Valve’s Steam platform is the dominant platform for the sale and distribution of games. While almost every developer has its own platform, Valve is the melting pot for all the game titles and it is almost a necessity for game sales. However, there is a new competitor in the market and it is the Epic Games Store.
The Epic Games store is a very new idea with a lower cut from their sales. It is meant as a challenge to the existing monopoly of Stream in the gaming space. This battle between Epic Games and Stream is bound to ensure better pay for the developers and/or cheaper games for customers.
The Epic Games Store
The launch of the Epic Games store comes after Epic Games found out about the high fees for launching their game on mobile. Google Play store, as well as iOs, take nearly one-third of the total revenue of the developer. This is a very high cost, which is possible only due to the near monopoly by the respective companies.
However, there is nothing to stop anyone from launching a rival store and lure developers to launch their apps and games on the new platform. This is exactly what Epic Games did, helped massively by the $3 billion in profits from Fortnite. The official announcement mentions an 88% developer cut. This means that Epic Games takes home only a 12% cut, a manageable number for most developers.
As a developer, you control your game page and your newsfeed. There will be no store-placed ads or cross-marketing of competing games on your page, and no paid ads in search results.
The revenue Split demonstrates how it would be lucrative for the developers to release their games on the new platform. However, Epic Games store obviously does not have the same reach as Steam. They need to show numbers in order to entice developers to release their games on the platform. Without adequate traffic and initial sale figures, Epic Games store will face a tough task ahead of them.
Recently Division 2 moved from Steam and will release on the Epic Games store. The move of such a well-known franchise definitely helps in bringing in new customers to the platform. It will ensure better sales figures and more traffic for the store. In the near future, we expect Epic games to keep pushing for more such titles to have a release on their platform.
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Division 2 releases on Epic Games
Tom Clancy’s Division 2 will be released on Epic Games store. This is a big title to be shifting their publication. The game was Ubisoft’s best selling franchise and generated $330 million globally within a week. This was the highest grossing title for a new game franchise and was definitely a big sale for Steam as well. Their decision to move to the Epic Games store definitely tilts the balance ever slightly. It is not enough to dethrone Steam from its pedestal, not by a long shot. However, we can expect future game titles to follow suit, especially considering the 88% developer cut on the store.
Division 2 saw strong sales on Valve’s Steam platform. It continues to have a decent player base on Steam despite being an old game. Obviously, these fans are diehard fans and we should see a majority of the franchise’s fanbase move at Epic Games store in March when the game will release.
Focus on the mobile segment
Mobile Gaming is slowly turning into a lucrative growth opportunity for all games. The microtransactions in the mobile games already have achieved significant volume. In addition to this, the player base for this segment is mostly situated in populous countries such as China and India. It represents an untapped market, one which can prove to be a huge source of revenue for any developer.
There are already Mobile esports championships involving Cricket, PUBG Mobile and various others. The growth of mobile esports is also a lucrative opportunity to further the reach of mobile gaming. The Mobile Gaming segment is already profitable for many developers.
Google Play Store and IOS platform
Epic Games has also an opportunity to get into the mobile app store segment. Currently dominated by Google Playstore and Apple’s IOS for their respective platforms, there is a need for competition. Earlier last year, Epic Games decided not to release Fortnite via the Google Play Store. They decided to release the APK which would be available for download for the players. Mobile Gaming is slowly turning into one of the most lucrative opportunities. There is a growing revenue segment from mobile gaming. Both Battle Royale behemoths in Fortnite and PUBG have a significantly high mobile playerbase.
Epic Game’s rumoured entry into mobile app store would mean a severe challenge to the existing players. Their monopoly in the segment will see a big challenge from Epic Games. It makes sense for Epic Games to release Fortnite in their own store. At the same time, it will be an opportunity for other apps to release on the new store.
However, this is definitely a daunting task for Epic Games ( if they even decide venture forth in this segment). Google and Android are massive players and Epic Games simply does not have the experience or the safety to challenge them right now.
A different style of competition: Urging users to subscribe on the website
For Google Play and Apple, they are facing a different style of competition. Some of the biggest apps and companies out there are taking the decision not to sell via these stores. Recently Netflix joined Spotify in urging customers to renew their subscription via their website. It would enable users to avoid the nearly 30% charge levied on the initial amount.
Netflix topped the list of top grossing apps last year. Taking a 30% cut from this is a massive revenue stream for Apple. In the past, Apple has taken action against other apps for trying to bypass Apple’s cut of 30%. Amazon’s Kindle was one of the most famous examples in the past.
Will the App-stores stay silent as developers choose to sell subscriptions outside of the store? It is a substantial loss of revenue and we expect some sort of response. However, it also highlights the excessively high charges levied by the app stores.
Epic Games – Steam Store Competition: Good news for Gamers
Competition between the two stores would only mean good news for the average gamer. While game prices have definitely gone up in the past; we will hope that this competition lowers the price. As Epic Games focusses on gaining market share and luring customers to use their site, they will offer discounts. Already there is always a free game available to play on the Epic Games store. Epic Games along with their partners have teamed up to give players a free game every two weeks. Developers are able to reach new audiences which will play their game, and hopefully, buy it if they like it. It is a tactic that is employed to enable more traffic to their website.
If Epic Games does see significant growth and volume, we can expect an appropriate response from Steam. They will compete with Epic Games and this usually means a better deal for the average buyer.
Epic Games recently secured $1.25 billion in investment from multiple sources. A few of these investors include KKR, ICONIQ Capital, Smash Ventures, aXiomatic, Vulcan Capital, Kleiner Perkins, and Lightspeed Venture Partners according to Gamasutra.