The launch of the Epic Games Store is good news for game developers, who will make more money per game sold on that service compared to Steam. It’s also good news for Epic Games itself, since the company might grow even more powerful and influential in the world of PC gaming. But is it good news for the players?
Players may not care about the revenue split between developers and the companies that own the digital distribution services, but they know that they already use and like Steam, so that’s where they’re likely to continue buying their games. Epic Games has to convince customers that they need to be buying games from the Epic Games Store and not Steam, and that might be a much larger challenge than wooing developers.
That’s why a recent survey showed that, while many developers don’t believe that Valve is earning its 30 percent cut, they’re likely to continue selling their games through Steam. It’s where the players are, and they will need something more than a higher profit margin for developers and publishers if they’re going to feel good about changing services.
Free games are one incentive, of course. And the news that Metro Exodus will come to Epic Games Store first may have shown us how the company, and a few high-profile developers and publishers, is serious about competing against Valve.
Lower prices! Bigger profits!
Metro Exodus will be exclusive to the Epic Games Store for the first year of its availability, and will then come back to Steam and other storefronts in 2020. It will also be sold for $49.99, which is $10 less than it was originally priced on Steam. (Existing pre-orders on Steam will be honored, at least.)
Even if the pricing difference isn’t directly called out in the press release, the math makes sense for publisher Deep Silver.
A copy of a game sold for $59.99 makes the publisher $41.99 if that publisher is keeping a 70 percent cut of the revenue, which is the deal that Steam offers at launch. But the same publisher makes $43.99 if it’s keeping 88 percent of the revenue from a $49.99 game. This is the power of the new revenue split: The customer gets a lower price, while the publisher still sees higher profits, and the storefront owner who is able to deliver all of this gains a new way to make money from a volume business.
Players may be comfortable sticking with Steam due to their familiarity with the service and its features, but competitive pricing changes that math. What if the games they wanted to play — like Metro Exodus — were suddenly not only exclusive to a different store, but also cost $10 less than they were expecting to pay?
People may complain about timed storefront exclusives on social media and in the comments, but Epic and Deep Silver care whether people ultimately decide to buy the game, not whether they grumble while doing so.
Because both companies get what they want if you buy Metro Exodus in that first year: Deep Silver gets another sale with a higher profit margin, and Epic Games gets another player using the Epic Games Store. I’d argue that the player also wins, as long as they enjoy the game. They saved a bit of money in exchange for the inconvenience of using a new service — that’s the only thing that’s changed.
Epic Games needs to convince players, not publishers
Getting players to understand the benefit of the Epic Games Store is important to Epic Games; yesterday CEO Tim Sweeney explained why the revenue split helps the players as well as the developers and publishers.
“Metro Exodus is amazing and is deservedly one of the most anticipated PC titles of 2019,” Sweeney said. “We are partnering with Deep Silver to launch Metro Exodus, underpinned by Epic’s marketing support and commitment to offering an 88 percent revenue split, enabling game creators to further reinvest in building great games and improving the economics of game stores for everybody.”
There’s a lot of marketing speak in there, but the main idea is that buyers should care about the better revenue split, because more money in the hands of publishers and developers may mean more money to make the games they like. And the line about improving the economics of game stores for “everybody” is a good way to call attention to the lower price. Improved economics in this case means more money for them, and lower prices for you.
As long as neither party is Valve, of course.
So what will Valve do? The company can try to coast on its huge number of users and hope it doesn’t lose too many other games as exclusive to the Epic Games Store — the company has already called the Metro Exodus situation “unfair to Steam customers” — but that’s not a winning strategy in the long term.
Steam’s biggest advantage is that it’s a mature service and offers the features that players want and are used to from a major PC gaming hub. This is one of the reasons that some customers seem actively hostile toward the Epic Games Store; they suddenly won’t be able to buy games like Metro Exodus on the service that offers the ease of use they’ve come to expect, like cloud saves and achievements and the like — at least, not at launch.
“Despite being a near monopoly, Valve hasn’t really leveraged its position to restrict the market in its favor (even allowing third party launchers like UPlay or allowing f2p games like Warframe and War Thunder to have their own launchers),” one player wrote on Reddit. “They also standardized a lot of features like automatic patching, saves, community features, anti-cheat, etc, that we take for granted until you see a storefront like Epic drop those.”
The good news for players is that everyone wants their business, and the battle for that business is structured in such a way that prices are going down, while profits — at least, in some cases — may be going up. Epic Games has found a way to get players to more closely consider the economics of storefronts, and it did so with both exclusives and a lower price. This won’t be the last time we see this approach as the platform wars continue in 2019.