Epic Games Store: growth strategy is currently working

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The legal dispute between Apple and Epic is actually about the abuse of a monopoly position. By the way, interesting information about the business model of Epic Games is always provided. Currently, figures on the cost-benefit balance of exclusive games and the costs of free games have come to light.

Basically, the Epic Games Store is up to date and until further notice a gigantic loss-making business, the Epic Games must be cross-financed. Legal documents revealed that a good month ago. Another document from Epic, which is used as evidence for statements in the process and has now been leaked, reveals what exclusive games cost and bring.

In total, Epic invested $ 146 million in the Borderlands deal with 2K Games. However, the sum has not been paid. For Borderlands 3 only, Epic has estimated $ 115 million, of which $ 15 million was paid for Borderlands marketing. Another $ 20 million was billed as a fee for 2K's temporary exclusivity, making Borderlands 3 roughly twice as expensive as Control's exclusivity.

The remaining $ 80 million was merely a sales guarantee. This did not have to be redeemed: 100 percent of the sum had been taken back, according to the documents from October 2019 – the total turnover for the shooter is stated there at 100 million US dollars, of which three quarters were implemented in the Epic Games Store. That brought the company a turnover of 9.2 million US dollars.

Borderlands brought growth

So the bottom line is that Borderlands 3 cost around 25 million US dollars plus the cost of a package deal. Another $ 31 million was paid for the Handsome Collection by Borderlands and Civilization. However, the promotion drew 1.56 million Borderlands players into the store, 53 percent of whom did not yet have an Epic account, the documents reveal. Each account cost Epic around $ 72, albeit without taking into account further gains from the other 2K games.

The numbers make it abundantly clear how much exclusive games are an essential cornerstone of the growth model. If the program is scaled back, Epic expects internal growth to decline in the medium term. The statistics suggest that the number of exclusive games will continue to be high until at least 2024. As the market share increases, they should become increasingly self-sufficient because, above all, sales guarantees are given and become cheaper with a larger market presence. With this growth model, Epic assumes that around 35 percent market share will be achieved in 2024 – if Steam reacts to the competitor. It should be 50 percent if Valve does nothing.

Free games bring further growth

Free games offer cheaper growth. In the first nine months of opening the store, Epic's free offers cost a total of $ 12 million. Even heavyweights like the Batman: Arkham Collection only cost $ 1.5 million and have been viewed around 6.5 million times. Ubisoft's quasi-free-to-play game For Honor posted a bill for $ 63,000, older indie titles also remained in the five-digit range. All in all, new accounts could be “bought” here at a unit price of US $ 2.37.

As much as this growth strategy was criticized by players, especially after the shop was introduced, the numbers are clear: From an economic point of view, it works, Epic is gaining weight and is buying in enter the market. Provided there are sufficient monetary reserves, the shop will be able to establish itself as a major provider in the long term.