The Epic Store: An Epic Blunder or An Unreal Opportunity?

15/12/2018 in News

It’s always interesting to me when a major industry player makes a bold move into a new space. Seeing game engine powerhouse and creator of the biggest game on the planet, Epic Games, make a push into also being a shop that you can buy games from is a fascinating turn of events, with potential to make large waves throughout the industry. They’re making some good decisions, and certainly their revenue split of 88:12 in favour of developers grabbed industry attention and headlines alike, but I have some significant reservations about how exactly Epic are implementing the strategy for the Epic Store. I thought I’d outline my views here, with hope that perhaps they can improve their offering in a manner that will result in better serving consumers, and a healthier industry for all involved parties.

Curiously, in the immediate run up to Epic relaunching their store, Valve took to their Steamworks Development blog to announce a new revenue share arrangement for games sold on Steam. Valve have never publicly announced their revenue share prior to this blog post. I was somewhat taken aback by how low key this announcement was. Publicly discussing this element of their internal operation represents a radical departure from how they have previously conducted business, and how secretive they have been regarding these subjects. It wasn’t accompanied by a press release, or any kind of media push or fanfare. Given that the number of publishers that will actually be impacted by these changes is probably just in double figures, it’s not entirely clear who the intended audience for this announcement was, since it likely won’t apply to anyone but the largest publishers. They could have just as easily got this information out there with an email round to the relevant individuals at the minority of publishers on Steam who would qualify for these new rates. The flat rate 70:30 split was obviously an open secret for those in the know, and is directly in line with the industry standard across the likes of PSN, Xbox Live, Nintendo eShop, iOS App Store and Google Play.

Perhaps this new deal was deliberately intended to preempt Epic’s new push for their store, or perhaps the specific timing is entirely coincidental, but either way this decision did not occur in a vacuum. There’s been an increasing push from multiple larger publishers to pull away from Steam. EA, Activision Blizzard and seemingly now Bethesda, have already left Steam either entirely or mostly for their major new releases. Ubisoft and Rockstar continue to grow their efforts for selling their PC games outside of Steam. Discord, Twitch and others have made efforts towards launching their own stores, albeit not particularly successful efforts so far. Humble have been bought by IGN, and have been making moves to flex their corporate connections to bolster their offering. I don’t think it was accidental that coinciding with the announcement of the change in revenue split, Valve have also granted devs more freedom to announce their sales figures. Developers releasing sales figures highlighting to what extent Valve represents the largest store on PC certainly works in Valve’s favour.

This all as Valve, whilst still making progress in some key areas, have been to some extent asleep at the wheel in other areas. There’s the absurd situation where Valve think it is appealing to customers, on the front page for the various sales that they organise, to have a button that says “Click to see all 8,472 titles currently on sale”. I’m pathological about browsing sales for the best deals, and I know I certainly can’t be bothered to scroll through a list of 8,472 games. Steam search is extremely basic, and lacking in robust advanced search controls that make it easier to find exactly what you’re looking for. Valve have offloaded much of their storefront organisation to their community curators and to developers/publishers themselves, resulting in (in my view) the shortcoming of there being little to no editorial voice in how the store is presented. Are the games pushed to the top good? I don’t know, but Valve have some data to say that players matching my profile are more likely to buy them. I think this metrics driven approach is partly valid, but I think it should be in support of, rather than a replacement for, Valve making subjective editorial declarations.

There’s been plenty of chatter from some indie developers not happy that their games are having to increasingly compete with other games. In some instances, this seems to me like it’s successful developers wanting to pull up the ladder behind them. In others it’s developers with bad/uninteresting games and/or ineffectively marketed games, who think that Valve should bestow success on them over other devs because of “reasons”. I do think there’s plenty Valve could be doing to improve discoverability/search, and improve how they present their storefront. Whilst broadly speaking Steam is a meritocracy, it’s far from a perfect meritocracy.

"Should Valve give indie devs preferential treatment?",
"No. Unless it's me"

— Lewie Procter (@LewieP) August 31, 2015

So far Epic’s strategy for dealing with the Gordian Knot of curation/visibility/eyeball management is to reject 99% of games and focus on ‘the 1%’. The only games currently on the store are extremely safe bets. Sequels to successful games, developers with a proven track record and marketable products, indie games with significant development and marketing budgets, often backed by publishers, including one that had an actual documentary made about making their prior game. This makes sense, given that it’s not yet a mature platform, but as their lineup expands, and as they begin to establish their criteria for which games get accepted and which (if any) get rejected, they’re going to need a real solution to this problem. If they want to keep a clean front page with their customers attention divvied up between a small number of high quality games, it begs the question of what fate will fall upon those games not granted this privilege?

