It’s not uncommon for many forms of entertainment to at some point explode in popularity at “peak” times. a few years ago we saw the rise in popularity of fictional book series, like The Twilight Saga or Fifty Shades. Like many books, movies and music, the video game industry has been shaken up by the internet over the last few years with a number of different styled games appealing to an old and new market, with the assistance of streaming services like Twitch or subscription services like Steam, for example. Sales at a number of stores, however have recently plummeted as more consumers download their games, and retailers like GameStop have struggled to adapt as customers switch their buying habits.
Judging by current statistics, revenue from PC games is expected to rise a total of 4 percent this year to $35.7 billion USD, from 2018, according to New Zoo. This growth offers a new opportunity for digital stores to generate a new form of income. Epic’s entry into the market, called the Epic Games Store, opened in December. To bolster its service, Epic has been courting game developers by committing a larger share of revenue. It offers exclusive access to hot sequels and lower prices to lure players.
While it’s not exactly a huge surprise, the public was still shocked to see that a majority of game developers who used Steam recently noted that it accounted for at least 75 percent of their revenue from sales of computer games, according to a survey released this year. Those sales generate crucial revenue for Steam’s owner, the game maker Valve Corporation. Steam was created in 2003 to sell Valve games, but its offerings were broadened to include third-party games. When a game is sold on Steam, Valve, in most cases, keeps 30 percent of all revenue the game generates.
“Stores extract an enormous portion of game industry profits and are ripe for disruption,” said Tim Sweeney, the chief executive of Epic in a recent interview.
“The goal is to build a long-term and presumably stable business with recurring revenue,” he said in an email, “instead of living under the pressure of constantly delivering hits and misses in the content business.”
Steam has faced other rivals, including stores from game developers like Blizzard Entertainment, Electronic Arts and Ubisoft, who can collect 100 percent of revenue when selling their own games on their own storefronts. Despite rising competition and complaints from small-game developers over revenue-sharing deals, Steam has managed to stay on top because of its powerful influence.
While many gaming companies are competitive in their own way, Epic has always stood out from the rest with their own advantages, including their larger scale financial status, emphasis on community building and access to the Chinese market give it a chance to successfully challenge the Steam subscription service head on, said Joost van Dreunen, the managing director of SuperData Research, a Nielsen company. It estimates that Fortnite: Battle Royale has generated at least $3.9 billion in revenue..
“They’re going to be this social platform where there are going to be cool games but you are also going to be hanging out with your friends,” Mr. Van Dreunen said. “It panders to a very different audience segment. Most likely Epic will be the more mainstream version of Steam.”