Connect with top gaming leaders in Los Angeles at GamesBeat Summit 2023 this May 22-23. Register here.
Epic Games announced it is bringing self-publishing tools for game developers and publishers to the Epic Games Store.
Tim Sweeney, CEO of Epic Games, and Steve Allison, head of the Epic Games Store, said in an interview with GamesBeat that the tools represent a major milestone for the store that should enable many times more game developers and publishers to reach larger markets with their independent games.
Sweeney also said the store reaches an audience of 68 million monthly active users, up from 34 million in 2022. To date, the store has had 230 million players. With these tools, developers can now have a chance to reach that audience more easily and publish their games at lower costs.
Sweeney said he believes that tools will make the Epic Games Store more competitive than its rival Steam, which has about twice as many users and enabled self-publishing years ago, first with Steam Greenlight and then with its replacement Steam Direct. When Steam enabled self-publishing in 2017, the number of games released per years on Valve’s service skyrocketed, Sweeney said.
GamesBeat Summit 2023
Join the GamesBeat community in Los Angeles this May 22-23. You’ll hear from the brightest minds within the gaming industry to share their updates on the latest developments.
“We just want to help developers build awesome experiences. We think that if we have enough of these services to choose from, then we’ll be successful,” he said. “It’s on us to make our services attractive enough that developers choose to use them, rather than forcing them through payment terms, like we’re fighting in the case of Apple.”
Now it’s Epic’s chance to enable the same kind of growth on the Epic Games Store as Steam saw when it unlocked self-publishing. As a practical matter, as the number of game submissions grows, Epic can’t keep up with the demands for curation. The company will still curate higher-profile games.
But the tools will allow developers to rate their own games and have the market verify those ratings. Developers can head straight to the Epic Developer Portal to release a game using the self-service publishing tools. These tools are available to any developer or publisher with games meeting the store’s requirements, such as content ratings.
“Not only can they submit their own game, but [they can] maintain their own presence and constantly update the materials. They don’t have to work with us directly. It’s an unblocking event for the store going much wider than it’s gone so far,” Sweeney said.
The Epic Games Store history
Sweeney said that the store began as a distribution vehicle for Epic’s own games. Unlike Unity, Epic Games always made its own games alongside its Unreal Game Engine. Those games helped highlight the features of the game engine for other developers.
But at first, starting more than a decade ago, it was just for Epic’s games. In 2012, the company decided to move to making online games, Sweeney said, and by 2014 it launched its own store to distribute the Unreal game engine. In 2016, it released Paragon on that store, and in 2017 it released Fortnite.
The strategy paid off big time when Epic’s battle royale version of Fortnite turned into a smash hit and generated tens of billions of dollars in revenue in the last five years. After that big hit, Epic Games opened the store up to other developers.
Then, in December 2018, Epic launched the Epic Games Store for third-party game makers. In contrast to Steam, Apple and Google, Epic Games charged a 12% royalty to developers, compared to the usual 30%. Microsoft eventually lowered its royalty from 30% to 12%, and the others made smaller moves to change their fees based on volume.
“We always had this idea we would turn it into a store because we felt other developers would like having an efficient distribution vehicle for their stuff,” Sweeney said.
The cost of free and exclusive games
The problem was that without a lot of customers visiting the store, it didn’t have much opportunity to grow, Sweeney said.
“Fortnite’s success enabled us to open it up. In 2018 we launched it to developers with this 88%-12% revenue sharing. We felt like that was a good deal for developers,” he said. “It’s a source of profit because the payment processing and support costs are well under our total percent. We felt it achieved a better balance that was appropriate for a retailer. We don’t see ourselves as a platform necessarily. It’s a game store. We sell games, just like a grocery store sells groceries on a 2% profit margin. We’re happy with that.”
But Epic Games started spending a lot to steer gamers to the store. Based on court documents in the Apple vs. Epic Games antitrust case, Subnautica had more than 804,000 users when Epic Games gave away the game on its then-new Epic Games Store. Epic gave the developers $1.4 million, and roughly 17% of the players were new to the Epic store. On average, the cost of acquiring each new user was $2.36. That means the giveaways were a relatively inexpensive way to acquire new users.
For Borderlands 3, Epic paid $146 million in advances to have the game as an exclusive on the PC. Epic recouped the minimum guaranteed fee of $80 million for marketing, bundle deals, and fees. Additional marketing cost $15 million, and there were $20 million in non-recoupable fees. Bundle deals drove the cost up another $31 million. Overall net revenue was $9.2 million.
