Epic Games CEO Tim Sweeney has spoken out about Epic Game Store’s PC exclusivity deals on Twitter, stating that the competitive decision to make games exclusive to EGS will ultimately improve the gaming ecosystem for PC players. He also insisted that whilst “unpopular” the “strategy of exclusives […] do work”.
In a protracted discussion on Twitter overnight (thanks, GI.biz), Sweeney responded to a thread in which a commentator asked him why EGS “yanked” exclusives rather than worked to have games on as many platforms as possible.
“This question gets to the core of Epic’s strategy for competing with dominant storefronts. We believe exclusives are the only strategy that will change the 70/30 status quo at a large enough scale to permanently affect the whole game industry,” Sweeney replied. “For example, after years of great work by independent stores — excluding big publishers like EA-Activision-Ubi — none seem to have reached 5% of Steam’s scale. Nearly all have more features than Epic; and the ability to discount games is limited by various external pressures.
“This leads to the strategy of exclusives which, though unpopular with dedicated Steam gamers, do work, as established by the major publisher storefronts and by the key Epic Games store releases compared to their former Steam revenue projections and their actual console sales.”
This question gets to the core of Epic’s strategy for competing with dominant storefronts. We believe exclusives are the only strategy that will change the 70/30 status quo at a large enough scale to permanently affect the whole game industry.
— Tim Sweeney (@TimSweeneyEpic) June 25, 2019
Sweeney went on to add: “In judging whether a disruptive move like this is reasonable in gaming, I suggest considering two questions: Is the solution proportionate to the problem it addresses, and are gamers likely benefit from the end goal if it’s ultimately achieved? The 30% store tax usually exceeds the entire profits of the developer who built the game that’s sold. This is a disastrous situation for developers and publishers alike, so I believe the strategy of exclusives is proportionate to the problem.
“If the Epic strategy either succeeds in building a second major storefront for PC games with an 88/12 revenue split, or even just leads other stores to significantly improve their terms, the result will be a major wave of reinvestment in game development and a lowering of costs.”
The extra 18 per cent developers and publishers retain by sharing profits with Epic and not Steam, Sweeney says, will benefit gamers, as the gains “are generally split among (1) reinvestment, (2) profit, and (3) price reduction”.
“The more games are competing with each other, the more likely the proceeds are to go to (1) and (3),” he added. “So I believe this approach passes the test of ultimately benefitting gamers after game storefronts have rebalanced and developers have reinvested more of their fruits of their labor into creation rather than taxation.”
There’s been a lot of change at Epic over the last 12 months, and CEO and founder Tim Sweeney believes that change will continue – and not just for Epic but the whole of the games industry. “I think the game business will change more in the next five years than the past ten,” predicts MCV’s Person of the Year in an interview with MCV earlier this year. “The last remnants of the old retail model of gaming are falling apart, and the biggest successes are fast-moving indies and fast-moving big competitors – exemplified by Fortnite and Apex Legends. All of the old decisions need to be revisited.”
