Epic Games founder says exclusives are the "solution proportionate to the problem" of Steam's 70/30 cut
Epic Games' outspoken founder, Tim Sweeney, has explained why the company is courting developers to release games exclusively on the Epic Store.
Although the obvious answer might be that the Epic Games Store can't compete with Steam's feature set, so it has to undercut it by snatching games away from it, Sweeney has a different take.
In a series of tweets, the industry veteran outlined why exclusives are necessary, even if they're unpopular. Sweeney suggests that the 70%/30% revenue split standard on most digital platforms, including Steam, is hurting developers. But, offering a better cut on the Epic Game Store alone won't be enough to change that long-standing standard.
The solution, as Epic sees it, is to buy exclusive games at scale, enough to put pressure on Steam and other platforms to reduce their cut to the more reasonable - in Epic's view - 88%/12% split.
For example, after years of great work by independent stores (excluding big publishers like EA-Activision-Ubi), none seem to have reached 5% of Steam’s scale. Nearly all have more features than Epic; and the ability to discount games is limited by various external pressures.
— Tim Sweeney (@TimSweeneyEpic) June 26, 2019
This leads to the strategy of exclusives which, though unpopular with dedicated Steam gamers, do work, as established by the major publisher storefronts and by the key Epic Games store releases compared to their former Steam revenue projections and their actual console sales.
— Tim Sweeney (@TimSweeneyEpic) June 26, 2019
Sweeney went on to add that this tactic, while aggressive, is "proportionate to the problem it addresses" - that being the 70%/30% cut. Epic's end goal is lowering stores' cuts across the industry. Failing that, Epic would still end up with a store selling dozens of anticipated games and an avenue for developers to sell their games at higher potential profits.
The 30% store tax usually exceeds the entire profits of the developer who built the game that’s sold. This is a disastrous situation for developers and publishers alike, so I believe the strategy of exclusives is proportionate to the problem.
— Tim Sweeney (@TimSweeneyEpic) June 26, 2019
If the Epic strategy either succeeds in building a second major storefront for PC games with an 88/12 revenue split, or even just leads other stores to significantly improve their terms, the result will be a major wave of reinvestment in game development and a lowering of costs.
— Tim Sweeney (@TimSweeneyEpic) June 26, 2019
So I believe this approach passes the test of ultimately benefitting gamers after game storefronts have rebalanced and developers have reinvested more of their fruits of their labor into creation rather than taxation.
— Tim Sweeney (@TimSweeneyEpic) June 26, 2019
While this sentiment might seem a little too admirable; after all, Epic doesn't benefit when competing stores adopt the cut, it's worth remembering that the Epic Games Store isn't the company's only source of income. More money being invested in making games means more games will be made, which has the potential to increase Unreal Engine royalties with it.
