Video game company Epic Games was burning through cash throughout 2020, losing roughly $273 million as a result of expenses for the Epic Games Store, as well as to compete with rivals like Steam. With the COVID-19 pandemic forcing players to stay home more than ever last year, Epic ramped up its already-popular free games initiatives to provide fans with a wide array of titles and to elevate the company into being one of the most well-renowned gaming brands in the world.
These free games have ranged from smaller indie titles like The Stanley Parable and Tormentor X Punisher to triple-A blockbusters like Watch Dogs and Star Wars: Battlefront 2. The most buzzworthy giveaway came in the summer thanks to May’s weeklong free release of Grand Theft Auto 5, which crashed Epic’s servers mere minutes after it began and boosted the player base of the already beloved open-world crime title’s online component to new heights. All of these special offers cost money on Epic’s end, and it turns out the company was willing to pay through the nose throughout 2020.
According to PC Gamer, Epic’s big legal battle with Apple over Fortnite revenue on the App Store has brought to light Epic’s expenses for its Game Store in 2020, which total at about $444 million. $273 million of those expenses served as a net loss due to Epic’s many free giveaways throughout the year. This includes exclusivity deals and “minimum guarantees” for publishers to keep their titles off of competing services like Steam. Epic itself isn’t particularly worried about this high amount of lost profits, as a recent filing by the company remains hopeful that profits will start to rise by 2023 and that these expenses are part of a long-term investment thanks to the Epic Store maintaining 12 percent of any given game’s revenue.
This confidence isn’t without merit, as Epic has enjoyed a steady stream of profit from its Unreal Engine and Fortnite. The latter is still regarded as one of the most successful battle royale titles on the market today, bolstered by its ongoing Season 6 and high-profile events like virtual concerts from Travis Scott and Kaskade. As for Unreal, it remains the gold standard for video game development, with fans even using it to create high-end remakes of scenes from Mortal Kombat 4 and The Legend Of Zelda: Ocarina Of Time.
While $273 million is a lot of money to take as a net loss, especially in the middle of an ongoing lawsuit against a major company like Apple, Epic is certain that both the profits it will make from its exclusive deals and the goodwill it has been building from players throughout the COVID-19 pandemic will more than make up for it in the long haul. In the meantime, it looks like the Epic Games Store will continue its run as a major competitor to Steam and a dominant force in the realm of PC gaming.
Source: PC Gamer