![]() Small revenue games never generated much value for Unreal anyway, as the company charged developers a 5% royalty. As a result, they will no longer generate any revenue for Unreal. Most games, of course, never gross over $1MM. In May 2020, Epic announced it would waive the entire Unreal licensing fee for a game’s first $1MM in gross revenue (this policy would be retroactive to January 1st, too). Their core business! And such moves go on. ![]() Accordingly, Epic is not only driving down the share of industry revenues captured by games stores, it’s eroding that of the engines, too. However, Sweeney prefers not to double dip. Game distribution and game engine licensing are obviously different services, and therefore it’s fair for Epic to charge for both. But if a game developer uses both Unreal and EGS, Unreal’s 5% licensing fee is waived. EGS sells games at 12%, versus the industry standard of 30%. Collectively, this means myriad multiplayer online services businesses have no reason to exist and the lock-in effects of Steam, PlayStation Network and Microsoft Xbox have been eroded.Īnother good example is the Epic Games Store. In fact, developers don’t even need to use the Epic ID unless they choose to use elements of EOS that would structurally require it (e.g. This means a game that doesn’t use Unreal, isn’t published by Epic Games Publishing, and isn’t even available for sale via Epic Games Store, can replace substantial portions of their online operations and expenses… at the expense of Epic. EOS, meanwhile, is available for free and has no platform ties, requirements or restrictions. Historically, game developers had two choices: (1) free services tied to a platform like Steam or Xbox or (2) paid services without the platform ties. But not only does Epic Games founder, CEO and majority shareholder Tim Sweeney opt against capturing this value, he chooses to shift value out of the category altogether and deliberately eschews bundles designed to lock in customers or players to Epic.Īs an example, we can return to part four of the primer, Epic Online Services.
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