And Epic got more than 1.56 million players for the Epic Games Store. Of those, 53% were new to the store. Epic lost around $181 million on the Epic Games Store in 2019 and projected it would lose around $273 million in 2020. Like most other stores, Epic Games hasn’t been willingly sharing its latest numbers.
A chance to be profitable?
Sweeney said the overall store strategy still represents an investment. That’s code for the notion that the free games, exclusive payments to developers, and overall store costs mean that the store is still losing money.
“Strategically, building anything requires up-front investment. You can easily launch a store, but you find you have no users and no opportunity for growth. Just like if you want to sell oil, you need to build an oil refinery. We’ve been investing heavily in building up our user base through funding free games and exclusives,” Sweeney said. “When you look at the profitability of the store, you really have to look at it two ways. As an ordinary operating business, what are the costs of selling games and providing support and ongoing services, and what’s the revenue from it?”
He said the Epic Games Store has always been profitable on a net basis. The cost of operating the store is significantly less than 12%. That part of the business has always been healthy.
“And then we have this huge up-front investment made up of exclusive rights and other things to jump-start the store. Those have brought the store up to 60 million monthly active users, which is half the monthly active user base of Steam,” said Sweeney. “Between that and the self-publishing tools and other organic growth that’s happening, we’re well on the way to being a business that has achieved a position where it has the potential to be profitable on a stand-alone basis.”
He added, “Whether we intend to wind down the heavy investment in exclusives or continue to make those for a few more years, these are decisions we make on a year-by-year basis. So far we’re still investing. Not at the staggering numbers as previously, but we’re still investing. We have a free games program. We renewed that for the year. We have exclusives in the works, which are really good games. We have our first-party stuff. We feel the lineup is good. It’s getting to a point where it’s becoming a force in the industry.”
Epic said that publishers and developers brought 626 new PC titles to the store in 2022, bringing the total count up to 1,548. That’s more than any previous year and represents a significant increase over the games Epic had available to players in 2021. Players spent $355 million on third-party applications, up 18% year over year. Including Epic’s own games, players spent $820 million in 2022, down 2% from 2021.
Epic said the Epic Games Store Free Games program had another strong year in 2022. Many developers and publishers partnered with Epic to give away 99 free games worth $2,240. Of those, 70 of the games offered in the free games program broke their peak concurrent user records on PC, with an average increase of 25 times their all-time records. Riot Games recently brought over its games to the store.
Nearly 700 million free games in total were claimed by players, bringing those titles to new and expanded audiences, Epic said.
The self-publishing store requirements
The store is open to all developers and publishers whose titles meet the Epic Games Store requirements. These requirements are designed to provide a best-in-class player experience that doesn’t lock players into a single store. Notable requirements include:
- PC Crossplay for Multiplayer Games: Multiplayer games must support crossplay across all PC stores. This ensures that players who purchase a multiplayer game in any store can easily connect with other players, regardless of where the game was purchased. To achieve this, developers can implement crossplay themselves, use a third-party software development kit (SDK), or use Epic Online Services for free.
- Epic Games Store Achievements: All games launching on the Epic Games Store after March 9, 2023 are required to enable Epic Games Store achievements if the game has achievements on other PC stores. This helps standardize the player experience regardless of where the game was purchased.
- Age Ratings for Regional Distribution: The Epic Games Store has partnered with the International Age Rating Coalition (IARC) to help developers obtain ratings directly where required. This service is provided at no cost to developers by the Epic Games Store. If a game already has a rating from an official rating system, it must be displayed on the store game page.
- Prohibited Content: Certain types of content are prohibited on the store, including but not limited to: hateful or discriminatory content; pornography; illegal content; content that infringes on intellectual property the developer does not own or have rights to use; scams, frauds, or deceptive practices, such as fake games or malware. Notably, blockchain games are not prohibited.
- Game Quality: Games must download, install, launch and function consistently with the assets and descriptions developers provide on the game page. Epic reserves the right to reject games that it feels aren’t sufficient in quality and functionality.
Epic’s pitch to use the Epic Games Store
Epic said that developers and publishers can access an audience of over 230 million users from all over the world, up 36 million from 2021. All told, there are 723 million cross-platform Epic accounts.
And publishers receive 88% of the revenue for the games sold through the Epic Games Store with an option to use your own or a 3rd-party payment solution to receive 100% of the revenue from in-app purchases. Epic Games keeps only 12% to defray the costs of the store.
The Developer Portal has an integrated process for obtaining IARC ratings (required in some countries and very useful in others) at no cost. Epic provides professional localization for developer game pages at no additional cost.
