain amount of money whether or not their game actually sells enough to cover it. For example, Epic put down $10.45 million for Control.

Apple says that Epic lost $181 million on the Epic Games Store in 2019, projected a loss of $273 million last year, and projects another loss of $139 million this year.

In its end-of-year report, Epic said that players spent $700 million on the Epic Store in 2020, but third-tiệc ngọt game sales only accounted for $265 million of that spending. That $444 million in advances to third-buổi tiệc ngọt devs isn"t cthua thảm to lớn being recouped, then. Some of those deals must be for exclusives releasing in the future, but according lớn 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 đơn hàng.

As for how much the Epic Games Store will have sầu lost in total by the kết thúc of 2021, factoring in exclusives và all other expenses, projections say it"s less than $600 million. Just a bit of spending money, then.



Citing depositions from Epic Games Store VP. & GM Steve sầu Allison và Epic VP of business development Joe Kreiner, Apple says that Epic lost $181 million on the Epic Games Store in 2019, projected a loss of $273 million last year, và projects another loss of $139 million this year. Added up, that"s an estimated $600 million that the Epic Games Store will need khổng lồ recoup before it"ll be profitable on the whole. Apple points out that Epic doesn"t think that"ll happen until 2027.

In its new filing (PDF here), Epic puts a happier face on its business plan, saying that it expects the Epic Games Store khổng lồ start earning annual profits in 2023. And what Apple calls "losing money," Epic would probably call "investing money." This spending is all part of the plan, says Epic, and its 12 percent revenue cut will eventually be enough to sustain the store, something it has been saying since it launched the store at the kết thúc of 2018.

"EGS is not yet profitable at its current scale & stage of development because it has front-loaded its sale và user acquisition costs lớn gain market mô tả," reads Epic"s filing, citing CEO Tlặng Sweeney.

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Other fun things Epic and Apple have lớn say about each other

All of this shin-kicking between Epic and Apple is over the way transactions are handled on iPhones & iPads. Apple makes developers get approval khổng lồ sell iOS applications on its App Store, và also enforces use of its payment processing system for in-phầm mềm purchases, which gives Apple a 30 percent revenue cut. Epic says that"s unfair, arguing that Apple and Google have all the power when it comes to smartphones, so developers are forced to lớn pay their fees if they want to lớn make successful điện thoại apps. Epic wants lớn accept money from Fortnite iOS players with its own payment processor, bypassing Apple"s fee (which it famously did without permission to kiông chồng off this whole fight), while Apple would like to lớn continue getting 30 percent of Fortnite"s iOS revenue, thank you very much.

Epic called its plan to go after Apple & Google "Project Liberty."

Epic has even bigger plans than bypassing Apple"s fee in Fortnite, though. It wants lớn put the Epic Games Store on iPhones & sell thiết bị di động games with its own payment system, competing with the App Store itself, và hopes US courts will rule that it would be anti-competitive for Apple khổng lồ stop it.

Epic argues that iOS developers can"t innovate & provide the safety features they want lớn due lớn Apple"s overbearing policies, and Apple brings up the Epic Games Store"s unprofitability in part to lớn attack the idea that Epic actually does those things in the first place. "By its own admission, the Epic Games Store—two years after it launched—is still missing "critical" features," writes Apple"s lawyers (echoing large parts of Reddit).

In a mostly-redacted section, Apple calls out "significant security breaches involving EGS," possibly referring to a 2019 Fortnite breach. It also says that Epic"s customer support team is inferior to lớn Apple"s, citing an internal email sent by Sweeney in which he asks "what happened with the community team" that was supposed khổng lồ offer customer service to people complaining online. "I"ve sầu seen nothing," wrote Sweeney. "Literally zero, while we"re being endlessly bombarded with claims of problems that Epic isn"t answering."

During the trial, it may also come up that Epic doesn"t force developers to lớn use its payment processing for in-game purchases on its store. That"s true in Ubisoft games on the Epic Games Store, for instance, which have their own in-game transaction system. Apple doesn"t want the court to think that the App Store & Epic Games Store are comparable, saying that in-tiện ích purchases are part of the iOS platform, not just some store feature, & that the first iPhone didn"t even allow third-các buổi tiệc nhỏ apps (read: you should be thanking us!).



What Epic wants, in brief. (Image credit: Epic Games)

Across the document, Apple more or less says: Epic, your store is a bonfire that you chuông xã money into lớn, all the gamers are mad at you, và if we"d let you run wild, you would"ve caused security breaches on our phones. You needed our App Store lớn earn $700 million in Fortnite revenue on iOS, you ungrateful nerds!

I doubt comparisons between the Epic Games Store và App Store will be a big part of the case, in the over. Epic"s issue with Apple isn"t just that it runs a store with mandatory fees. Epic"s complaint is that Apple also makes that store và its in-phầm mềm purchase system unavoidable on a huge portion of the smartphones in the world. That"s what makes it an antitrust issue, in Epic"s view.

Part of Apple"s rebuttal is that Microsoft and Sony bởi the same thing with the Xbox & PlayStation. Epic says, no, that"s not the same, because game consoles "vày not include general computing features lượt thích smartphones," aren"t very portable, và don"t connect to cellular networks. "Smartphones are critical platforms for developers," says Epic, & since so many of them are iPhones, developers have sầu no choice but lớn submit khổng lồ Apple"s rules.Apple says that"s not true, because "consumers can & do switch away from iOS devices khổng lồ Android devices," & lots of people play Fortnite on multiple platforms, so actually it is competitive sầu.

The companies raise many more points and counterpoints in these recent filings, which comprise about 500 pages together. For instance, Apple says, as it has before, that Epic tried khổng lồ negotiate a side khuyễn mãi giảm giá with it, implying that Epic"s open platform evangelism is actually self-serving. Epic, meanwhile, accuses Apple of burying competitor"s apps in the App Store search.

Against my expectations, Apple"s is the more aggressive of the two documents, making it the more interesting. Here are a few more tidbits from Apple"s interpretation of the evidence:

Fortnite"s average monthly users declined between 2018 & 2019, and Epic noticed when #RIPFortnite trended on Twitter. (See? Developers bởi hear you. And then they develop elaborate plans lớn sue Apple.)Epic believed Fortnite could be reinvigorated by turning it inlớn a platsize for creators, but felt that platsize fees, lượt thích the App Store fee, might hinder the plan.Epic called its plan to lớn go after Apple và Google "Project Liberty." Sweeney was "in the loop" on it "100 percent." (I mean, obviously, he tweets about it all the time.)100-200 Epic employees were involved with "Project Liberty."Epic knew the public wouldn"t necessarily sympathize with it when it defied Apple"s rules, and was concerned about looking lượt thích "the baddies." It paid a truyền bá firm $300,000 to work on Project Liberty.Epic has made more than $700 million just through Fortnite iOS transactions. (Which is one reason its Epic Games Store losses are no big khuyễn mãi giảm giá.)

Epic & Apple go to lớn court on May 3. Journalists won"t be allowed in the room due to Covid-19 restrictions, but there"ll be live audio. Before the trial, there will be a conference on April 21 where elements of each party"s arguments may be clarified.

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This article was updated on April 10, 2021 to add more details about the filings và case.


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