Epic has sunk $500 million into the Epic Games store, and doesn’t expect to turn a profit until 2027

[ad_1]

Various documents have come out of the ongoing Apple vs Epic legal case in California, and here’s a full summary of the gist of Apple’s (very decent) defense. As part of this, Apple’s lawyers implemented what one could only call a car drive in the Epic Games Store, which Epic’s lawyers were claiming was comparable to the App Store.

“The Epic Games Store is unprofitable and cannot be compared to the App Store,” the lawyers began, somewhat frankly, “and it will not be profitable for at least several years, if at all.” Ouch!

But what’s interesting is that Apple’s legal vultures continue to analyze how unprofitable the Epic Games Store is. “Epic lost about $181 million in EGS in 2019. Epic is expected to lose about $273 million in EGS in 2020. In fact, Epic has set aside a minimum of $444 million in warranties for 2020 alone, while it forecast, even with growth.” Big “, only $401 million in that year. Epic acknowledges that this trend will continue in the near future: Epic projects will lose about $139 million in 2021.”

If we take the lower numbers, this adds up to an investment in Epic’s portion of $493 million since 2019, and Epic itself has admitted that “non-refundable costs” will be at least $330 million. At best, Epic does not expect EGS to generate cumulative gross profit before 2027.

Of course all of this has to be taken in the context of what Epic is trying to do with the Epic Games Store, and the fact that Epic is a very profitable company in other respects: it can afford these staggering sums as an investment in the future, and if it all works out, the Epic Games Store will be a player A major player in game distribution and very profitable.

Part of Epic’s case against Apple is that it wants the ability to own the Epic Games Store on iOS, and another reason it keeps raising the store’s level is because the Epic’s commission rate in the Store is 12%. This is precisely countered by the observation that iOS and the Epic Games Store are two very different things: “While Epic’s commission is lower than Apple’s, it doesn’t offer all the services that Apple does. EGS is essentially a storefront — lacking To the integrated features that make the App Store a desirable platform for consumers and developers.”

Apple ends by noting that Epic’s basis for claiming exceptional behavior from Apple is that the iOS Store was not designed to host other stores. Which of course means it was. “Epic’s claims are thus based on the idea that Apple’s design and implementation of its intellectual property could constitute exclusionary behavior. This theory fails as a matter of law.”

The Epic Games Store seems to inspire some, sure, but it’s actually not bad these days: and it’s hard to argue with the ongoing free games, which are undoubtedly a huge component of this sunk cost (only one of them made a profit, it seems). Either way, you can say one thing about this billion: Epic can handle it.

[ad_2]