'Stores charging 30 per cent are marking up their costs by 300 to 400 per cent' - Epic to take on Steam with a developer friendly digital store
Epic have announced that they are to launch a digital games store front and have put their sites on ousting Steam by offering developer friendly terms - and a relatively small 12% revenue cut on all sales. Steam currently take 30% of each sale.
Steam has undergone something of a shift in goodwill in recent years alienating indie developers with increasingly poor terms and exposure and taking a huge portion of sales for games from publishers of all sizes in order for them to appear in the store.
By offering developers 88% of the sale cost of their games Epic have launched a volley that Steam will struggle to absorb and this is likely to create more competition in the digital games marketplace.
Talking to MCV, Epic Games CEO Tim Sweeney said “While running Fortnite we learned a lot about the cost of running a digital store on PC. The math is quite simple: we pay around 2.5 per cent to 3.5 per cent for payment processing for major payment methods, less than 1.5 per cent for CDN costs (assuming all games are updated as often as Fortnite), and between 1 and 2 per cent for variable operating and customer support costs.”
He went on to add “Fixed costs of developing and supporting the platform become negligible at a large scale. In our analysis, stores charging 30 per cent are marking up their costs by 300 to 400 per cent," he reveals. "But with developers receiving 88 per cent of revenue and Epic receiving 12 per cent, this store will still be a profitable business for us".
In addition to the smaller cut in sales, Epic, are also waiving their usual 5% royalty fee for developers who create games in the publisher's Unreal Engine when selling through the new store meaning even more profit for those who do all the hard work.