Epic Games Store has been in the news cycle a fair bit lately. While it fights Apple Inc. in a trial that’s getting uglier as its court date approaches, an unsettling update concerning the company’s financial stature has surfaced.
In spite of generating almost $1 billion in revenue through over 160 million registered accounts, a recent court filing related to the aforementioned trial has revealed that the game store is not doing very well at all. In fact, it is currently operating at a rather substantial loss.
Since its inception in 2018, Epic has reportedly lost more than $450 million on its games store; a figure that is likely to cross the half a billion mark before the end of this year.
To quote a couple reports, the store cost Epic around $181 million in 2019, $273 million in 2020 and is currently projected to lose another $139 million in 2021.
While fingers can be pointed at many different candidates, a major part of this loss can be attributed to the company’s strategy of front-loading its user acquisition costs to increase its market share.
This includes Epic’s drive to sign more exclusives to its platform along with, well, giving plenty of games away for free.
Another figure that could be a cause of worry for Epic is the $444 million they committed to developers as a minimum guarantee in 2020.
A minimum guarantee is an advance paid to a publisher or developer irrespective of whether the game does well enough to make the advance amount back. So, that could potentially mean a whole lot of cash down the drain for Epic.
However, the company thinks that things are well under control and that the store is on track to turn a profit by 2023. Additionally, it seems that the company is still sticking to its aggressive ‘exclusives’ strategy that CEO Tim Sweeney outlined in 2019.
Even Epic’s golden goose Fortnite could pull the company back from the brink; its resurgence caused by the Covid-19 pandemic has reportedly brought the company $750 million in in-app purchases.
With Apple snapping at its heels, it will be interesting to see until how long Epic sticks to its guns. Until then, let’s just hope no harm comes to our game collections.
About Epic Games
Established in 1991, Epic Games is an American video game and software developer founded by CEO Tim Sweeney and is headquartered in Cary, North Carolina. The company developed the Unreal Engine, a commercially available game engine that also powers their internally developed video games, such as the Unreal, Gears of War, and Infinity Blade series. Fortnite, one of the world’s biggest games with over 350 million accounts and 2.5 billion friend connections, is run by Epic.
Epic offers an end-to-end digital platform for developers and creators to create, distribute, and operate games and other content through Unreal Engine, Epic Games Store, and Epic Online Services.
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