Tim Sweeney's Temper Tantrum
What's the Deal with Epic Games CEO, Tim Sweeney's temper tantrum over Valve's revenue cut?
Valve is amid a US antitrust lawsuit, alleging that they use their dominant position within the market to control game prices and push out competition. The lawsuit feels comedic, as it’s an absolute stretch to claim that Valve controls the videogame creation supply chain and no barricades prevent games listed on Steam from being listed on other platforms.
Lawsuit details aside, emails dating back to 2017 from Epic Games CEO Tim Sweeney were released as part of the lawsuit, in which Tim Sweeney addresses Gabe Newell with the following message: “You assholes are telling the world that the strong and powerful get special terms, while 30% is for the little people”1.
Sweeney’s outrage at the 30% cut Valve takes is ridiculous for a few reasons. While this wasn’t the case when his email was originally sent, Valve’s revenue cut decreases to 25% once a title earns $10M in sales and decreases to 20% once a title reaches $50M in sales.2 If you’re thinking, “That still seems high; Epic’s 12% is the standard Valve should be held to”, then you’re wrong. 30% is considered the industry standard revenue cut and is the same cut taken on the PlayStation Store, Xbox Games Store, Nintendo eShop, Apple App Store, Google Play Store, GOG, the Microsoft Store, Amazon, and most importantly, physical retailers.3 Not to mention that physical copies require packaging, shipping, discs/cartridges, and other physical materials.
Considering the above information, it feels like Sweeney’s frustration stems from Valve being his biggest competition rather than their revenue cut. While he makes many mentions of fighting against Apple due to turmoil involving Fortnite’s presence in mobile stores, he ultimately asks Valve, “Why not give all developers a better deal?”.4 While the Epic Store does offer a much better revenue cut to developers, Sweeney attempting to paint himself as a man of the people, is quite ridiculous; after all, it’s far more difficult to have your games published and discovered on the Epic Store.
Part of why Valve has such a dominant hold on the market is because it’s easy for developers, big or small, to get their games onto the platform. Once listed, Steam has multiple forces that increase the discoverability of games, namely the “New & Trending” category on the front page, the “Discovery Queue,” and its user tag system. Steam also has infinite scrolling enabled on its homepage, so you can scroll until you find a game you like. In comparison, the Epic Store has a lackluster and clunky homepage, while its Browse page displays 40 games at a time and forces you to click to the next page. At the time of writing this, there are about 3,300 games on the Epic game store, while Steam has roughly 73,000.5
Sweeney seemingly expects his 12% revenue cut to sway competition in his favor, but in addition to being the clear choice for small and mid-sized developers, Steam is much better for players. Any longtime Steam user knows it’s as much of a gaming social media platform as it is a storefront. Steam includes user profiles where you can keep up with what your friends are playing, the ability to follow games so you’re notified when your favorite titles receive updates, great game library organization features, a built-in workshop where users can easily upload and download mods for their games, a user review system allowing the community to curate quality titles, and so much more.
In the 7 years since Sweeney sent this email, the Epic Store has hardly evolved. While they’ve made small updates, like library organization and the inclusion of an achievement system, the Storefront, UI, and few features feel like a Neocities website created by a high-school student compared to Steam. Instead of improving the product in any significant way, Epic’s strategy has been to buy their way forward. They do this in 2 ways. The first is the free games they give out: every Thursday at 10 AM PDT, Epic gives away 1+ title/s for free that all users can claim to their library for the following week. They’ve been doing this for so long that I have 317 different games in my Epic library despite never spending a single cent on the platform. Their other strategy is to buy away the competition via exclusivity deals. Some exclusivity deals are timed, such as Borderlands 3, but in the case of games like Prince of Persia: The Lost Crown, Alan Wake 2, or Kingdom Hearts, the games are unavailable on Steam. To make matters worse, Alan Wake 2 and Prince of Persia: The Lost Crown reportedly failed to meet sales expectations6, with Alan Wake 2 not recouping its development costs as of February 20247.
The reality is that so many amazing games release nowadays that playing everything is impossible. PC gamers are skipping out on games like Alan Wake 2 and Prince of Persia: The Lost Crown, not because they don’t have appeal, but because there are other games with comparable appeal that don’t require them to leave their preferred ecosystem for an ugly, feature-lacking alternative.
While I vastly prefer Steam over Epic, I’m not alone, as the Epic Game Store reportedly isn’t profitable.8 Even when consumers like me who prefer Steam want to play a game like Prince of Persia: The Lost Crown, chances are we will purchase it on Nintendo Switch, PS5, XBox, or wait for it to come to Steam. As it currently stands, the Epic Game Store is the place you go to play Fortnite and the occasional free game they gave away. Even then, the free games don’t incentivize users to spend money on the platform in any way. Ultimately, if Sweeney and Epic want to compete with Valve, they must enhance their platform aesthetically and with many new features. The strategy of purely buying away exclusives and blowing money to give away weekly free titles is not working, and the smarter developers are starting to realize that an 8-18% difference in your revenue cut doesn’t mean much if it means you’re selling 80% fewer copies.
Sweeney called Valve “assholes,” but he’s the one who is completely out of touch with consumers. He fundamentally doesn’t understand why Steam is the better product for gamers and developers with less funding; he has made that very apparent through the ways Epic has attempted to compete since the Epic Store’s release. While he views Valve as assholes who are making more money than him, to millions of PC gamers, Sweeney is the asshole who’s ensuring that multiple anticipated releases each year are stuck in a lackluster ecosystem where they’re nearly guaranteed to underperform.