Epic Games Reveals Digital Distribution Costs
Epic Games studio CEO revealed the costs of digital distribution. His calculations show that a 12% margin is enough to make big money, and the industry standard 30% is exaggerated.
Thanks to the Epic Games Store, the revenue share of digital distribution stores has become one of the hottest topics. During the GDC 2019, Tim Sweeney, Epic Games CEO, revealed the costs of such platform.
According to Sweeney, 2.5-3.5% of the game's price goes to transaction fees, at least in countries with developed economies. Storing and uploading files takes 1%, as does customer service. In total, this makes up about 5.5%. The Epic Games Store takes 12% of the price of the game, so after deducting all costs, the company is left with 6.5% of what users have paid for the title.
For a game costing $60, Epic Games spends $3.3 on costs, keeps $3.9 for itself and $52.80 remains for the developer/publisher. Of course, many studios cooperate with publishers, in which case the distribution of the latter amount depends on the provisions of the contract agreed upon by both parties.
These calculations are very general, but they give a good overall idea of how much big a bill must Epic foot when selling games on its website. A 30% revenue share has so far been a standard in the industry. It can be found in Steam, App Store and Google Play, but as you can see, it could be cheaper. It is worth mentioning that Valve has already introduced some changes in this respect, although only the greatest titles can count on better conditions.
Currently, developers choose to make games available only (at least temporarily) on the Epic Games Store because the store owner pays them for it or gives them a revenue guarantee. Store managers realise that it is not possible to maintain such a system in the long run. Exclusive titles are to build a community of customers large enough for developers to want to release their games on the Epic Games Store just because of lower revenue share and not other financial incentives.
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