In December 2018, Epic launched the “Epic Games Store”, which is a direct competitor to other game distribution platforms like Steam. Epic charges a 12% distribution fee (compared to 20-30% on Steam), meaning 88% of all sales get passed through.
In 2019, the Epic Games Store saw $680M in spending on their platform (note: this does not include in-game spending). Of this total, $251M (36%) was spent on third party games while the rest was spent on games owned by Epic.
Therefore, Epic saw $30M (12% of $251M in third party sales) plus $429M (100% of the revenue from games they own directly), resulting in a total of $459M in revenue from the Epic Games Store. That’s a strong first year. As I wrote about in December of 2018, this is a hedge to the single-game title risk they have with Fortnite. It’s working.
For context, in 2017, Steam reportedly did $4.3B in revenue yet game developers in 2019 are saying they are seeing their revenues dip quite a bit via this channel.
I also found the above chart around their player base quite interesting. As a North Carolina based company, only 17% of their active player base is in the United States. I thought it would have been much higher.
Also, Europe is where 36% of their player base is located. One market that is expanding incredibly quickly is Brazil, as evidenced by the Epic Store’s player base, League of Legends franchising developments, and plenty of innovative startups emerging from Brazil lately.
The Game Developers Conference has released the results of the 8th annual State of the Industry Survey. This survey highlights various trends in the industry ahead of their GDC 2020 conference in SF in March (we will be there). They surveyed almost 4,000 game developers for this report.
The above chart shows that 2019 was a year of net-expansion for the game development community. Note: only 10% said they contracted. This expansion is being fueled by a strong macro environment, an increasingly digital consumer, and the entrance of new corporate (endemic + non-endemic) and financial investment (i.e. PE, VC, FOs) in the video gaming industry.
Below, you’ll see a breakdown of the revenue by platform (PC, Mobile, Console, etc). As I looked at this chart, I noticed that PC and mobile are unsurprisingly still dominant in regards to revenue by platform. I then found myself looking at the far left column in each graph (i.e. what people are seeing the least revenue in), and the most insignificant platform is still console: Nintendo Switch (78%), Xbox One (72%), and PS4 (65%).
This is unlikely to change, but perhaps the new Xbox + PS5 will attract more developers to their ecosystems.