Epic’s New Game Store Poses Threat to Steam’s Dominance

During The Game Awards last week, Epic Games debuted a new digital marketplace that offers a favorable 88/12 percent revenue split to game creators. By opening a new marketplace, the company may be establishing a game store competitor to Valve’s Steam, which has dominated PC game distribution for over ten years. Epic chief executive Tim Sweeney has also pledged to better support creators. Although the store’s first list of games is small, it will be part of Epic Launcher, the software required to update and play “Fortnite.”

The Verge reports that, “there remains the distinct possibility that consumers don’t want to fragment their game libraries any further,” which means that “Steam remains dominant, and Epic’s store becomes just another less-popular alternative, like GOG or Green Man Gaming.” The need for a new store, it adds, is due to “the imminent platform war that’s been brewing for years,” which could result in changing “how millions of people buy and play games in the future, and how developers, in turn, make money from those sales.”

PC games are sold on Steam unless they come from a major publisher like EA or Ubisoft with their own stores or “a game console maker or a studio owned or paid by a game console maker like Microsoft or Sony.” Any losses from not selling on Steam is offset by the fact that a “larger company is paying the bills, and there might be a strategic business reason.”

With Steam’s dominance as a PC game middleman, Valve “is estimated to have made $4.3 billion in Steam revenue alone last year, not including its standard 30 percent cut on purchases of in-game content and expansions.” But the downside is that, “Valve has no control over the hardware people use, and in turn, no control over what software they use.”

That hasn’t been an issue thus far, and gamers appreciate Valve’s “loose restrictions and its generous refund policies.” But Epic arrives with its store just as things are beginning to change, “now applying pressure to Steam at a crucial moment for game distribution.” With a war chest of billions earned through “Fortnite,” Epic is “offering up more developer-friendly revenue splits.”

If the developer uses its Unreal Engine, “Epic will now give you back the 5 percent it typically takes of all game sales, in addition to letting you keep 88 percent of all sales through the Epic store.”

At the same time, Valve’s Steam “has begun to lose its sheen as the consumer-friendly, do-no-wrong marketplace … [with] high-profile controversies around games like ‘Hatred,’ a mass murder simulator that was pulled from the company’s Greenlight program only to be reinstated” and issues such as “rampant bigotry on game community boards, and mass review bombing of indie games deemed overly progressive by alt-right communities.”

As a result, “more developers [are] eager to sell their games elsewhere, and more consumers [are] interested in alternatives to Steam.”