In the ever-competitive video game industry, Epic Games’ venture into the digital storefront arena using the Epic Games Store has become a tale of ambition, controversy, financial gamble, and of a company struggling to tell the difference between delusion and ambition.
Launched in 2018 as a direct competitor to Valve’s industry-leading platform, Steam, the EGS aimed to disrupt the status quo with a more developer-friendly revenue split and a slew of user incentives, including a steady offering of free titles. However, as the dust settles on the storefront’s first half-decade, it appears Epic Games’ bid to upend Steam’s dominance is facing uphill challenges, with profitability still out of reach, as per The Verge.
The vision for EGS was always grandiose, with Epic Games Store boss Steve Allison once projecting that the company hoped to secure half of all PC gaming revenue. Such aspirations have come at a cost, with Epic funneling vast sums into weekly free game offerings and exclusive deals to entice both players and developers to its platform. Yet, despite these investments, Allison admitted in a legal battle against Google that the platform is still chasing growth, with profitability still on the horizon.
Epic’s strategy has been under scrutiny, particularly in light of the company’s recent layoffs, which saw the dismissal of more than 800 employees. The layoffs came as a shock to many, given the continued success of Epic’s flagship free-to-play battle royale shooter, Fortnite. But, it’s clear now that Epic’s war on Steam has taken a massive toll on its finances, which ultimately might be what’s forcing the company to tighten its belt.
The EGS is a polarizing platform. Its aggressive pursuit of exclusivity deals has often alienated interested gamers. Its user experience has been a frequent point of contention. It’s clunky, sluggish, and feature-lacking, compared to Steam, which is easier to use and more seamless to operate. While Epic has managed to secure a number of high-profile titles for its platform, including publishing Alan Wake 2, the user interface and functionality of the EGS have failed to keep pace with the more established and community-focused Steam.
Epic’s deep pockets have funded the store’s growth so far, with CEO Tim Sweeney previously asserting that spending a little over $300 million on the platform was a strategic move to scale up the business. However, predictions for when it would start to see profits have been repeatedly pushed back, with various reports citing years ranging from as early as 2023 to as late as 2027. Amidst this financial uncertainty, Epic has also had to adjust its in-game economy, increasing prices for in-game currency like V-bucks, which could further impact the store’s competitive edge.
The challenge facing the EGS is multifaceted. On one hand, it must evolve to offer a user experience that can genuinely rival Steam’s well-established ecosystem. On the other, it needs to maintain the support of developers and players alike, without the need for heavy-handed tactics like exclusivity that have previously sparked backlash. Moreover, it needs to demonstrate that it can be more than a costly venture for Epic and become a sustainable and profitable enterprise.
As the battle for digital storefront supremacy continues, Epic Games finds itself at a crossroads. The company needs to navigate the delicate balance between aggressive expansion and strategic consolidation. The path to profitability is still unclear for the EGS. Is Epic Games out of touch with reality as it dethrones Steam? It’s possible. But, if nothing else, the EGS remains a fascinating experiment in marketing disruption – one whose success or failure will have far-reaching implications for the future of digital game distribution.
