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Update: Epic has sunk $500 million into EGS, does not expect profit until 2027

Commissar SFLUFAN

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New documents reveal more about how much Epic is spending—and losing—on EGS exclusives.




The titles in the original graph are redacted, but redditor MrBubbaJ took a run at matching up release dates, which are visible on the chart, resulting in the assumption that the game launched on March 19, 2019 is Satisfactory. The MG—"minimum guarantee," which is essentially the amount that Epic paid to get it onto EGS and keep it off of Steam—is $11.5 million, a hefty sum but also very mid-range on this particular chart. But in its first year of release—still in early access, mind—it earned $11.6 million, making it the only game on the chart to cover its costs.


It's also worth mentioning, though, that the return-on-investment picture remains relatively bleak over the long-term: Only two games, Satisfactory and Dauntless, and possibly a third—there's a separate entry for a game released on March 19, which may or may not be a second entry for Satisfactory—are expected to earn back their minimum guarantee cost over their lifetime. 


An even more notable loss can be seen in Metro Exodus, which topped the minimum guarantee list with $37 million, but had earned back less than a third of that and is expected to cost Epic more than $22 million lifetime.




Also, the number of EGS exclusives has dropped considerably:

2018: 3 games
2019: 50 games
2020: 35 games (36 if you include Rocket League)
2021: 8 games, ytd.

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But what's interesting is that Apple's legal eagles go on to break down just how unprofitable the Epic Games Store is. "Epic lost around $181 million on EGS in 2019. Epic projected to lose around $273 million on EGS in 2020. Indeed, Epic committed $444 million in minimum guarantees for 2020 alone, while projecting, even with 'significant' growth, only $401 million in revenue for that year. Epic acknowledges that trend will continue in the immediate future: Epic projects to lose around $139 million in 2021."


If we take the lower figures, that adds up to an investment on Epic's part of $493 million since 2019, and Epic itself has acknowledged that "unrecouped costs" will amount to at least $330 million. "At best, Epic does not expect EGS to have a cumulative gross profit before 2027."



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  • Commissar SFLUFAN changed the title to Update: Epic has sunk $500 million into EGS, does not expect profit until 2027

The only way to think about these numbers is to put them in context with the market they're trying to compete in, but given that Valve remains private, it's really hard to get those numbers. The best some quick searching could do was find a 2017 estimate that Steam brought in $4.3B in revenue not counting DLC, MTX, or IAP. Since then, Steam's MAU have pretty much doubled.


All in, and given PC gaming's recent rise, it's very conceivable that Steam is pulling in $10B in revenue per year. If Epic continues on this path for another 5 years, they might end up spending roughly a billion dollars to get in.


There's also the larger business considerations for Epic here. They can leverage the success of the Epic store to further incentivize devs to use UE. Though engine revenue doesn't come close to either store or game sales. Also, the better established Epic is as a storefront, the better they could for hope any potential Epic App stores on Android (or iOS if some judges go nuts). Those are also huge pies where even a small market share could prove very profitable, if they can get it established. (As an aside, I'm increasingly optimistic that Epic could find success there. We're already seeing Android 12 making 3rd party app stores better, and Google might find it advantageous in dealing with regulators if they could point to a 3rd party store that provides any amount of "competition." I'm less optimistic that they'll get anywhere on iOS.)


Anyways, this is all to say that while the sums seem astronomical, this is a bet that could pay off big time. Given that Fortnite alone brought in more than $9B in revenue in two years, they've got the cash.

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