Epic Games is launching a competitor to Steam; the company announced earlier today that it will open the Epic Games Store, a digital distribution service that is designed to rival the platform that has made Valve one of the most prominent online game distributors in the world. The Epic Games Store will also have a much more favorable revenue split for developers than Steam currently offers.
Epic Games is the studio behind worldwide phenomenon Fortnite, a game that is so popular it is causing issues for professional athletes because of its addictive qualities. The online multiplayer battle royale title has also spawned some of the most successful Twitch careers that the online streaming service has ever hosted, most notably in Tyler "Ninja" Blevins, whose meteoric rise has coincided with Fortnite's. While Fortnite is free-to-play, it has a microtransaction model that has been a strong source of revenue for Epic Games.
The Epic Games Store will do away with the standard 70/30 revenue split between developers and platform that Steam has made the industry standard. Instead, the Epic Games Store will give developers 88 percent of the revenue that their games bring in - and if developers use the studio's own Unreal Engine, it will cover the 5 percent engine royalty sales out of the store's already relatively small 12 percent cut. Epic Games founder and CEO Tim Sweeney broke down the idea behind the revenue split in an interview with GamesIndustry.biz:
"Fixed costs of developing and supporting the platform become negligible at a large scale. In our analysis, stores charging 30% are marking up their costs by 300% to 400%. But with developers receiving 88% of revenue and Epic receiving 12%, this store will be a profitable business for us."
It's hard not to notice the shade being thrown Steam's way by Sweeney's statement, which seems critical of the extreme cost markup that the 30 percent revenue model supposedly generates. Alongside helping support developers with a much more generous revenue split, the Epic Games Store will also have a "Support-A-Creator" program that is designed to reward YouTube and Twitch content creators for helping showcase the games that developers have put on the Epic Games Store platform. Epic wants to matchmake creators with developers, hoping to create relationships between creators and developers that are compensated.
The biggest news for fans of gaming will be that the Epic Games Store will debut on PC and Mac relatively soon with an already hand-curated set of games, but that the company expects to open the store up to more games and other platforms as the next year progresses. Sweeney also stated consumers can expect one free game every two weeks for the entirety of 2019, with Epic funding those free releases themselves so that developers don't lose out.
The creation of a brand new digital distribution platform is sure to send shockwaves throughout the industry. Valve started Steam on the back of its own successful games and industry stature, and it looks like Epic Games is taking that approach as well, leveraging the success of Fortnite to create a new pivot for the company. With such a favorable revenue split system and a powerhouse game revenue in Fortnite backing the store's launch, we could see a very real power shift in the digital distribution side of gaming in 2019.