Tim Sweeney on EGS' Impact [Jun 26, 2019, 11:18 am ET] – Share – Viewing Comments
A lengthy
series
of tweets from Tim Sweeney looks to address some of the concerns gamers have
expressed over Epic Games Store exclusives and other issues:
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.
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.
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.
Will the resulting 18% increase in developer and publisher revenue benefit gamers? Such 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).
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.
Of course, there are LOTS of challenges along the way, and Epic is fully committed to solving all problems that arise for gamers are for our partners as the Epic Games store grows.
CJ_Parker wrote on Jun 27, 2019, 08:41:
Um, I know that and that's pretty much exactly what I said. The "recoup" part obviously happens a lot SOONER if the publisher gets a HIGHER cut, i.e. if LESS money goes to the middle man.
So, the SOONER the publisher breaks even, the sooner the dev sees royalty money so, yeah, the developer benefits from EGS' lower cut even in a classic dev/publisher relationship.
I never talked about "renegotiating" deals so it'd be great to not put words in my mouth. I talked about negotiating deals, i.e. when a developer finds a publisher and they negotiate a deal.
If the EGS split (either due to EGS' rising popularity or other stores matching EGS) becomes more common it gives devs an OPPORTUNITY (my exact words) to maybe use that as leverage in negotiations. There are no guarantees in life for nothing except death.
The EGS is creating opportunities for developers, e.g. the opportunity to get royalties faster because the publisher will lose less money to the middle man or an opportunity to negotiate better contracts.
The first part is "guaranteed" by the way. Less money lost to middle man = faster recoup for publisher = royalties get paid to dev sooner is all but guaranteed if the publisher plays honest.
There's literally zero data to backup the assertion that publishers are currently or will in the future, give developers better royalty splits due to the 88/12 EGS split and exclusivity. Zero.
There's also zero evidence so far that taking a year long EGS exclusivity deal will cause a game to sell quicker, and get royalties in the hands of the developers quicker. Zero.
You can and Sweeney both can speculate that it should/will happen, but but for any game that's currently an EGS exclusive, those publisher agreements were signed long ago, and those devs are already locked into publisher agreements, and will most likely take longer to see royalties since the game is only being sold on EGS, and by the time it hits other outlets, will be marked down considerably.
Publishers write those agreements in their favor, that's why they make insane amounts of profits, and studios end up shutting down when games don't "sell as well as expected". They have zero business incentive to give developers a better royalty agreement due to EGS exclusivity payments.
Violence, naked force, has settled more issues in history than any other factor, and the contrary opinion is wishfull thinking at its worst. Breeds that forget this basic truth have always paid for it with their lives and freedoms.
-Robert Heinlein
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