[News] Epic will lose over $300M on Epic Games Store exclusives, is fine with that

[rlex]

 

isher a certain amount of money whether or not their game actually sells enough to cover it. For example, Epic paid Remedy $10.45 million for Control.
In its end-of-year report, Epic said that players spent $700 million on the Epic Store in 2020, but third-party game sales only accounted for $265 million of that spending. That $444 million isn't close to being recouped, then. Some of those deals probably haven't started making money yet (as in, the game hasn't released), but according to Apple's learnings, Epic is going to eat "at least $330 million in unrecouped costs from minimum guarantees alone" if you consider 2019's deals, too. 

As for how much the Epic Game Store will have lost in total by the end of 2021, projections say it's less than $600 million. Just a bit of spending money, then.
These estimates are available to us because Epic and Apple have laid out the (pretty spicy) arguments they'll be bringing to court next month. As part of its defense, Apple's lawyer army wants to show that the Epic Games Store isn't comparable to its iOS App Store, and so its fact finding includes everything Epic has said about how unprofitable the Epic Games Store has been.
Citing depositions from Epic Games Store VP and GM Steve Allison and Epic VP of business development Joe Kreiner, Apple says that Epic lost $181 million on the Epic Games Store in 2019, projected a loss of $273 million last year, and projects another loss of $139 million this year. Added up, that's nearly $600 million that the Epic Games Store will need to recoup before it'll be profitable on the whole. Apple points out that Epic doesn't think that'll happen until 2027.

Epic puts a more positive spin on its finances, saying that it expects the Epic Games Store to start earning annual profits in 2023. And what Apple calls losing money, Epic would probably call investing money. This spending is all part of the plan, says the company, and its 12 percent revenue cut will eventually be enough to sustain the store.

"EGS is not yet profitable at its current scale and stage of development because it has front-loaded its marketing and user acquisition costs to gain market share," reads Epic's filing, citing CEO Tim Sweeney.

Back in Apple's filing, the iPhone maker takes a few jabs at Epic for the same thing many gamers have: the Epic Store's relative lack of features compared to Steam. "By its own admission, the Epic Games Store—two years after it launched—is still missing 'critical' features," writes Apple. 
Epic points out that it has been building new features, such as self-service refunds, and that it's also giving away free games every week—another way it's been spending money. (Funnily, Apple says that the Epic Games Store's funding has come from "other parts of its business" that have been "incredibly profitable." I wonder which parts those are?)