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Epic Games takes on Steam with its own fairer game store

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With a generous 88 / 12 percent revenue split

Epic Games, the developer of Fortnite and the widely used game-making software Unreal Engine, is about to start selling other companies’ games, too. Epic is launching a new online store like Valve’s Steam that will similarly feature third-party games, marking yet another substantial threat to Steam’s dominant position as the lead distributor of PC titles. Epic’s store, which is set to launch soon, will start with a select number of PC and Mac games, and it will open up to more developers next year.

While we don’t know which games will make the initial cut — “Stay tuned for game announcements Thursday at The Game Awards,” the company hints — Epic CEO Tim Sweeney tells The Verge that he’s aiming to ultimately include “quality games of all sizes and genres” and is open to expanding the store to Android and even iOS, should Apple allow users to install a competing storefront on its iPads and iPhones. (Slim chance of that.)

It won’t just be games built using Epic’s Unreal Engine. Epic says its store will be open to games built using the competing Unity engine and other software tools. But Epic’s still plugging its own tools: For games made using Unreal, Epic says it will waive all Unreal royalty fees for sales generated through the store. (Unreal developers traditionally give Epic a 5 percent royalty cut on all sales.) More promising, however, is that Epic says it will only take 12 percent of all game sale revenues within its store, with the remaining 88 percent going directly to developers and publishers.

With Steam, Valve has traditionally taken around 30 percent of all revenue generated by game sales, in-game transactions, and downloadable content like expansions, leaving just 70 percent for creators. That’s standard across app stores run by Apple and Google, too, but Epic wants to take a different and more developer-friendly approach. “As a developer ourselves, we have always wanted a platform with great economics that connects us directly with our players,” Sweeney explained in a separate prepared statement. “Thanks to the success of Fortnite, we now have this and are ready to share it with other developers.”

Image: Epic Games

The timing is certainly notable. Last Friday, Valve announced an updated revenue split for Steam that gives developers more money from each sale after certain thresholds are met. But Epic’s 88 / 12 deal could be more lucrative for developers than the 70 / 30, later 75 / 25, and finally 80 / 20 revenue splits (depending on gross revenue) that Valve is now offering. Valve, seeing increased competition from other game stores, seems to understand that developers won’t stick around unless the terms become more favorable.

“Steam’s new 25 percent and 20 percent tiers represent a great improvement for the top 1 percent of games, and make Steam a significantly better deal for top games than Google Play and the iOS App Store,” Sweeney comments. (That’s a compliment, but also a burn: Valve’s revised revenue rules won’t help indie developers nearly as much as Epic could.)

In addition to its revenue split, Epic has another unique benefit it hopes will convince game makers to bring titles to its store. Borrowed from a feature within Fortnite, Epic is bringing its Support-A-Creator program to its new game store.

In Fortnite, Support-A-Creator lets a popular streamer, like Tyler “Ninja” Blevins for instance, earn $5 for every 10,000 units of in-game currency that gets spent by players who decide to pledge their support. In return, Ninja brings publicity to Fortnite by continuing to stream it daily, while the developer earns revenue from the in-game transactions. But that’s for free games like Fortnite. Sweeney says the Epic Store will now let creators get a piece of the full sale price of each paid game, too — though the amount will be up to developers. To keep devs from just setting it to $0, Epic is pledging to cover the first 5 percent of creator-revenue-sharing for the next 24 months — which could be a big incentive for big internet celebrities to plug Epic’s store.

Here are Sweeney’s answers to some of your most likely burning questions:

  • No, there’s no store-wide DRM, though game developers can add their own.
  • No, Epic doesn’t plan to add social components like game streaming or forums.
  • Yes, Epic will help devs take advantage of online features in their games (presumably things like chat, matchmaking, and cloud saves, though they weren’t mentioned by name).
  • Yes, the Epic Store will offer refunds — initially through customer support, though an automated, 14-day, no-questions-asked return policy should follow soon.
  • Yes, it’ll be available outside the US, in “most countries in the world except for China and where prohibited by US law, such as North Korea and Iran.”

Regardless of how Epic’s marketplace is structured, a new competitor to Steam, one from the creator of Unreal and Fortnite no less, is a direct threat to Valve’s primary moneymaker. Valve has developed some of the most popular PC games of all time, including the Counter-Strike, Half-Life, and Team Fortress franchises, as well as the massively popular e-sport title Dota 2.

Yet it’s Steam that is estimated to have generated more than $4.3 billion in 2017 from game sales, earning Valve a substantial amount of recurring, annual revenue as its game development ambitions have wound down over the years. (The company still develops games, and it just released a new digital card game based on Dota 2 called Artifact, but its biggest and most celebrated franchises have been largely dormant for years.)

With Epic entering the scene, Valve will have yet another competitor to contend with. PC gaming-centric chat app Discord recently launched an online game store of its own to compete with Steam. With its network of more than 150 million users, Discord already owns a substantial amount of the social infrastructure of PC gaming, including friend lists, text chat, and voice chat. Soon, Discord could start owning game purchases by giving its users one single destination to buy games, launch them, and hang out and chat with friends.

Additionally, a number of other, smaller stores like the indie-focused Itch.io have also become popular alternatives in recent years, as developers have soured on Valve’s revenue split. What makes those alternatives more appealing to developers is also Valve’s lax approach to content moderation. Steam has suffered a number of high-profile controversies around its increasingly hands-off approach to what games can be sold on the platform, which has sent some players and developers elsewhere.

This new move from Epic is certainly in line with the stance it’s taken on platform owners since the launch of Fortnite, and it all aligns with Sweeney’s outspoken distaste for middlemen. The Epic founder has long voiced his criticism of app store owners, particularly Apple, that take a big chunk of revenue while performing, in Sweeney’s view, very little work for it. “These app stores take 30 percent of your revenue for distribution,” Sweeney told a crowd at the Devcom conference in Germany last year. “That’s strange because Mastercard, Visa, and other companies that handle transactions take two percent or three percent of the revenue.”

Long before Fortnite launched, Epic decided to develop its own launcher so it could sell and distribute its own games on PC, much like how Blizzard, EA, and Ubisoft handle PC gaming. And when deciding how to launch Fortnite on mobile, Epic wasn’t able to bypass the iOS App Store due to the iPhone maker’s tough restrictions on third-party software. Yet, thanks to the lack of such restrictions on Android, Epic did cut Google out of the equation by letting players download and install the mobile version of Fortnite directly over the internet.

Now, with a handful of changes, Epic is turning that very same launcher into a store. (You can opt into the Epic Games Launcher beta and see the storefront right now.) It’ll be interesting to see if the biggest game publishers sign on with Epic — or if they decide to turn their game launchers into storefronts as well.