La cause Apple versus Epic proceeds in US courts. The process has yet to begin, but some data on the entries and exits of the Epic Games Store emerged from the first papers prepared by the lawyers of the two companies.
An expensive strategy
Born in 2018, the store proposes itself as Steam's first competitor in the sale of digital copies of video games. To carve out a slice of the market, however, Epic had to operate a very aggressive and expensive strategy.
The games given away weekly they are only the tip of the iceberg of this operation. In the wake of Fortnite's success, Epic has offered very generous exclusive contracts to several developers.
These contracts provide a "minimum guaranteed" clause. Simply put, Epic pays developers a fixed amount, regardless of how many copies the game sells once it's made available. For example, the Coltrol exclusivity would have cost over $ 10 million.
Until now it had been impossible to quantify the costs of these contracts, but Apple's lawyers did some figures emerge. In their attempt to prove that Epic Games Store is not suitable for the App Store, the lawyers of the Cupertino company have highlighted significant losses in the EGS balance sheet, which would amount to over 300 million dollars.
The main releases for Epic would be represented precisely by exclusive contracts, which cost the company 444 million dollars. Epico responded with its figures, declaring that purchases on its store would amount to 700 million dollars in 2020 alone.
This figure, however, appears much higher than it actually is for Epic. Much of it is in fact up to those who developed the games, not the store. Furthermore, if purchases are limited to only third-party games, the numbers are dramatically reduced, reaching 265 million dollars. Calculations derived from these figures would lead the losses caused by the exclusive contracts to approximately 330 million dollars.
Epic is therefore very far from making its store profitable, on the contrary it would register losses of hundreds of millions every year. Precisely, including the expenses, Epic would have recorded 181 million dollars in losses in 2019, 273 million in 2020, and would forecast another 139 million for 2021.
The huge expenses, coupled with security problems and the lack of fundamental features would make Epic Games Store incompatible with the iOS App Store. According to Apple's predictions these losses will not be amortized before 2027.
In response to these allegations the CEO of Epic Tim Sweeney described these losses as investments, costs necessary to win a part of the market.