Epic Games reportedly expects to lose over $330 million on exclusives and games offered on the Epic Games Store. Despite these reports, Epic CEO Tim Sweeney still considers the project a long-term investment and feels excited about the progress made by the platform.
“That’s right!” Sweeney said in a Twitter post responding to an IGN article entitled Epic Is Losing Hundreds of Millions As it Battles To Gain Market Share from Steam. “And it has proven to be a fantastic success in reaching gamers with great games and a fantastic investment into growing the business!”
Epic Games currently finds itself in a legal battle with Apple Inc. Back in August of 2020, Epic added a feature to Fortnite that allowed players to buy in-game V-Bucks via its own payment system, bypassing Apple’s system and the phone maker’s usual cut. The two companies now find themselves in the middle of an antitrust lawsuit.
The Profit‘s Take:
I have 3 concerns here. First, Epic continues to be distracted by the ongoing lawsuit. I am amazed they managed to raise $1B at a 50% valuation increase with this hanging over their heads. Second, while Epic is very enthusiastic about the Epic Games Store losses being an investment, it’s not clear if they are achieving anything of significance. 56 million monthly actives sounds a lot like the Fortnite crowd. Other than for Fortnite and the free games, who is actually using the Epic Games Store, and will they stay when those go away? I think not. Primarily because the Epic Games Store hasn’t offered anything in the way of real innovation compared to Steam. Finally, for all the reasons above – and here’s my hot take- I believe the Epic Games Store will likely go down as one of the worst investments in gaming history. Epic could have used these hundreds of millions to further their metaverse ambitions, make new games, build new technologies, etc and created far more long-term value in the company.