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Epic Games has admitted that its digital storefront still isn’t profitable after launching five years ago.
As The Verge reports, during the first day of the Epic vs. Google court case on November 6, Epic Games Store boss Steve Allison said on the witness stand that the digital PC store isn’t profitable despite its debut in December 2018 but said that the company’s “goal” is still “growth”.
It was reported that emails revealed during the Epic vs. Apple trial in 2021 suggested the company was hoping to claim half of all PC gaming revenue. Epic CEO Tim Sweeney even tweeted at the time that losing over $300 million on the store was a “fantastic success in reaching gamers with great games and a fantastic investment into growing the business!”
During this same trial, the company also said that the Epic Games Store would start turning a profit in 2023, which we now know hasn’t come to fruition.
Epic Games spends millions to give away free games every single week – which is meant as a fairer profit split between the developers and publisher – and an ongoing campaign that doesn’t appear to be slowing down any time soon, even though the Fortnite company doesn’t pay for each copy given away.
The Epic vs. Google case comes after Epic sued Google in 2020 after a fight over in-app purchase fees when it claimed that the Google Play Store constituted an unlawful monopoly.
Epic’s scheme of spending too much money to turn a profit has affected its workforce too as it recently laid off around 830 employees – 16% of its workforce – with Sweeney saying that it “concluded that layoffs are the only way.”
“For a while now, we’ve been spending way more money than we earn, investing in the next evolution of Epic and growing Fortnite as a metaverse-inspired ecosystem for creators,” Sweeney wrote in a statement. “I had long been optimistic that we could power through this transition without layoffs, but, in retrospect, I see that this was unrealistic.
“While Fortnite is starting to grow again, the growth is driven primarily by creator content with significant revenue sharing, and this is a lower margin business than we had when Fortnite Battle Royale took off and began funding our expansion.
“Success with the creator ecosystem is a great achievement, but it means a major structural change to our economics.”
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