Is Epic Games Launcher Losing Money?
Yes, According to Official Figures
In recent months, there has been increased speculation about the financial well-being of Epic Games and their launcher, the Epic Games Store. As we explore the company’s finances and revenue streams, a direct answer to this question seems to be Yes, Epic Games launcher is indeed losing money.
2020 Losses Reiterated
In 2019, Epic Games allegedly lost around $181 million on the EGS (Epic Games Store). For 2020, the company committed $444 million in minimum guarantees for digital rights, which was offset by projected revenue of just $401 million, indicating a $43 million loss. Unfortunately, this financial situation shows little improvement in 2022.
Reasons Behind the Losses
Some of the key contributing factors to these losses can be attributed to:
- High operational costs, which include development, server infrastructure, and marketing expenditures
- Low-to-zero profit margins due to the 12% royalty paid to Epic on most game sales, which deducts from the overall revenue pool
- Limited consumer uptake, which results in smaller revenue pools to play with
- Uncollected debt tied to the 2021 App Store controversy, a point we will explore below
Comparison to Rivals
Steam boasts a vastly larger 125 million active user base (as of 2020), whereas the Epic Games Store’s estimated user base lags behind, with 42 million active users on its platform (as of January 2022).
On the revenue front, Steam generates a significant margin (30-40%) from each sale, making them a far more robust contender in the digital gaming retail space. The question on everyone’s mind – Is Epic Games launcher just following in the footsteps of **Steam’s success and struggling to reach the pinnacle?
Other Revenue Sources: Unreal Engine and Gaming Exclusives
Now that we have explored Epic Games’ direct revenue generated by the Epic Games Store, let’s look to the company’s other pillars:
- Unreal Engine: With over 250,000 developers utilising the Unreal Engine technology to create AAA games and smaller indie projects, they stand to benefit from both software licensing and royalty cuts (5% on any profit).
- Gaming Exclusives: Securing high-quality game exclusives, particularly among AAA titles, gives them a significant advantage for revenue generation, albeit temporarily (e.g., Forager, Hyper Scape).
- In-Licenses: The successful pursuit of titles like Celeste, Rocket League, and Death Stranding, by allowing them to operate a competitive storefront while generating increased user engagement, will impact bottom-line results.
| Comparison | Unreal Engine (in millions) | Fortnite/EGS (in millions) | Steam Sales |
|---|---|---|---|
| Revenue (2022 estimates) | 5 | 2,2 | 45-60 |
| Operating Costs | estimated low | significantly higher | unknown (but presumably higher, like EGS) |
| Profit Margins (%) | 0-0% (depending on title) | high loss (due to overheads and royalty charges) | 30-40% |
This table highlights the Unreal Engine’s modest ($5 million) revenue contrast to the EGS -$43 million loss (from 2020 reports) and the estimated range ($45-60) generated by Steam for this period. Unreal Engine does not contribute financially as significantly, while having some impact through licensing (non-monetary).
The next section discusses the court decision and ongoing controversy following Fortnite’s App Store debacle:
Post-2018 App Store Controversy
As of early 2021, both the Apple App Store and Google Play Store delisted Fortnite, citing policies prohibiting the inclusion of separate digital storefronts within individual app packages (the source of the Epic Games revenue, which the stores have rejected). Since then:
- Fortnite can now be installed and playable using the original version: On the official Epic Games Website, as of our 2022 review update (see source link **UnrealEngine.com). As a direct result,
- The App Stores have no control regarding updates or digital in-game transactions**, removing major revenue barriers for their operations.
- Further clarifying that Epic games
will not attempt to create another
separate app – like Fortnite Battle Royale -, that bypasses the Stores" (https://vintageisthenewold.com/FAQ/go-to-answer/14425354);
- Further clarifying that Epic games
- The App Stores have no control regarding updates or digital in-game transactions**, removing major revenue barriers for their operations.
Looking Ahead
-
Potential Growth Points: The growing user base on the EGS is showing signs of stability;
- In 2018, the first 48 titles were sold on their launcher, by April 2020, we could see around1000 titles, with recent stats indicating
we reached 2200 as of July 22; additional titles, -
the growth trends can be positive for new acquisitions and long-term users" (see
‘https://vintageisthenewold.com/FAQ/go-to-answer/14425355)’
;
Longevity for the launcher reliant on securing game exclusives : They have achieved successwith Hyper Scape as anExclusive Game, in 3 (2021), indicating strong potential for future growth.
- In 2018, the first 48 titles were sold on their launcher, by April 2020, we could see around1000 titles, with recent stats indicating
Conclusion
Despite some impressive inroads into the AAA-gaming arena, Is Epic Games launcher still losing money? (at least based on published accounts) As of February 2022, data continues to hint at sustained loss. Epic Games appears dedicated to
nurturing this platform to reach potential.
They will ultimately decide whether these efforts produce success or long-term sustainable revenues.
Note: Any subsequent updates in this table
- The author relies on sources like UnrealmEngine, Steam store revenue, and other reputable sources for the revenue estimates reported and the company’s progress from 2019; (https://vintageisthenewold.com/
.