This new court filing is a very lengthy read at over 300 pages but there are some interesting bits of information:
- Currently EGS has more than 160 million registered users and more than 56 million monthly active users
- EGS has 400 games published by more than 200 developers
- EGS currently supports 29 different currencies and has pricing in more than 190 countries and 30 regions
- EPIC expects EGS to become profitable in 2023
- At present, EGS has not yet achieved profitability because it has increased a lot of costs in order to gain market share
- The 12% distribution amount charged by EGS is sufficient to cover the operating costs of EGS
- EPIC lost approximately US$181 million on EGS in 2019, approximately US$273 million in 2020, and estimated losses of approximately US$139 million in 2021
- Apple uses the application review process to give priority to its own applications to pass the review, and use this to compete against competitors
- Apple does not use all its own rules for its own apps
There's also this useful bit of information:
This suggests that most EGS exclusives aren't selling very well if they aren't hitting their minimum sales guarantees.
Personally I think EGS being profitable by 2023 is being very optimistic unless they seriously plan on cutting back on exclusives and freebies, and even then I have serious doubts that people picking up free games or being forced to buy from the EGS are going to buy stuff on EGS over other superior storefronts/platforms.
Edit:
Some additional notes and information about EGS profitability by Senj and Spam Musubi:
Is your confusion here that you don't understand what it means to cover operating costs, and how that differs from profit? Or do you think they have some other source of revenue beyond the 12%?
Your question doesn't really make sense.
Revenue is all the money they take in, which as the document is at some pains to spell out, is 12 % of sales + (optionally) 12% of IAP.
Operating costs are everything it takes to run the store – salary, servers, payment processing fees, etc, excluding deals with developers and publishers they cut to grow the market.
Profit = revenue – operating costs. Normally, businesses want to be profitable (ie make more money than it costs to keep the lights on) so that they can invest the profit into running the business. This is all business 101 stuff.
If they're saying "hey, our revenue is only enough to cover variable operating costs but growth costs mean we aren't profitable" (and they say this in several places, including the pull quote in OP but also page 141 scribd, 135 in the doc, although they contradict themselves on when they think they'll finally be profitable), then by definition they're saying exactly what you're asking – 12% is only break-even.
But it's actually worse, because there they're carefully saying that the 12% covers variable operating costs – meaning they're excluding fixed costs like salary and benefits for employees. So there they appear to be tacitly admitting they're not even break-even without spelling it out.
"Epic decided to charge developers 12% after it concluded […]" is purely based on their initial projections. The store launched with that number, so it's not based on their sales data. It's their initial guess. It doesn't not reflect backwards on the reality of the store.
Additionally, it's claimed that innovation and investment is covered by this amount. However, it's clear that they are losing money on their investments, as per the other evidence in the document. And "innovation" is moot. The store has barely progressed since launch, and is still lacking in basic features most of its competitors have. Clearly innovation is not something they are seriously investing in. In fact, given all the data, one could argue that the reason the store is so bare bones is because it barely covers their operating costs and they can't justify spending more money on improving the experience.
Finally, the 12% number is a bit misleading, considering, unlike other stores, they offload payment processing costs to the customer.
No, it's not included. "Variable operating costs" has a specific meaning in accounting contexts that explicitly excludes salary and other fixed operating costs. These are universal definitions across the US. When they say "customer service" as a variable operating cost they mean things like processing fees on refunds that vary based on sales, not CS rep salary, which doesn't fit in that cost category.
Do note that they're being very, very precise with their wording in these 2 statements. The first doesn't say that the 12% does cover distribution and growth – it just says they decided on 12% after concluding it would. That first statement is true even if they turned out to be wrong about what the 12% covers, which given their other declarations, they're kind of dancing around admitting.
And then again, with the second statement: there's no reason to say "12% covers our variable operating costs" rather than "12% covers our operating costs" unless it's not covering fixed operating costs.
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