Is Fortnite profitable for gamers
Epic Games Store: Dispute with Apple shows the size of the losing business
It's hardly a secret that Epic is cross-subsidizing its game shop. Documents from the legal dispute with Apple show how expensive it is to try to force a new store into the market. For the foreseeable future, the store is a gigantic loss-making business for Epic Games.
In the legal dispute between the two companies, documents have now been submitted that are intended to describe the factual basis of the dispute. In the representation of Apple, the business model of the Epic Games Store is described on several pages. "The Epic Games Store is not profitable and, if it ever succeeds, will not be for a period of at least several years“, Is recorded on page 81.
Losses in the three-digit million range
In 2019, the EGS posted a loss of US $ 181 million, and in the following year, Epic even calculated a loss of US $ 273 million, with the company saying "significant growth“Expected sales of just $ 401 million, Apple said. Epic also expects losses of $ 139 million in 2021. Nothing about that will change in the near future.
The reason for this are the attempts to force the Epic Games Store into the market. Incentives for gamers and developers cost the company a ton of money. Part of this lure strategy are weekly free games, but also the purchase of exclusive titles that are linked to an income guarantee. Epic guarantees developers a minimum turnover; If the game sells worse than expected, the provider pays the difference to the guaranteed amount. This has cost Epic an impressive $ 330 million so far - with announcement. Because the expected sales in 2020 of 401 million US dollars are lower than the sales guarantees for the same year of 440 million US dollars, according to Apple.
According to Apple, this state of affairs will last for years: "Even at its best, Epic doesn't expect gross profit with the EGS until 2027". In the reply, Epic Games expressly contradicts one point: It is expected that the shop will be able to operate profitably as early as 2023 (see page 141), until then the costs for marketing and customer acquisition will be "preferred“In order to establish itself on the market. The EGS must therefore be financed by other business areas that have been "incredibly profitable“Have been. This means Fortnite, Epic Games' big revenue generator.
Dispute with Apple in favor of Fortnite
Apple explains from page 83 onwards why the legal dispute, which is actually about the allegation of a monopoly position and abuse of power, is referred to can be read off and is therefore essential for survival. The lawsuit, Apple alleges, would only be a vehicle to revive interest in Fortnite, whose player and sales figures have been declining since 2018 - a sign for Apple that the game is in the last phase of its life cycle. Numbers are blacked out in the document.
The litigation is portrayed as the result of a long-term, targeted media strategy known as Project Liberty. Part of the strategy was to provoke the expulsion of Fortnite from app stores and to give Apple a negative image in the eyes of users. Because, the company writes, the lowering of platform fees, which Epic has written on the flag, is ultimately a means to keep Fortnite alive. Developers are supposed to create new content there, which would mutate the game into a platform. However, this business model would only be profitable if the commission of the platform operators decreases so that it can instead be distributed to developers. Epic denies the allegations, however. The case is expected to be heard in court in May.
- Max DollEmail... writes tests and reports with a focus on input devices, PC games and next-gen consoles on ComputerBase.
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