Epic Games is losing hundreds of millions of dollars on its own store. Over the past two years, Epic Games Store losses have reached $454 million, and by the end of 2021, they may even amount to about $ 600 million. But Tim Sweeney is sure there is nothing wrong with that. He calls the losses “fantastic investments” and believes that such a strategy will prove itself well in the future.
The impressive losses of the digital store became known from the court materials in the case of Apple and Epic Games. The data was shared by Apple with reference to the testimony of EGS head Steve Allison and Epic Vice President for Business Development Joe Kreiner.
What exactly did Apple say in its report:
- In 2020, Epic spent $444 million on warranty payments to developers and publishers. The authors of exclusives for EGS received this money regardless of how well their game sold;
- at the same time, sales of third—party games brought EGS almost half as much – $265 million for the whole of last year. As Apple pointed out, during the entire operation of the store (i.e., since the end of 2018), Epic lost about $330 million on warranty payments alone.;
- The total losses of EGS over the past two years amounted to $454 million. Of these, the company lost $181 million in 2019, and $273 million in 2020;
- Apple forecasts another $131 million loss by the end of 2021. Also, according to the corporation, EGS will begin to make a profit no earlier than 2027.
Nevertheless, Epic management does not consider losses in EGS to be a big problem. In the response document, the company stated that all this is part of the business strategy. They say it’s just a very large investment in the rapid growth of the store and an increase in the user base. Epic also believes that it will be able to recoup costs by 2023. It is assumed that the reduced 12% commission that the company charges from developers will also help here.
Separately, the head of Epic, Tim Sweeney, commented on the situation. On his Twitter page, he agreed with the losses of EGS (however, without naming his figures) and stressed that they would be “fantastic investments” in the platform.
Apple calls it a loss of money, but when you spend money to build a great and profitable business in the future — that's exactly what you invest. This is equally true for a factory, store, or game.
Head of Epic Games
The confrontation between Apple and Epic began in August 2020. Then Apple removed Fortnite from the App Store due to the fact that the developers added their own payment system to the game. At the moment, several hearings have already been held on the case, and the next one will be held on May 3.