MCV’s Person of the Year talks about the epic potential of Epic Games’ numerous business interests on the eve of its big outing at GDC
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. “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.”
And Epic is certainly doing its part to revisit those “old decisions” in every part – division not being a word that Sweeney is keen on – of its business. Unreal Engine just embraced AR with support for the new Hololens 2, Fortnite’s Battle Pass continues to lead the way in service games, and of course the Epic Game Store looks set to grow and grow, thanks to its revenue share model and influencer-friendly aspect.
THE STORE THAT GIVES MORE
The store is Epic’s newest and most intriguing innovation, though it certainly didn’t appear overnight, with Sweeney stating: “We built the technology long before we had a business model supporting it.”
That business model came thanks to Fortnite: “It accelerated everything by bringing in the large audience of engaged gamers required for a successful storefront launch, and the e-commerce economies of scale for an 88-12 per cent revenue-sharing model,” says Sweeney.
That split famously makes it far more generous than Steam’s – or Google or Apple for that matter – 30 per cent take. But its key competitors haven’t been rushing to react to that aspect, Sweeney tells us: “Other stores on open platforms have been slow to respond so far.”
It’s not just the revenue split that’s helping establish the Epic Game Store, though, with titles such as Metro Exodus and The Division 2 choosing the store
over Steam.
“Ubisoft supports our model and trusts us to deliver a smooth journey for players, from pre-purchase to the game’s release,” Sweeney says.
But delivery is only half the deal, so is Epic offering financial incentives, above and beyond the superior revenue split, to games which move exclusively to the store?
“Yes, we’ve worked to ensure it’s genuinely worthwhile for developers to move to the Epic Games store,” Sweeney replies openly. That’s because Battle Pass has given the company one hell of a war chest, or as Sweeney puts it: “Fortnite’s success has given Epic significant latitude to help developers.”
And it’s helping developers that’s the driving thought behind the launch of the store. A goal that tallies well with the company’s engine business, and a rare example of developer-centric thinking, as opposed to the pure consumer-centric thinking of most publishers and platform holders in today’s games industry.
“We’re giving game developers and publishers the store business model that we’ve always wanted as developers ourselves,” says Sweeney.
That makes good business sense, as it’s with developers, on the supply side, that the opportunities lie to shake-up the status quo.
“It’s nearly perfect for consumers already… There is no hope of displacing a dominant storefront solely by adding marginally more store features or a marginally better install experience. These battles will be won on the basis of game supply, consumer prices, and developer revenue sharing,” Sweeney reckons.
Give developers a bigger share of the pie and they can be more profitable, invest more in their titles, cut prices for consumers, or all of the above.
Matthew Karch, CEO of Saber Interactive, developer of World War Z, recently made a public statement to this effect: “We chose the Epic Games Store because we believe it’s the best deal for players and developers… Building games is costly, and so to receive 88 per cent instead of 70 per cent means we can invest more into making World War Z,” he revealed as well as announcing a price drop from $40 to $35. “We are thrilled to be able to share the developer-friendly benefits of the Epic Games store with you all.”
It all sounds great, so now the store just needs to open its doors to more developers.
“The Epic Games Store team has been working with developers around the industry to identify prospective titles. In this early phase, we are starting with a small number of carefully selected games based on consistent quality across a wide variety of scopes. Throughout 2019, the store will open up more widely,” Sweeney tells us.
He goes on to explain that what we’re seeing presently is the “50-game version of the Epic Games Store” and that the “250-game version” will be “significantly evolved.” Not only will it integrate the social and matchmaking systems that the company has built for Fortnite but Epic is also thinking more radically. The store is also already looking to the future in one respect, forwarding creators and influencers as the answers to discovery problems.
“We believe the ultimate vector for players to discover new games will not be our storefront but creators, which is why Epic’s ‘Support a Creator’ program is integrated into store operations,” says Sweeney, adding: “Viewership of creator channels has greatly outgrown any storefront. In Korea and China, the primary game distribution vectors are social: WeChat, KakaoTalk and QQ, rather than storefronts. As with the twists in Fortnite’s evolution, one shouldn’t necessarily project the Steam or App Store paradigm onto its final form,” he cautions.
BREAKING DOWN WALLS
It’s such thinking, as much as that revenue split, which is set to shake-up the industry in the long term. That said, Epic’s clout via Fortnite is already shifting entrenched positions, most notably in Sony’s change of heart when it came to crossplay on PlayStation 4. But even with that victory he’s still keen to effect further change where needed.
Sweeney has long been a supporter of open platforms, and is keen to reiterate that to us: “We believe that all general computing platforms should be open platforms. Windows, Mac, Linux and Android are all open platforms. We’d love to see iOS open up as a platform, as it’s the lone remaining holdout, and this creates some uncomfortable implications around editorial decisions, national government censorship demands and a lack of economic competition in digital goods.”
He does note that “iOS is technically open in supporting user-directed software installation” on the enterprise side. It’s only Apple’s own terms of service that prevent publishers from using it for consumer software. “A few edits to one document would open up iOS completely for everyone and be a great outcome for all.”
That said, iOS continues to defend its walled garden. While on Android, Fortnite simply bypassed Google’s own Play Store.
“On Android, Fortnite is one Google search and a few screen taps away,” Sweeney is keen to point out. “Our data clearly shows that players who want to play Fortnite have no trouble finding it. The audience we do lose are players who are looking for any new game, and would have discovered Fortnite through Google Play’s storefront and Top Ten lists had it been there. That audience we’ll have to build over time through our supply-side initiatives.”
One place where Sweeney was recently keen to talk up the importance of open platforms was this year’s Mobile World Congress, where he appeared onstage to announce Unreal Engine support for the next-gen HoloLens 2.
As we’re speaking just before GDC, the other shiny new features for Unreal Engine 4 were still under wraps. With Sweeney only able to hint that “major initiatives underway include digital humans, optimised workflows for code and art and online service integration.”
Still, we had a few questions for him that he could address before the big GDC keynote. With Unity’s recent adoption of C# as its main language, we wondered if there was any similar plan to introduce such a language in Unreal to bridge the gap between Blueprints and C++.
“This is a topic we discuss quite a lot,” Sweeney replies. “There may be a place for a scripting language on par with C#, Lua, or Python. The challenge is in the interoperability boundary between scripts and native code. What has worked so well in Unity with C# has never proven scalable to triple-A games building on top of an engine with full source and adding new C++ side features.”
That makes sense, but the high-end nature of the engine can make it hard for developers outside the triple-A space to find qualified users. A certification system might help here, we suggest, but Sweeney says that although Epic has discussed such a scheme, there are no plans at present.
One thing that there must be plans for, but which Sweeney can’t comment upon, is the upcoming next-generation of console hardware – with Microsoft rumoured to be making some initial announcements at this year’s E3. More hardware in the market to address, likely with full backward compatibility to the previous generation, will certainly be a boon for the flexible yet powerful Unreal Engine come 2020.
More immediately, a key area in which the engine is set to expand this year is online services: cross-platform logins and profiles, a new voice comms service, parties and matchmaking, cloud saves, achievements and trophies. With all this to be integrated across Unreal Engine, Epic Game Store and of course Fortnite – it’s easy to see why Sweeney is opposed to the word ‘division’ in his business.
It’s through such joined-up thinking that Epic today has more fingers in more pies than ever before, and with that comes partners – with numbers set to explode over the coming months as the store expands.
“Epic succeeds when our partners succeed. Our whole business model is built on supporting this thesis,” says Sweeney.
It’s a simple statement, and one made by many, but Epic looks to have an enviable mix of assets to support that thesis now and succeed like never before.
