EPIC Games Is Doing More For Developers Than Anyone Yet Realizes

Fortnite — Epic Games

EPIC Games, the creators of the world-famous Fortnite have just had their app pulled from both the App Store and the Play Store. The app has stood the test of time holding a spot in the most downloaded and highest-grossing categories of both marketplaces since its release in July 2017. Fortnite has become a world phenomenon, finding it’s way on to every imaginable platform from IOS and Android to Nintendo Switch, Xbox, Playstation, and PC. The game itself is free to play with in-game purchases accounting for most of the games $1.8 billion in revenue in 2019. This isn’t the first time Fortnite and its parent company EPIC have made headlines. They have previously been in hot water after circumventing the Play Store and allowing downloads on Android devices directly through their own launcher. So, with the obvious revenue being lost by EPIC right now after being pulled from the app stores, what do they have to gain, and why are they pushing the buttons of tech giants Google and Apple? The answer has more layers than you might think, so let’s take a trip back to the days before Fornite.

So, the year is 2016, a year before the launch of Fortnite. The Play Store and App Store hum along pulling in billions of dollars in revenue yearly for Google and Apple respectively. Every time a developer of a game, productivity app, or social network puts their creation into these ecosystems they are forced to agree to the terms set forward by these tech giants. I will give a quick rundown of the fees below.

Google Play Store:

Initial Setup — $25

Transaction Fees — 30%

Apple App Store

Initial Setup — $99 recurring yearly

Transaction Fees — 30%

If you are putting a game into the world you also are likely to release it on Steam, who also had a virtual monopoly on PC game distribution in 2016, so you are subject to their fees as well.

Steam:

Developer Fee — 30%

So, are you starting to see the pattern yet? Each of these marketplaces owns a virtual monopoly or did in 2016. This meant that there was no competition, and so the companies leveraged a hefty 30% service fee on any product distributed through their platforms. If you wanted to launch an app, you would be hard-pressed to do so effectively without putting it on the Play Store, App Store, or both. PC games faced a similar choice, Steam has long been the de-facto distribution network of PC games. Yes, you could launch your game through indie outlets such as Itch.io, but your likelihood of success drops dramatically. In essence, if you wanted to launch, you needed to simply bite the bullet and pay the 30%. This was possible because the marketplace was simply more powerful than any of the apps or games contained within its ecosystem. This is evidenced when you look at a super successful app such as Angry Birds. Rovio, the owner of the Angry Birds franchise grossed almost $300 million euros in 2019, a seemingly large amount, right? Not relative to the almost $55 billion the Apple App Store grossed alone. In the end no matter how big you were, you never had enough leverage to change the status quo, so instead, you simply worked the fees into your business model and moved on, until now.

In July 2017, EPIC Games, the creators of the Unreal Engine launch a new game. The game is a battle royale, a budding genre, and it’s called Fortnite. Sporting childish graphics, underwhelming combat, and a very novel building system the game is an instant sensation. It blew up, taking over every imaginable space in the virtual world and scoring a haul of 2.4 Billion dollars in revenue in 2018. In addition to the roaring success that Fortnite had quickly become, EPIC began to take aim at a larger issue, the issue of developer and transaction fees. In December 2018, EPIC Games launched the EPIC Games Store. Now, they had made a good game, but why would any developer possibly want to switch from Steam with its name recognition, to an otherwise relatively unknown game distribution platform? Simple, they could keep more of their hard-earned cash. In contrast to the industry standard 30%, EPIC was only charging third-party developers a paltry 12% transaction fee. Now, for perspective, games often take years of development and tens of thousands of dollars to even get an indie game to market. This means that when you launch, if you aren’t the next Stardew Valley, you need to keep as much of your revenue as possible to help offset both the time and monetary investment that has been made in the game.

Once EPIC had both Fortnite and the EPIC games store in full swing they began to take aim at both Steam and the mobile marketplaces where Fortnite was distributed. The first volley was when EPIC began signing developers up for what they called timed exclusives. Essentially, EPIC would find an upcoming game, often with an existing fanbase and a potential to sell a large number of copies and approach them about launching exclusively on the EPIX store for a set amount of time. The most notorious of these was the timed exclusive launch of Borderlands 3, a long awaited sequel to the much beloved Borderlands 2. Borderlands was created by Gearbox Games and published by 2K. The game was to launch in September 2019 on EPIC, and April 2020 on other PC storefronts. This was met with ire from fans across the globe who accused EPIC of holding the game hostage in an attempt to steal revenue and force players into their ecosystem. A deeper look makes me believe that they did this as a way to yes, force people into their ecosystem, but equally to compete with a monopolistic storefront like Steam and push for better developer fees. It worked to a certain degree, with Steam changing their developer fees to a sliding scale from 20–30% depending on revenue. EPIC still hasn’t gotten steam to cave to the 12% they are currently levying on developers, but they continue to buy the rights to timed exclusives and only time will tell if it will be enough to break the mold.

Next EPIC took aim at the mobile storefronts. EPIC first attempted to sidestep the 30% fees on the Play Store by creating a downloadable launcher for their game that could be sideloaded onto any Android device and did not receive distribution through an official Google channel. This meant that they were not liable for the fees that Google would typically charge on transactions, as expected this wasn’t well received and Google soon implemented the Play Approved system for “checking” apps for compatibility and safety before having them loaded into a persons phone. EPIC seemed to back off on the mobile front until earlier this week. Apple and Google allow game developers to update their apps in a way that is substantially different from other apps. This system allows game developers to bypass the verification system, therefore, creating a system where new updates can be pushed on a consistent basis. This is a pivotal part of game development and maintenance. EPIC used this system to implement a payment system within Fornite that bypassed the App and Play Store systems without needing to have it approved by either marketplace.

As you would expect this was met with swift judgment as Apple removed Fornite from the App Store and Google followed suit on the Play Store. The difference this time is that Fornite and Epic are uniquely positioned to push the issue in the courts. Fortnite has an international download base of 320 million, and Epic owns the Unreal Engine which generates royalties from the likes of Rocket League, Bioshock, and Biomutant among many many others. Additionally, the Epic Games Store provided them with yet another stream of revenue. Epic might be the only developer within the App Store universe with both the resources and the gall to go head to head with the tech giants. This is just the next iteration of the crusade that Epic has been on for years, the quest to create a more equitable fee system for marketplace holders and developers alike. A system that is more sustainable for all involved.

In the end, it may all be for not and Epic will be forced to bow before the 30% fees that everyone else pays. However, in an alternate universe, maybe just maybe, Epic will turn out to be the hero that we all need. The ones to finally break down the walled garden and create a more equitable fee system that both marketplaces and devs can live with. I guess only time will tell.

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