Epic Games have been working to carve out a larger space for themselves in digital distribution of games for multiple years now. They've made exclusivity deals with tons of games, which they plan to do a lot more of, and have been offering free games as an incentive to customers, which they've yet to stop doing either. That all costs money, naturally, and some new court documents from Epic's ongoing legal battle with Apple dig into just how much. Epic committed $444 million to securing exclusive games in 2020, meaning they'll almost certainly be spending even more on this year's deals.
In new court documents submitted this month by Apple, the app store owners cite Epic's depositions, detailing just how much they spent last year. "Epic committed $444 million in minimum guarantees for 2020 alone," Apple say. Those minimum guarantees would have been advance payments made to publishers and developers, the amount Epic committed to paying regardless of whether or not the games being paid for actually wound up recouping the same amount in sales. Epic reportedly paid $10.45 million for Control to launch as an Epic Games Store exclusive on PC, for instance.
Of course exclusives won't always end up recouping what Epic spent to sign them. "Epic projected to lose around $273 million on EGS in 2020," Apple says, adding that the projection for 2021 is a $139 million loss. "As Epic has acknowledged, the incentives and investments it has made in an attempt to grow EGS will result in 'unrecouped costs.'That includes at least $330 million in unrecouped costs from minimum guarantees alone."
As Apple say, Epic had expected to lose money on these deals in their effort to gain and retain users on the Epic Games Store. Running all or part of a business at a loss isn't a novel concept. They sure are big numbers though, and they add context to other numbers we've seen from Epic recently.
Back in January, Epic shared some stats about Epic Games Store use in 2020. On PC, players "spent over $700 million of which third party games represented 37% at $265 million," they said. On a related note, last year they offered 103 games for free, with a total of 749 million free game copies claimed.
As Epic said earlier this year, "We have more exclusives coming in the next two years than we have published to date." That means their $444 million spent on minimum guarantees is likely to go up this year.
Apple's interest in the matter, in part, is to prove that their legal dispute with Epic was driven by Epic's desire "to revive and reinvigorate its business." Whether or not that's the case will be for the legal folks to sort out.