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In context: It’s no secret that the Epic Games Store has been operating at a loss since its opening. Apple has exploited this fact in court, suggesting that EGS may never be profitable. He claims that the store is nothing like the App Store and that it is not sustainable. Meanwhile, Epic continues to pour resources into its market, confident that it will have a very profitable distribution platform in just a few years.
We’re approaching the one-year mark since Epic began its antitrust legal battle with Apple to ban it and other companies from operating independent stores on iOS. In the latest round of legal wrangling, Apple’s defense attorneys went on the offensive by attacking the Epic Games Store (EGS), claiming it was “unprofitable”.
“The Epic Games Store is not profitable and cannot be compared to the App Store,” Cupertino’s legal team told the court. “and will not be profitable for at least several years, if ever.”
As harsh as the statement may seem, it is not without merit. The Epic Games Store has reported $ 454 million in losses over the past two years and does not expect to profit from it until 2023. In 2019, it lost $ 181 million, then an additional $ 273 million in the year next.
“Epic has committed $ 444 million in minimum guarantees for 2020 alone, while projecting, even with” significant “growth, only $ 401 million in revenue for that year,” Apple lawyers argue. “Epic recognizes that this trend will continue for the immediate future: Epic expects to lose approximately $ 139 million in 2021.”
The defense team also postulates that given the store’s “unrecovered costs”, they don’t expect EGS to see a cumulative gross profit until at least 2027, four years older than the estimate of Epic. Epic contends that even with a sales share of less than 12%, that’s enough to cover EGS’s operating costs, bringing back profitability much sooner than Apple claims.
Additionally, Epic appears to be flush with capital, thanks in large part to Fortnite. She did not hesitate to invest money in one-off exclusives to make the store more attractive to consumers. He spent $ 10.5 million on his own to make Remedy’s Control a timed EGS exclusive. It has also offered many freebies since it opened, further adding to the store’s losses. Epic is clearly not afraid to spend the money on the bet that he will end up making big profits.
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