The Epic Games Store, which now accounts for a loss of hundreds of millions of dollars a year, will be profitable in three or four years, according to Epic. That says Epic CEO Tim Sweeney and that is also stated in strategic documents from the end of 2019.
The document, released in the Epic-Apple lawsuit, describes two strategies for the future of the Epic Games Store. An aggressive model assumes significant investments in exclusive games and with that, Epic would make a profit for the first time in 2024 with the download store for PC games. With this model, sales would exceed $ 1 billion by 2023 and the download store would have 125 million users, 50 million of which are active.
The second strategy describes a winding down model in which investments decrease and far fewer users are added. The costs are therefore lower and that should yield a profit from 2023.
It is not known whether Epic is currently actually following the strategy outlined in the document, but everything indicates that the company is pursuing the aggressive model. During the lawsuit, Epic Games CEO Tim Sweeney said the download store is now at a loss and indicated that the store is expected to be profitable in three or four years. That is also in line with the outlined aggressive strategy.
According to the aggressive model, there should be about four Tier 1 exclusives in the Epic Games Store every year. By this, the company means games that achieve at least $ 60 million in turnover. With the aggressive model, Epic Games expects to generate up to 50 percent of the revenue of the entire PC gaming market, provided Steam is unresponsive and does not cut its commission. If Steam does, Epic Games expects to reach a 35 percent market share.
Spend less on free games
Both strategies are based on phasing out free games giving away. Every year less is spent on this. According to the document, the budget for buying out publishers to give away games for free in 2019 and 2020 was $ 34 million per year. In subsequent years, that budget is $ 15 million.
It is not known whether Epic actually spent $ 34 million in 2020. This is a strategy that was drawn up at the end of 2019. In the first nine months of 2019, Epic spent about $ 11.7 million on free games, documents previously revealed. Epic presumably paid publisher Take-Two in 2020 for giving GTA V away, but details about it have not been disclosed.