Epic Only Recouped Minimum Guarantee Costs From Three Games
Epic has been giving away free games on the Epic Game Store for a long time now, and many people were wondering how on Earth the company was making any money while doing this. Well, it turns out it wasn't making any money. In fact, only three of the games launched on the platform have recouped their initial minimum guarantee cost.
Thanks to research gathered on resetera, we can see that three games hit their minimum guarantee targets, although the names have been blacked out. Redditors believe they have worked out two of the games, though: Dauntless and Satisfactory.
The minimum guarantee is an advance payment that Epic makes to devs that agree to sign a sixth-month exclusivity contract with the Epic Games Store. It guarantees devs a large amount of money before a single sale is made. Once a certain number of sales was reached, Epic would then start sharing the profits.
This was an attractive offer for many small indie devs who could not guarantee sales, and who did not have to pay back the advance if targets weren't met. Most notably, the Ooblets developers faced targeted harassment for their EGS exclusivity and had to explain to angry fans why the deal helped them so much.
Epic most likely knew many of these games would not recoup the costs spent on them for exclusivity. When a new competitor enters a marketplace – like Airbnb when it had to go up against hotels, Uber undercutting with Taxis, Deliveroo providing cheap deliveries – it has to fight for a share of the pie and build a loyal user base.
Nowadays, the common way to do that is to use investor money to offer a cheap service that undercuts everyone else until a sizeable market dominance is built up – then prices can start being jacked up again. Since the EGS was competing against Steam, it could have been trying to entice Steam users away with free games in order to build up a user base.
According to the research complied on resetera, Epic is now looking to shift to a more traditional publisher business model, where it will help developers with marketing costs and other hurdles that stand in the way of video games being made.
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