$130m Loss Expected for Epic Games Store Exclusives in First Wave
The first wave of Epic Games Store exclusive is proving to be pretty pricey. According to documents sourced from the Epic vs. Apple legal battle, it looks like the first 23 games it gave away are going to lose Epic Games a cool $130 million.
The Epic Games Store has been around for a couple of years now and it entered the market with a bold strategy — it pays developers significant sums of money to ensure that these upcoming titles are only available on the Epic Games Store. A game is typically exclusive to the storefront for around a year, although shorter periods have been observed such as with Borderlands 3.
In the years since then, Epic Games has snapped up a number of hot properties as timed exclusives such as Hitman 3 and Ooblets. However, these exclusivity deals come at a cost. We now have a somewhat better idea of what Epic Games is paying for these exclusivity deals — and how much money it’s losing as a result.
First Wave of Epic Games Store Exclusives Net Big Losses for Storefront
GameDiscoverCo newsletter founder Simon Carless shared an image from the Epic vs. Apple court case on Twitter, highlighting the true cost of the Epic Games Store exclusives strategy. While it spent $210 million in minimum guarantees to get these developers on board, it only expects to recoup around $80 million of that initial investment.
The names of the individual games are redacted in the image. However, Carless points to a Reddit submission that does some guesswork based on release dates. Some of the listed games didn’t perform all that poorly, but others resulted in stunning losses.
Take Metro Exodus as an example. It launched on the Epic Games Store on February 15, 2019, and the court documents say that Epic Games paid out $37 million in minimum guarantees. However, the expected shortfall is 22.2 million, meaning that Metro Exodus made less than half of the revenue Epic Games expected it to. (As with most Epic Games Store exclusives, Metro Exodus launched on Steam roughly one year later.)
Epic’s own chart shows that only two games actually made more than the minimum guarantee that Epic Games guaranteed them. Based on the speculation in the Reddit submission, it looks like Satisfactory and Dauntless were the only two titles to meet Epic’s expectations in the first wave of Epic Games Store exclusives. A $130 million loss is certainly nothing to gloss over, but it pales in comparison to the billions in revenue brought in by Fortnite — a game that Superdata says brought in $2.4 billion in its first year alone.
Earlier court documents show that Epic Games believes its storefront will be profitable by 2023. Anyone who has run a business can tell you that you’re going to lose money for the first few years; it’s an investment that takes time and effort to start making returns. This is especially true when you are dealing with an entrenched, and well-defended competitor like Steam presents Epic in the PC game store front market. Whether or not that rings true for the Epic Games Store, however, remains to be seen.
What do you think of the amount of money invested in the first wave of Epic Games Store exclusives? Do you think the Epic Game Store will be profitable by 2023? Let us know in the comments below!