Though many customers are still loyal to Valve's Steam platform for PC games, some developers appreciate Epic Games' competition.
Talk about the big business battles of the video games industry, and it's tough not to focus on the wars between gaming consoles. In the 1990s, SEGA and Nintendo were engrossed in a public, often odious back-and-forth banter in an attempt to grab hold of the majority market share of the gaming industry. In 2019, the big console makers are still duking it out for dominance, but there's another battle taking place. This war is being waged for control of the PC gaming market.
Created and released by Valve in 2003, Steam was designed to be a digital platform that would allow Valve to push automatic updates to some of its online games, like Counter-Strike. After realizing the potential of its platform, Valve kept evolving Steam, and by 2005, it was set to sell its first third-party game on PC.
As the years went on, Steam continued to increase its influence over the PC game distribution market, surviving any competition that dared to try and take it down. In 2017, Steam had earned Valve an estimated $4.5 billion dollars, up almost $1 billion dollars from 2016's figure, according to the third-party analytical firm Steam Spy. Up until this point, Steam had come to dominate the PC gaming market and outlasted any competition that dared to stand in its way, simply because it held so much of the market share. (It's worth noting that this is excluding first-party PC distribution platforms like Uplay or EA Origin, as these platforms tend to only distribute their own games.)
However, in the past year, a formidable competitor has entered the ring and it's looking to disrupt the hold that Steam has had on the PC gaming market for almost two decades. The Epic Games Store was launched in December 2018, promising a much larger revenue share for developers than that of Steam. Despite being launched by the parent company of the Unreal Engine and Fortnite, most didn't expect the Epic Games Store to shake things up in the way that it has so far. After all, Steam has gone virtually uncontested for almost 20 years, so why should things be any different now?
Within months, the Epic Games Store started picking up a handful of notable PC exclusivity deals for games like Borderlands 3, World War Z, Super Meat Boy Forever, and many more. The most logical reason that dozens of publishers and developers began flocking to the Epic Games Store had to do with its generous revenue share. Epic offers all developers an 88% cut of all sales on the Epic Games Store, with the store taking 12% of sales. Steam, by contrast, offers most developers a 70% cut and keeps 30%, with bigger games having the chance to earn up to 80% revenue share.
Exclusives are deals between developers or publishers and a digital storefront, making that store the sole distributor of an intellectual property (IP), usually for a set amount of time. In exchange for exclusivity, Epic (and other distribution platforms) will typically offer the developers a sum of money, as well as an agreed-upon revenue share and a handful of other perks, which will vary based on the distributor.
"...I am glad someone is coming along and going, ‘Maybe we can give more back to developers.'"
You might be wondering why developers don't distribute games themselves, especially when they have to give up a portion of sales. The short and simple answer is that most developers simply don't have the audience, and potentially finances, to launch a game alone.
Digital storefronts like Steam and the Epic Games Store already have millions of active users looking to buy games from its platform. So, if they want their game to be seen and played, they are forced to launch with a digital distributor, and potentially sign an exclusivity deal. Thus, it's critical to find a partner who will offer the best return to developers, which is why there has been an increase in Epic Games Store exclusives.
"Epic Games Store's 88/12 split is very generous and I do think that's a large draw for developers," Tommy Refenes, co-CEO and programmer at Team Meat, the developers of Super Meat Boy Forever, told GameSpot. "Steam's 70/30 cut has always been great and I have benefited greatly from it, but I am glad someone is coming along and going, ‘Maybe we can give more back to developers.' That's not something I ever thought would happen."
Refenes was very clear that Team Meat saw great benefits with Steam, but found even more success upon partnering with Epic. "When Epic approached me, they offered me a deal that gave me more support than I've ever had from any deal with any store or console ever," Refenes told GameSpot.
It also seems that Team Meat is not the only one who has benefited financially from a deal with Epic. "Releasing World War Z on the Epic Store was probably the best move that Saber has ever made as a studio," according to Matthew Karch, the CEO of Saber, which recently launched World War Z on PC as an Epic Games Store exclusive. "We make more money on Epic than on any other platform by a huge margin," adds Karch.
According to these developers and others, the support Epic offers goes far beyond finances as well. "...Most importantly was the level of support Epic Games offers its partners," Nick Clifford, director of marketing at Phoenix Labs, told GameSpot. The studio launched Dauntless as an Epic Games Store exclusive in May 2019.
"We have an open line of communication with their team, talk daily, and share best practices. We've been out to their offices multiple times and they've visited us as well," said Clifford.
"The guys at Epic are very accessible and pragmatic, it's not a big business corporation with ties, long communication, and various approval levels, no, they have both feet on the ground and they are gamers like us," said Henning Schmid, a representative for Yager, who recently released The Cycle as an Epic Games Store exclusive. "Frankly, I don't see any disadvantages to being on the Epic Games Store from a development studio perspective... We wouldn't have been able to release our vision of The Cycle without Epic and their help."
In addition to studios profiting from Epic exclusivity deals, players are receiving benefits as well. With sales on Epic eclipsing that of the Xbox and PlayStation Store at Saber, Karch shared that they have been able to pass along some of those savings to "gamers." "We actually lowered the price of World War Z by about five bucks on PC, to pass along savings to gamers because of Epic Games Store's smaller cut."