“Every other platform, other than PC, has already adopted proper rating systems. The rating system on consoles uses IARC ratings. Google uses IARC ratings. Apple has its own system, but it’s still a real, administered system. Whereas on PC game stores it’s just the wild west,” Sweeney said. “Without ratings, you can’t have proper parental controls gating access to games. On a store like Steam where most of these indie games are unrated, because the developers don’t have the resources to get a rating if you set up parental controls that say you can’t play unrated games, you just can’t play games. That’s not how these systems are intended to work.”
The Support-A-Creator affiliate program allows developers to incentivize content creators and amplify a game outside of the store by sharing a percentage of your revenue with them.
For games built on Unreal Engine, engine royalty fees are waived for in-store purchases using Epic’s payment processor. In-app purchases and products using their own payment processor are not exempt from engine royalties.
Stopping review bombing
Allison brought up the problem of review bombing, which happens when players don’t like something about a game and then team up via social media to give the game a low review score. Allison said Epic has a good solution to combat this.
“We wanted to figure out a way to prevent brigading and negative reviews. We’ve seen games get shut down in other stores just because they locked their framerate at 30 FPS or things like that. Suddenly all these negative reviews come in and end the life of this game,” Allison said. “It’s terrible. Valve has done things to make that better, but we want to make a brigade-proof review and poll system. We do the five-star system, and then we ask questions of actual players who’ve played for more than two hours to help users communicate with users in a way that can’t be review-bombed. Anywhere we can do things that we would like to see improved, and that our partners would like to see improved, we try to do that.”
Allison said Epic Games doesn’t really want to be in the business of being a gatekeeper. But the tools were expensive to develop and required a big team. It took a while to get self-publishing in place.
Regarding not gatekeeping, Allison said, “That’s definitely our principle. But it’s also one of the things that I like to use when I talk about why this is so important to our next phase in the future. Steam has done a good job with this. If you look at Statista, you could probably look at the graph of their releases per year. When Steam Greenlight debuted, and then when they went to Steam Direct in 2016, you could see how it changed the curve of releases up and to the right. But it’s also where the business went up and to the right.”
In fact, Allison said that while Epic has half the monthly users of steam, its catalog size is only 1% as big as Steam’s. And Steam is releasing 10,000 games a year.
“Our users can’t get everything that they want to buy if it’s not here. We have to open up,” Allison said. “We’re working hard on getting every major sim-ship, all the major publishers, supporting business models like subscription, and launching these self-publishing tools so that we can create our version of that same up and to the right moment. We think it’s going to be a powerful driver for us, the same way it was for Valve.”
This self-publishing move will put Epic Games in touch with many of the small developers who publish on Steam.
Sweeney added, “The other thing is, we’re not economically gatekeeping. You can distribute a free game and then do your own payment processing as a developer if you want, or you can use our payment service. It’s up to you. We don’t ban cryptocurrency apps, because that’s just another way of payment gatekeeping. We want to give developers as much freedom as possible.”
He added, “Our own services that we build and give to developers don’t gatekeep. Epic Online Services, it’s another free bundle of services that developers are free to use to ship anywhere. If you use that, you get the same platform cross-play features that we have in Fortnite. Voice chat between every console and every smartphone and every computer platform. It’s not locked to our store. All of Steam’s social services are locked to their store. PlayStation Network, Xbox Live, and Nintendo’s services only work on their own platforms.”
Self-service publishing tools and IARC age ratings
Epic calls this the 1.0 launch of the self-service publishing tools coming out of closed beta. These new tools are housed in Epic’s Developer Portal and will allow for exponential growth in the catalog of games and apps, Sweeney said.
The tools make it easy to bring eligible PC products directly to the Epic Games Store and its huge global audience. Partners who use self-service publishing will continue to benefit from the favorable 88%/12% revenue split or can use their own in-app purchase payment solution in their products. The latter is something that developers in the iOS store cannot do.
The Epic Games Store has parental controls in place that take into account a region’s age rating, thanks to the new IARC integration. This global solution gives publishers simple, no-cost access to ESRB, PEGI, GRAC, USK and ASK age ratings, all from the Epic Developer Portal.
Epic Games Store features that debuted in 2022
Epic published Player Ratings and Polls allow players to provide direct feedback to the Epic Games Store community for the games they’re playing. It improved Search to find games faster in the Store and the Library. It improved Browse in the Store and your Library with more and better filter options.
