Epic Games was in court today on the first day of an antitrust lawsuit against Google. According to reporting from The Verge, Epic Games Store boss Steve Allison was on the witness stand during today's proceedings, where he made the surprising claim that the PC gaming platform still isn't profitable. The Epic Games Store launched back in 2018, and Epic Games has made several aggressive moves to compete with Steam; these include weekly free games, exclusivity deals, and a higher percentage of profits given to developers. Despite more than a half decade without profit, the goal for Epic Games is still "growth."
Epic Games Store Losses
It's unclear when Epic Games hopes to begin making a profit on the Epic Games Store, but Allison's admission is particularly notable given recent events at the company. Back in September, Epic Games announced that it had laid off 16% of its staff, with more than 800 employees losing their jobs. The layoffs were met with surprise by many in the gaming industry, given the continued success of Fortnite. Pundits attributed the layoffs to the decision making of CEO Tim Sweeney, noting several ways Epic has been losing money over the last few years. In particular, Giant Bomb's Jeff Grubb called out the company's "unwinnable war on Steam" as one potential reason behind the layoffs. Knowing now that the Epic Games Store still isn't making a profit, Grubb's theory would seem to be even more plausible than it was before.
The Epic Games Store's "free games" represent a significant
investment for the company each year. Epic does not pay for each individual game given out, instead negotiating a set fee with developers. During the Epic v Apple lawsuit, it was revealed that $330 million was spent in 2020 between free games given away on the Epic Games Store, as well as on exclusivity deals. The success of Fortnite helped offset those costs, but things might be starting to catch up with the company. Of course, the legal battles with Apple and Google have also been blamed for Epic's recent layoffs, with Forbes' Paul Tassi wondering "how much Epic has spent on Tim Sweeney's endless crusade against Apple."
Epic v Google
It remains to be seen whether Epic's court battle against Google will prove any more successful than its case against Apple. Epic began a war with both companies in 2020, when a Fortnite update intentionally violated both Apple and Google's terms of service. As a result, Fortnite was subsequently removed from both the App Store and Google Play Store, resulting in legal action brought on by Epic Games. Epic mostly lost the lawsuit against Apple, but has continued to appeal. In fact, Sweeney's own blog post announcing the company's layoffs in September reiterated plans to keep up "the fight against Apple and Google distribution monopolies and taxes."
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