"So no regrets, though it’s been terribly costly."
Epic Games has for several years now been engaged in a legal war with Apple and Google, centered around the closed ecosystems of iOS and Android: Where developers have no choice but to pay a 30% store fee on all revenue. The massive success of Fortnite seems to have brought this into sharp relief for Epic and CEO Tim Sweeney, who argue that it should be able to distribute its games on these ecosystems without paying just under a third of its profits to the gatekeepers.
So far it’s spent an awful lot of money but had mixed results, with Fortnite still unavailable for iOS in the US. Epic has reached a stage where the Epic Games Store is available on Android worldwide and on iOS in the European Union, and it’s now taking the next step of distributing games through that storefront (it takes a 12% cut of payments it processes, but 0% of payments the developer processes themselves). As part of this Epic is swallowing the cost of Apple’s Core Technology Fee, which it calls “illegal”, for participating developers.
This is a step forward, of course, but it’s not any kind of long-term solution: The vast majority of customers are always going to prefer the direct convenience of the App Store or Play Store. Epic’s fighting an uphill battle to even get developers to use the EGS on mobile, but that in itself will no doubt be part of its ongoing legal arguments with the platform-holders.
As part of the launch Tim Sweeney has been on the interview circuit, telling IGN that the company has invested over $1 billion in the EGS so far (this figure is presumably for the whole thing, not just the mobile launch). That’s silly money but Epic, thanks to the industry-leading Unreal Engine and the ongoing success of Fortnite, has the means to do it: And more than anything else, Tim Sweeney is up for this fight in a major way.
“I think we might run into serious financial problems after a couple more decades of this,” Sweeney told IGN. “But we’re determined to fight this out. I expect large parts of this struggle will go on throughout the rest of this decade and we’re fully committed to going through it and investing to break through.”
Sweeney characterises the legal fight as “an investment in Epic’s future” and part of a continuum in how the company’s changed with the times. “If you look at Epic’s history, we’ve always aimed big and we’ve always grown prudently,” says Sweeney. “Our first big 3D game in the era of Doom and Quake was the first Unreal game in 1998. And that sold two million copies. It was pretty cool! And we made Gears of War and expanded to console, and that sold six million copies.
“And we decided to become an online game developer, and it took years to figure out how to do that, with years without growth. But we figured it out eventually with Fortnite in 2017 and now we’re a company with billions of dollars of revenue a year and thousands of employees and an opportunity of the sort that we’ve never had before.”
It does help, when you’re in a fight like this, to have a Fortnite reliably bringing in the big bucks. Interestingly enough Sweeney’s rowing back a little from a certain buzzword beginning with “m”, even if he still thinks the idea has merit.
“Some people call it the Metaverse and some people call it just games, but it is real,” says Sweeney. “And you find hundreds of millions of players who are highly engaged in immersive 3D games together with their friends. And we think that if we are successful with this, then someday there will be billions of users of this kind of game. And we think we’re in an awesome position to be a leading company or perhaps the leading company in that world if the shackles are removed that prevent us and all developers from actually competing on our own and becoming first class companies in the industry.”
I’m not going to lie, it is a little hard to agree with the idea of “shackles” on Epic, though Sweeney persists with the metaphor and says no trillion-dollar company “is a vassal in another company’s ecosystem.” His real anger is what he sees as Apple and Google just sitting back, doing nothing, and creaming off as much profit as they can.
“You’re either a company that has a direct relationship with customers and freedom to do business with them directly, or you’re behind Apple and Google’s paywall and you do not have that chance and you cannot grow and most of the profit your business produces will go to Apple and Google who will use it for fuck all… share buybacks and dividends rather than investment in hiring and innovating and building technology and making the world a better place.”
The Sweenster estimates that the battle against Apple and Google has cost Epic, quite outside of the legal fees, “a billion dollars of revenue, perhaps several billion… But I felt very firmly that the proper way to challenge them was to demonstrate to the world the real effects of their policies because Apple… Apple does a good job of hiding it. They don’t let developers tell users that they’re paying 30% of their fee for nothing or their purchase price is going to Apple for nothing, and it’s not widely known.”
The regulators are now looking at these closed markets, and the Epic CEO says “we view our company’s aims on the scale of decades. We’ve been in business for 33 years now, which is a pretty long time for a tech company, especially a game developer. There were a lot of game developers in 1991, not many of them are around now.
“But we think our best days are ahead and we think our best days can only be achieved when we have true freedom and we believe the best way to get to that freedom is to go all in and fighting for access rather than arguing about money as Apple is trying to encourage all other developers to do.”
There’s a great bit in the film adaptation of Master & Commander where well-known Englishman Russell Crowe bellows out to his sailors “do ya wanna see a guillotine in Piccadilly? D’you want your children to sing Les Marseillaise?” Back to Sweeney:
“Do you want your kids to grow up in a market where Apple and Google extract all the profit from all digital businesses and control access to all the information? It’s not a good world, just like FYI. So no regrets, though it’s been terribly costly. We’re really looking at our future opportunity and future value rather than the opportunity that we missed by fighting Apple and Google this way.”
Epic has plans to bring EGS to mobile in markets where it’s not currently available and keep fighting the good fight. It is easy to be sniffy about various billion-dollar companies going at one another, and I’m certainly guilty of making more than a few jokes about it, but this is one of the great fights of our industry’s age and, if Epic doesn’t fight it, it’s hard to see who else will.
Is it self-interested? Of course it is and Tim Sweeney would admit that. But the potential is there for this to fundamentally change the games marketplace for every developer and, Epic would say, inarguably for the better. This fight has been going on for five years, and it feels like it’s just warming up. It is safe to say that Epic is not short of cash: But nor is it short of purpose.
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