Zinger Key Points
- Epic Games admits in court its PC store, the Epic Games Store, remains unprofitable.
- Their strategy of investing in free games and rapid expansion has not led to profitability, resulting in layoffs in September.
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Epic Games, the company behind Fortnite and the Epic Games Store, recently admitted in court that their digital PC game store is still not profitable.
The Epic Games Store was launched in late 2018 as a direct competitor to Steam, offering free games each month and a more favorable revenue split for game publishers and developers.
Despite its growth and the addition of features and exclusive titles, the store has struggled financially. Five years after its launch, it continues to operate at a loss.
The Verge reported that during a legal battle with Alphabet Inc's GOOGL Google over app store fees, Steve Allison, the boss of the Epic Games Store, acknowledged on the witness stand that the store was not making a profit and that the company's primary focus remained on growth.
Epic had previously argued that the losses incurred, over $300 million, were part of a strategic plan to expand the store's user base and business. They had also predicted that the store would turn a profit in 2023.
As 2023 arrived, it became evident that Epic's strategy of spending significant amounts on free games and rapid expansion had not resulted in profitability.
In September, the company laid off 830 employees, approximately 16% of its workforce. CEO Tim Sweeney shared the news in a memo, citing financial difficulties resulting from overspending in pursuit of expanding Fortnite as a metaverse-inspired ecosystem.
"I had long been optimistic that we could power through this transition without layoffs, but in retrospect, I see that this was unrealistic," Sweeney wrote.
He added: "We concluded that layoffs are the only way and that doing them now and on this scale will stabilize our finances."
Read Next: Epic Games Alleges Google Employed 'Bribe And Block' Tactics To Quash Competition
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