With Saber's deal, aside from being able to offer the game for a discount on PC, Karch said the exclusivity deal has allowed the studio to have financial stability and confidence to make the best game possible for its community.
The idea that Epic Games Stores exclusives benefit the gaming community as a whole is a foreign idea to many. To a lot of the community, exclusives are an annoyance that exist because of greedy developers and publishers. However, Karch has a different viewpoint. "Epic is not some outsider to games, nor is it a greedy corporate publisher," he said. "It's a game developer with an unimpeachable pedigree."
It's hard to say exactly where the bias for exclusives began, but a lot of initial hate came from the fact that Epic's platform isn't as developed or advanced as Steam. As a newer platform, it is lacking a lot of features that its competition already has in place. After all, Steam has been around for nearly two decades, so to say that its platform has been tweaked and fine-tuned almost to perfection would be more than fair.
It shouldn't really come as a surprise that those on PC would rather use Steam instead of Epic, as it simply is more user-friendly and already has an established user base. "Some community members complained about our decision [to release as an Epic Games Store exclusive] as they are used to a rich feature setup like Steam, but most of them simply don't care. Knowing the ambitions of Epic, I am sure that they will catch up in the future," said Schmid.
He is right, Epic has addressed some of the complaints from users since launch, and is continuing to add in new features. While Epic is trying to catch up to Steam, it's certainly understandable that some users would prefer to play on Steam in the meantime. However, Schmid suggested that "most simply don't care," so if the lack of features on the Epic Games Store isn't a problem for most, what else could it be?
Perhaps the biggest issue that consumers have with the Epic Games Store boils down to one simple word: change. The Epic Store is trying to shake up the world of PC gaming. It is trying to come along and disrupt the status quo. If we are being honest, buying a game off of the Epic Store versus Steam only involves a few extra clicks and maybe five minutes of your time. It's not that big of a deal--but it is a big change.
There has never been a real threat to Steam in the past. Sure other PC gaming distribution stores have popped up over the years, but none of them have ever disrupted the community this much. The Epic Store isn't just picking up exclusivity for a few tiny games and helping out indie developers here and there, it is coming after AAA and indie developers alike. Change is hard and often times scary, but sometimes it's necessary for a better future. Epic believes it is creating a better future for gaming, but the verdict is still out.
Passionate fans are often very vocal when they feel betrayed by a company, which is what tends to happen when exclusivity deals are made. Often times the "bad press" is due to a lack of communication on the part of developers, leaving the community alienated from the reasons behind the decisions that were made.
"Unlike other Epic Games Store exclusive games, we did not get a lot of negative feedback [from the community], as our players knew where we came from and that this exclusivity helps us to turn our vision for The Cycle into reality," said Schmid. "We spoke very open and transparently with our community and they fully understood our decision."
Aside from the support Epic offers developers, Epic also offers a more limited library, which allows games to stand out better than they would if the storefront is constantly being flooded with new games. It's no secret that Steam is the best place to go if you're looking for a large library of games. However, with that comes the chance that a developer's game could get lost in the shuffle.
"I feel like I'm working with a partner to launch my game and not like I'm just going to put the game out there and hope for the best. That's huge in this market where there are new games coming out every single day. I don't feel that once we launch on the Epic Games Store that we will be buried under a ton of new releases. We are going to be front and center in front of millions and millions of customers for a while. That's huge," said Refenes.
However, is that the case for all developers? What about the big studio that already has as much social support as needed? Do Epic Games Store exclusives benefit them as well?
"If developers have enough funding and resources available to finance and grow its games and business, they probably will be better off if it is not limited to only one platform," Patrick Rose, the founder of Games Analyst, told GameSpot.
Rose told us that there are three things that a studio must determine when trying to decide if an exclusivity deal is the right move for its game. To start, developers need to first understand its products. Once a studio has figured out exactly what kind of product it wants to release, the focus should be turned to the market. This phase is where the developers must decide who its target audience is.
"The internet is fantastic at painting a negative picture and terrible at painting a realistic one."
Once those two initial questions have been answered, it's time to figure out where that audience is located. Are they on consoles? Steam? Epic?
This step is perhaps the most important of all. At this point, developers have already narrowed down who they want to sell their games to, but they must now accurately determine where the audience is located. Making the wrong choice here could be detrimental to any game, no matter the size of the studio behind it. At the end of the day, it simply comes down to what's best for the game. Contrary to popular belief, size doesn't matter.
After talking with Team Meat, Yager, Phoenix Labs, and Saber Interactive, it seems that at least in the case of these four studios, choosing to become an Epic Games Store exclusive was the right move. Not only did all four developers speak highly of Epic as a company, but they all shared similar experiences of financial stability, profitability, and ultimately freedom.
While exclusives may be an annoyance to some in the video game industry, the good seems to far outweigh the bad for developers and the community at large. Despite what the internet may tell you, exclusives are a necessary and good thing for developers and the community as a whole. As Refenes told us, "The internet is fantastic at painting a negative picture and terrible at painting a realistic one." Signing an exclusivity deal with the Epic Games Store not only leads to major funding boosts, but also support, experience, and exposure that otherwise wouldn't exist for many development teams.