More than six years ago, Epic Games began its campaign to challenge Steam’s 30 percent revenue cut for developers, opting for a significantly lower 12 percent fee on sales through the Epic Games Store. Starting in June, Epic will further lower its fees to zero for the first $1 million in annual sales of each individual game.
The updated revenue structure, announced recently, is set to be implemented on a “per app” basis, meaning that after surpassing the $1 million mark in annual sales, a typical 12 percent fee will be reinstated for those apps.
This move is not the first time Epic has aimed to alleviate the financial burden on smaller developers. In 2011, the company waived royalty payments for the first $50,000 in sales from projects developed using the newly available Unreal Development Kit. By 2020, this royalty-free threshold was expanded to encompass the first $1 million in lifetime sales for projects using Unreal Engine.
Supporting Smaller Developers
Epic’s strategy targets lower-tier game developers, contrasting sharply with Valve’s fee arrangement for Steam. In 2018, Valve reduced its standard 30 percent revenue cut to 25 percent, but only for a game’s total earnings exceeding $10 million. A further reduction to 20 percent is applicable once a game surpasses $50 million in lifetime sales.
Epic Games CEO Tim Sweeney expressed strong criticism of Valve’s approach shortly after its announcement, highlighting perceived inequities. In a 2018 email revealed during Epic’s legal dispute with Apple, Sweeney stated, “Right now, you assholes are telling the world that the strong and powerful get special terms, while 30% is for the little people. Why not give ALL developers a better deal?”
The initial years for the Epic Games Store were marked by a selective approach to product offerings, focusing on well-known developers and exclusive titles to draw consumers. However, in 2023, Epic officially opened the store for self-publishing, allowing a substantial influx of smaller titles, including games like Fell in Love with Coser 4 and Vacation Adventures: Park Ranger 17 Collectors Edition.
The new fee structure will likely lead to a reduction in revenue for Epic, which has historically invested heavily in the Epic Games Store to capture market share in the competitive environment of PC game distribution. While the store attracted over $1 billion in customer spending in 2024, it still pales in comparison to Steam’s reported $10.8 billion in total customer expenditure for the same year.
This results may be somewhat disheartening for Epic, especially considering the company’s initial aspirations of achieving a 35 to 50 percent share of the PC gaming market by 2024.
