Store Wars

While we are all staying at home, hiding from the Coronavirus, The gaming industry is thriving, as we talked about in the last blog post: The Corona Games. The enormous profits from selling games don’t go quietly by the major companies, and a grand war is happening right before our eyes.

The company Valve was the pioneer of digital gaming distribution when creating the most extensive digital store for video games named Steam. Steam is charging 30% of every transaction within the store, and while the financial data isn’t revealed, it is estimated to millions of revenue every year.

Epic Games Store challenges Steam Store

Steam was the main store in the industry for an extended period. But in 2019, a new player entered the arena, Epic Games Store, by Epic Games. The company that made a fortune in the past years from the popular game Fortnite. Epic Games decided to open a direct front with the Steam store and rival it using its tremendous income from the Fortnite game. Epic Games opened a game store with free game giveaways that lasted the whole year. Epic promised better terms for developers that would offer their games in the new store exclusively. That divided the gaming community into two groups: those who favored the competition and thought that Epic Games play hardball against the monopoly of Steam, and those who believed that Epic Games Store is playing unfair by forcing developers out of the Steam platform. Epic’s success is debatable, and we discussed it in an earlier post. One of the most considerable achievements in the Epic Store is the fact that all of Fortnite players had to register to the store. That boosted the initially registered numbers and created engagement in the store.

Epic Games Store and Steam Store facing a new front

On another front, Steam found itself struggling with new models that might change the way consumers buy games. Unique services, such as subscription services are getting popular. Microsoft’s Xbox Game Pass offers unlimited access to hundreds of games for the mere price of $5 a month, 10% of a new game. The popularity of these services grows bigger every day, and Microsoft reported 10 million subscribers in the first quarter of 2020.

Meanwhile, Google opened the half-baked streaming service of Stadia that offers online game streaming and will provide a cooperation with Ubisoft on a subscription model in addition to the Streaming subscription. But Google is not alone, Geforce Now, PlayStation Now are all offering online gaming and subscription services, and there are more on the way. Many companies are looking into subscription services and online streaming. These services might make an online video game store obsolete, and Steam had to make a move.

Epic and Steam fight back

In 2019, Steam joined forces with Electronic Arts (EA), one of the biggest publishers nowadays. Electronic Arts owns many popular labels such as Star Wars, FIFA, Madden NFL, Battlefront, and Battlefield. But most importantly, EA had the most significant rival to Fortnite, the game Apex Legends. In addition to that, EA has a mildly active subscription service and started working on a cloud streaming gaming platform along with its game engine “Frostbite.” Electronic Arts, on the other hand, could benefit significantly from the massive player base of Steam and the frequent visits. This year, Epic Games made another move towards its store and opened a publishing company that will focus on Indie Games. The publisher will help Epic Games challenge Steam once more by offering exclusive deals to developers. The offer of Epic Games is pretty sweet.

• Full creative freedom and ownership. Developers retain 100% of all intellectual property and complete creative control of their work.
• Fully-funded projects. Epic Games Publishing will cover up to 100% of development costs, from developer salaries to go-to-market expenses such as QA, localization, marketing, and all publishing costs.
• 50/50 profit sharing. Developers earn a fair share for their work — once costs are recouped, developers earn at least 50% of all profits.

This offer should drive developers into Epic Games Store and threaten Steam once more. The publisher joined forces with gen DESIGN (The Last Guardian), Playdead (Inside, Limbo), and Remedy Entertainment (Control).

Steam has a problem with being a vast store with many titles and therefore suffering from lack of spotlight on Indie games. For that, they released statistics that show how beneficial they are for Indie Studio developers. In the meantime, Electronic Arts declared a collaboration with Google Stadia to register her games on the platform.

What the future holds for Epic and Steam?

As it looks like, this war is far from ending. There is a lot of money involved, and many companies are relying on this industry to provide a distribution channel for them. But the definite winner of this new rivalry is the consumer. The competition pulls the most massive guns by the distributors and forces them to work towards the gamers. The rise in demand for gaming products and services makes the players come out with the upper hand. Epic Games have a lot to improve with their lack of features in the store, and Steam must be more flexible towards developers. These companies have a lot of room for improvement, and they are not the only ones. GOG and Humble Bundle also play in the Gaming store business. But the consumers are the biggest winners from this competition, and we will see what the future holds for the industry and if the Game Stores will still survive the shift in the business.