Tim Sweeney Says Stores Mark Up Costs by 300-400%; Epic Games Store Will Start Small and Expand in Mid-2019
Yesterday’s big news in the games industry was the announcement that the Epic Games Store would soon open to other game developers, featuring a more convenient revenue share split than the current market leader, Valve’s Steam.
Founder and CEO Tim Sweeney provided more details about the store’s opening in a brief Q&A with Game Informer. According to him, stores that charge 30 percent (like Steam) are currently marking up costs by 300-400%, which is why Epic can charge only 12 percent while still remaining profitable.
While running Fortnite we learned a lot about the cost of running a digital store on PC. The math is quite simple: we pay around 2.5 to 3.5 percent for payment processing for major payment methods, less than 1.5 percent for CDN costs (assuming all games are updated as often as Fortnite), and between 1 and 2 percent for variable operating and customer support costs. Fixed costs of developing and supporting the platform become negligible at a large scale. In our analysis, stores charging 30 percent are marking up their costs by 300 to 400 percent. But with developers receiving 88 percent of revenue and Epic receiving 12 percent, this store will still be a profitable business for us.
The Epic Games store is a long-term effort that we’ll be extending and improving for years. Ultimately, we hope competition between stores means better deals for all developers!
Sweeney added that it will start with a small selection of games on PC and Mac before the end of the year, with the goal to expand in mid-2019. The Epic Games Store is also expected to hit Android at some point next year, while availability on iOS is still to be decided. There are no plans to open a storefront on console platforms, which is understandable due to how the console market works.
The Epic Games store is launching on PC and Mac in 2018, and Android later in 2019. We’d like to launch on iOS in 2019, however, that is in apparent conflict with the current Apple policy.
We believe all general purpose computing devices, such as PCs, smartphones, and tablets, should be open to competition between stores.
Consoles are a different market, with dedicated game machines whose hardware costs are often partly subsidized by software revenue. Epic doesn’t seek to operate a storefront on console platforms, but as an engine maker, we do everything we can to enable cross-platform interoperability.
The Epic Games store is launching with a small selection of handpicked games and will grow over time. As we work toward opening up generally to developers in mid-2019, we plan to set a reasonable quality threshold.