If you wind the clocks back a decade or so, indie games being able to secure a Steam release was practically a ticket to success. This is no longer the case. This is not a failing of Steam, it is Steam becoming democratised. Whereas Valve, too, used to reject 99% of games, and only allow those which were good/interesting and/or most effectively marketed to release on Steam, now the vast majority of games are accepted rather than rejected, and a game’s success or failure is simply determined by how good/interesting and/or effectively marketed it is (with a positive/negative multiplier effect for luck/privilege).

By going to the 1% of indie developers, Epic have done nothing to solve curation/discovery etc. Perhaps they have a robust plan going forward, but looking at the store front page today, I’m curious to see how it will look with a larger library. Any discussion suggesting that Epic have solved problems related to these issues in any scalable manner are premature at best and disingenuous at worst.

Then there’s the significant question of revenue split. At first glance the 88:12 proposed by Epic seems like a power move. A bold statement that they are going to take a far smaller slice of the pie, and let developers keep more of what customers spend on their games. In truth, I think this needs to be scrutinised with a bit more nuance.

Some of the statements of developers who have signed as exclusive suggested that it was for this revenue share that they decided to make a deal with Epic, but this is clearly pretty inaccurate. 88:12 is certainly a better split than 70:30, but even still Epic was only able to get these games as exclusives because the revenue share for these devs is actually:

88 + [undisclosed payment in exchange for exclusivity]:12

Were the change in standard revenue split enough to entice developers alone, it seems to me that Epic would not also need to be offering upfront payment. It’s not clear if all games that are exclusive are receiving payment in exchange for this exclusivity, but Coffee Stain have confirmed that they have. I’m not sure if this is something that will be offered to all developers, or just a minority that Epic are actively courting.

I question what exactly the motives are behind these developers signing with some degree of exclusivity. Do they really have such a strong objection to the 70:30 revenue split at an ideological level? As far as I can tell, most of these developers don’t seem to have a problem with the exact same revenue split on Sony/Microsoft/Nintendo/Apple/Google platforms. Were the tyranny of the 70:30 split so objectionable, why on earth are these developers also releasing on other digital storefronts with the same revenue split? What’s the basis for arguments that Valve do nothing to earn their cut, but Sony, Microsoft, Nintendo, Apple and Google do? It reads to me less that they have a policy of objecting to a 70:30 split, and more that they have a policy of accepting big bags of money from a retailer that simply asks for some degree of exclusivity in return. There’s nothing inherently wrong with such a policy, these are businesses made up of people that need food on the table and roofs over their heads, but framing it as a decision rooted in sticking up for developers as a whole, and holding Valve accountable, seems disingenuous to me. Maybe it’s both, but I’m inclined to think that the payment in exchange for exclusivity is the bigger factor. Broadly speaking, I’d say that if Valve were in fact not earning their cut, I don’t think you’d need to pay developers to not release their game on Steam.

I’d also say that it’s reductionist to say that the Steam cut is 70:30. Valve are also perfectly happy to let developers have (effectively) unlimited key generation to do as they please with. Developers can sell Steam keys directly to customers, keeping 100% of the proceeds from sales. Developers are also free to sell Steam keys via one of many stores offering more favourable revenue splits. Indie bundles, Humble Store, Itch.io and many other digital retailers sell Steam keys, from which Valve don’t see a penny of revenue. Depending on how actively a developer pursues these options relying on the Steam backend, but entirely outside of the Steam store, the revenue split could be far more favourable. The comparison between 88:12 and 70:30 is not a direct comparison unless it also takes into account these types of sales, or until Epic commit to also allowing developers (effectively) unlimited key generation for this same purpose.

Ultimately though, it’s not the proposition for developers that’s giving me the most unease. It’s the proposition for customers. The three year old Epic store/launcher is remarkably barebones. Comparing directly with Steam, there’s a significant list of missing features, some basic and some more advanced. By releasing exclusively on Epic launcher, these developers are denying their customers access to Steam features such as cloud saves, system-wide controller integration, big picture mode, native Linux support, Proton integration for running Windows games on Linux, family account sharing, robust regional pricing, tech support forums, universal user reviews, information regarding language support on store pages, automated refunds.

