The EPIC Effect: Microsoft Changes Revenue Split To Match EPIC Store, Steam Holds Firm

from the competition-is-amazing dept

Way back when Epic released its Epic Store PC game storefront, the release of this new competitor to Steam focused on two major selling points. The first was timed exclusives that it shelled out tons of money for, allowing it to sell games the public couldn't get anywhere else for a certain period of time. This pissed off lots of people, as the public generally doesn't like exclusives. That said, Epic did mention that it would end its exclusivity practices if the rest of the gaming storefront world, especially Steam, mirrored the Epic Store's second key selling point, which was a far more favorable split offered to game developers than the "industry standard" 70/30 split that sees places like Steam getting nearly a third of game revenue just for hosting the game on its platform. Instead, Epic's store has a 88/12 split, meaning the platform is willing to take less than half of the revenue Steam extracts from gamemakers.

In other words, Epic positioned its exclusivity program as merely a method to get the other storefronts to take less money away from game developers, which softened the blow with the public and surely made it a great many fans in the gaming industry.

Well, Steam hasn't caved yet. But Microsoft did just announce that it is moving to match the splits offered by the Epic Store, marking some movement in the industry and perhaps an indication of things to come.

“As part of our commitment to empower every PC game creator to achieve more, starting on August 1 the developer share of Microsoft Store PC games sales net revenue will increase to 88%, from 70%,” Head of Xbox Game Studios Matt Booty wrote on the Xbox blog. “A clear, no-strings-attached revenue share means developers can bring more games to more players and find greater commercial success from doing so.”

The move is the latest in a bit of a sea change for game revenues. In a survey released yesterday by the Game Developers Conference, only 3% of respondents thought the once-standard 30% take by a platform was justified. The Epic Games Store broke onto the scene by notably only taking 12% of the revenue. Over the last year, both Apple and Google have lessened their cuts for games making under $1 million. Steam, meanwhile, has held more or less firm on its 30% take, with the cut lessening the more money a game makes, a system that makes more money for larger, richer publishers, while penalizing smaller indies.

Funny what a little bit of competition can do. While it is certainly notable that Steam is watching all of these changes with its proverbial arms folded, doing no sort of splits-changing of its own, maybe that's okay and maybe there's a place for that. Or maybe the pressure continues to build and the Epic Store does end up being the preferred storefront for smaller titles and indie developers and Steam eventually does have to come down from the 70/30 split.

All I know for sure is that without Epic entering this arena and pushing the envelope, be it for altruistic reasons or otherwise, it seems unlikely that even Apple, Google, and Microsoft would have made any of these changes. That's why, whatever you think of the Epic Store, the added competition certainly is nice.

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Filed Under: competition, epic store, steam, video game stores, video games
Companies: epic, microsoft, valve

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  1. icon
    Candescence (profile), 29 Apr 2021 @ 9:03pm

    "In other words, Epic positioned its exclusivity program as merely a method to get the other storefronts to take less money away from game developers, which softened the blow with the public and surely made it a great many fans in the gaming industry."

    I hope that's sarcasm, Tim, because that didn't really happen. The Epic store is still largely despised by the PC gaming community, and not just because of exclusives. Steam is not only significantly more accessible for developers and publishers of all shapes and sizes (the availability of content on the EGS is miniscule compared to what Steam offers, even if a lot of games on Steam are crap, but it still has exponentially more games that are at least okay), it also provides a significantly better interface and a truckload of features for both the consumer and developers that the 30% revenue take pays for maintaining, and Valve keeps adding new features that enhance the experience for consumers and improve visibility for developers. The EGS doesn't even have basic features that should be taken for granted on any basic digital storefront - I'm pretty sure it still doesn't have a shopping cart feature. The EGS is an absolutely terrible client and storefront, Epic has really been trying to muscle its way into being competitive by splashing the absolute truckloads of money it made from Fortnite.

    Also, speaking of those exclusives, Steam can potentially wait out Epic. A recent court filing reveals that Epic has been losing hundreds of millions of dollars from the EGS, and doesn't expect to be sustainably profitable before 2023 at the earliest, maybe 2027 at the latest. Paying for exclusives and free games has been a huge gamble that won't pay off for years, if ever, and documents uncovered by the court battle imply that the EGS has been underperforming for Epic and the games on the store have not been meeting minimum sales guarantees. Sure, an upfront loss to start a new venture is a viable strategy, but it clearly isn't working here if games aren't selling.

    Also, I have to note, again, the lower revenue split won't help the vast majority of developers/publishers, considering the EGS has a miniscule amount of games compared to the likes of Steam or even A better revenue split isn't going to help if you can't publish your game where the lower split is. People may complain about Steam's open doors policy, but nobody wants to go back to the days when Valve was ridiculously picky about what games ended up on its storefront.

    Don't get me wrong, a lower revenue split would be nice for developers, but Epic is the wrong party to champion that cause, and they're the wrong type of competitor to try and tackle Steam. They've been trying to brute-force their way into the market with a ridiculously inferior storefront and client using high-profile exclusives, something that's been tried before (especially with EA, and look how that turned out, they came running back to Steam after a while). In my opinion, Epic is really only providing a low revenue split as a selling point they can use because they can absorb the resulting loss in revenue from game sales. And considering the data indicates it's not driving people to buy games nearly as much as they want, Steam has little incentive to change course.

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