In context: It’s no secret that the Epic Games Store has been operating at a loss since its opening. Apple has taken advantage of this fact in court, suggesting that EGS may never see profitability. He claims that the store is nothing like the App Store and is unsustainable. Meanwhile, Epic continues to pour resources into its market, confident that it will have a very profitable distribution platform in just a couple of years.
We are approaching the one-year mark since Epic began its antitrust legal battle with Apple by bidding it and other companies to operate independent stores on iOS. In the latest round of legal disputes, Apple’s defense attorneys went on the offensive by attacking the Epic Games Store (EGS), saying it is not “profitable.”
“The Epic Games Store is not profitable and it is not comparable to the App Store,” the Cupertino legal team told the court. “And it won’t be profitable for at least several years, if ever.”
As harsh as the statement sounds, it is not without merit. The Epic Games Store reported $ 454 million in losses in the past two years and doesn’t expect to make a profit until 2023. In 2019, it lost $ 181 million, then another $ 273 million the following year.
“Epic committed $ 444 million in minimum guarantees for 2020 alone, while projecting, even with ‘significant’ growth, only $ 401 million in revenue for that year,” Apple’s lawyers maintain. “Epic recognizes that the trend will continue for the foreseeable future: Epic projects to lose about $ 139 million in 2021.”
The defense team also posits that, given the store’s “unrecovered costs,” it does not believe EGS will see an accumulated gross profit until at least 2027, four years longer than Epic estimated. Epic argues that even with its lower 12 percent share of sales, it is enough to cover EGS’s operating costs, increasing its profitability much sooner than Apple claims.
Additionally, Epic appears to be full of capital, thanks in large part to Fortnite. He has not hesitated to invest money in timed exclusivity deals to make the store more attractive to consumers. He only spent $ 10.5 million to make Remedy’s Control an EGS timed exclusive. It has also offered numerous free gifts since its opening, adding to the store’s losses. Epic is clearly not afraid to spend money on the bet that it will eventually make big profits.