The last one particularly stands out to me. On Steam, users get unlimited refunds processed automatically as long as they meet the reasonable requirements of having bought the game in the last two weeks, and having played it for less than two hours. Epic say that “We will offer two no-questions-asked refunds per player within two weeks of purchase”, this has been clarified to mean that each customer is allowed to get a refund twice a year. Who knows why only two, but I guess cross your fingers that you don’t have any problems with any games you buy from Epic Store if you’ve used up your refunds. One of their flagship launch games, Ashen, launched with non-functional multiplayer on PC, and they were still selling it with no warnings whatsoever on the store page that these problems were present. No user reviews, no forums detailing technical problems, and yet customers requesting a refund for games that do not function as advertised like this best just hope that it doesn’t happen more than twice a year. I’m no legal expert, but on the surface this seems to go counter to EU consumer law. Particularly irritating is that in the process of researching for this article, I’ve had to pull information that Epic have exclusively posted on Reddit. If the reason for no user forums on Epic store is to avoid the negative discourse that can thrive in these kind of spaces, why on earth is some information being exclusively posted on Reddit, a space that Epic have zero control on moderation over.

Perhaps it’s no wonder that Epic’s games such as Paragon and their Unreal Tournament reboot failed to find an audience on Epic’s store, and why even after giving Shadow Complex Remastered away for free on Epic launcher, it still went on to find a healthy audience as a full priced release on Steam. Clearly Fortnite is lightning in a bottle, but it’s curious that Epic haven’t revealed just how many of those 200m active users are operating on a platform that Epic can even sell games (ie ruling out people playing Fortnite on PS4/Xbox One/Switch/iOS) and how many of them have even entered any payment details (user accounts with no intention of spending any money are not especially relevant to people selling games on Epic store).

Maybe they’ll develop their service to match these features and functionality, maybe they won’t, but as of today, they are not competitive with Steam, and I wonder if their calculation that 12% is the right cut of sales for them to take will allow for budget to implement a featureset that competes with what Valve offers, and will they offer users features that appeal to them going forward, or will their focus remain on simply using all that Fortnite money to pay developers to not release their games on Steam.

By paying developers to get a monopoly on distribution of the Windows version of their games, Epic are specifically not wanting to compete with Steam, and are depriving players of a choice where to buy these games from. I’d be much happier for them to compete with Steam by offering a better service to users, but as of right now that’s not an approach that Epic seem to be taking, focusing only on giving developers what they want. Of course it’s worth listening to developers, but I think it should be balanced by listening to customers. It’s rather telling to me that in their own FAQ discussing the decision to launch exclusively on the Epic Store, the developers of Rebel Galaxy Outlaw best effort to explain how it is good for their customers amounts to “We will get more money from every sale, we can spam you more easily”. Seems to me that users don’t directly get any benefit from developers having a larger share of revenue, especially when it comes at the expense of a great many useful platform features. As for Epic by default handing over email addresses to developers, if users wanted developers to have their email address I’m sure they’d be able to manually sign up for a newsletter. I think this apparent disregard of GDPR (which requires marketing emails to be opt in, rather than opt out) plus Epic’s 40% ownership by Tencent, might raise some serious questions about what is going to happen to user data from Epic Store, especially given Tencent’s close ties with the Chinese government.

PC gamers don’t forget. Whilst Epic were busy saying that there’s no money in PC gaming, PC gamers were a bunch of pirates, and “maybe Facebook will save PC gaming”, Valve were busy building the first viable large scale ecosystem for digital games on PC. It wasn’t Facebook that saved PC gaming, it was Valve. PC gamers remember how things were before Steam. Whilst Valve are to some extent a dictator ruling over PC gaming, it’s my view (and clearly a sizable portion of consumers in the space’s view) that they are a benevolent dictator. There’s a great many ways in which they could exploit their dominant market position, through monopolistic methods, but they opt not to. I’m very happy to see competition for market share from industry rivals, but I’d be far happier to see that competition take the form of competing to offer the best features and services for users, which so far is not the approach Epic seem to be taking at all. Whilst Valve are far from perfect, and I’d love to see them make interesting games again, the huge volume of consumer goodwill they have earned has been earned through doing right by their customers, and I feel that simply buying exclusivity rather than seeking to generate similar consumer goodwill is a shortcut to market share that has a net negative on the industry.

I hope Steam improves, and maybe this pressure is an incentive for them to do so, but I hope Epic in future seek to compete with Steam’s pro-user approach, rather than specifically avoiding competing by paying developers to not release their games on Steam. I think Epic store is going to struggle to find success with their current strategy of designing a store around their needs, and around developers needs, without having any meaningful answer to the question: What is in it for customers?