And it created Library Favorites and Folders to help organize collections and get players to their favorite games faster. It added a Direct Game Page to Library Linking to click from the product page to the game in your library, ready to download or play. It also improved Storefront Lists.
It also added Top Sellers, Top Rated, Most Played, and Top Upcoming Wishlisted. And it released Crossplay Tools for PC released as part of Epic Online Services. It’s an option for partners to ensure players across all PC versions can play together, regardless of what store they are purchased from.
And the store added Parental Controls and Cabined Accounts providing a tailored store experience for younger players and their parents focused on managing safety, content access, privacy and purchasing permissions.
What’s planned for Epic Games Store users in 2023?
This year, Epic said its highest priority is launcher performance. And it also plans to evolve the Epic Games Store in several other meaningful ways. 2023’s priority roadmap includes (but isn’t limited to):
- Launcher Performance Improvements focused on substantially faster load times and attention to the end-to-end user experience across the entirety of the launcher.
- Support for Subscription Services from third-party publishers and live service products.
- Content Hubs, in addition to product pages, these hubs will provide a new destination for publishers to share information with users in a robust editorial format about their upcoming and ongoing live-service products, developer news and application updates.
The next Fortnite?
Fortnite made the Epic Games Store more of a real competitor to Steam. But does Epic Games need another Fortnite? Over time, yes.
Allison noted that Steam was born on the back of Counter-Strike, which more than a decade later is still anywhere from No. 1 to No. 5 on Steam. Valve also has Dota 2, Team Fortress 2 and Left 4 Dead.
“We have things analogous, our versions of that, like Fortnite, Rocket League, and Fall Guys, as well as all the games coming from Epic Games Publishing,” Allison said. “Do we need another Fortnite? I don’t know that it should be another Fortnite. It’s a wildly successful thing. But we do have these seeds of the existing audience that–I think you do need to have that to compete at the level we want to compete. Fortunately, we have that.”
Will other stores start copying Epic?
As for the antitrust issues that Epic has raised against Apple, it remains to be seen if Epic can force the rivals to cut their royalties more and make the industry more competitive.
“Competition has been working. Some parts of it work slowly, but it’s all happening on PC, where stores are able to compete with each other,” Sweeney said. “On the eve of us launching Epic Games Store, after we disclosed the terms to lots of developers, Valve lowered their top take rate from 30% to 20%. Suddenly it became a lot more profitable to be a game developer. Microsoft eventually lowered their store fee to 12%. They removed the requirement to use their in-app purchase system for payment from non-game apps. We also host other stores in our store. We host itch.io. We host Humble. Microsoft does too.”
The PC landscape is shifting and the top three PC stores have evolved their policies in response to competition, Sweeney said.
“I think that’s just beginning. Epic Games Store has not yet hit the tipping point where a developer can profitably choose to release on EGS first, in order to get the higher revenue share first, at least in the general case,” Sweeney said. “Some online games, which have higher costs–Genshin Impact chose to launch on their own service, and then launch on Epic Games Store. They chose not to come to Steam, because those store fees really cut into their business opportunity.”
That will happen for more and more categories of games as Epic Games Store grows, to the point where when developers start foregoing Steam because they just take too much money, Sweeney said.
“Valve will have to make some hard choices. When mobile platforms are opened up to the same form of competition – and that day is coming – we’ll compete there too. Ultimately their day of reckoning will come as well, where stores have to compete on their merits and margin to win business from developers,” he said.
As for antitrust issues, Sweeney said, there are three things needed for fairness on the mobile platforms in particular.
“Number one, you have to enable competition in payment processing. Apple’s payment processing service can compete with Epic’s payment processing service, plus Stripe and Paypal and everything else, on equal terms. You need to have store competition, so that mobile users can choose to use the iOS App Store, or choose to use the Epic Games Store, or even Steam if Valve chose to bring it to mobile,” he said.
Europe has passed a Digital Markets Act that has put some of these principles for fair store competition into legislation, and they will begin enforcement next year.
Sweeney said, “Finally, you need to do all of this without allowing the platforms to use their control of one market, the operating system market or their monopoly store platform, in order to impose a monopoly rent – basically a tax on other markets, such as in-app payment processing or other stores – as a term of access to that platform. This is what the Sherman Antitrust Act is supposed to put in place. One monopoly in one market can’t use its control of that market to impose rents, to take money from other markets without providing services to those markets in a fair, competitive state. That day is coming.”
GamesBeat’s creed when covering the game industry is “where passion meets business.” What does this mean? We want to tell you how the news matters to you — not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it. Discover our Briefings.
Author: Dean Takahashi