Embracer CEO: Fees Paid to Platform Owners Are Over Twice Game Development Costs

Embracer CEO Lars Wingefors where the executive mentioned the intention to challenge the existing paradigms when it comes to the high fees currently enforced by most platform owners (Nintendo, Sony, Microsoft on Xbox, and Valve).

[ApocalypseShadow]

There's always the open PC market. Build your own console PC Store and make games for it. Create your own console platform. 100% profit. To complain that you're not getting a fair deal on someone else's platform just sounds silly to me. And using Microsoft's example is weak as they are only trying to grow their Windows Store against Epic, Steam, etc. Not because they want to help developers.

Funny though reading the article. This company has seen increased profits year over year just like Epic and Fortnite. But want more money. They sound just as greedy but act like it's for development change and for the people.

[Alexious]

Every company has seen increased profits year over year due to COVID, that's not the focus here.

[Eonjay]

The elephant in the room is the fact that if your development costs aren't that deep, paying more money in platforming fees is what you actually want because it means by extension that your profits have also exceeded development cost.

[1nsomniac]

So you believe the only fair way is for every single game/developer to have their own independent store/launcher…. ??

No, we need to get out of this stupid capitalism mentality. An online store shouldn’t be receiving 33% of everything it sells. A retail store doesn’t even do that and their upkeep is far, far higher.

Too many people these days think they’re on Dragons Den and have completely lost touch with reality.

[Gridknac]

Look at it this way. If theres not enough profit for you selling games, then don't sell games. Go do something else. No one is forcing these people to develop games. Go flip burgers or work at a call center. Capitalism is what makes this all work. If developers start making less games because theres not enough profit in it, then there will be less games sold, which leads to profits falling for the store front. Who in turn will drop the 30% down to encourage more development.

[IGiveHugs2NakedWomen]

The developer is just being silly. If you want the chance for more people to see your game you put it on platformer with millions of users and create content to market it. Whining about the fees is silly since you already knew what you were getting into when you made the game. If it's that bad, start a "gofundme." If people are interested they'll support you.

[Christopher]

Good luck selling your game from your own site with your own infrastructure and no built in tools to find your content based on interests and genres. Should we also complain that retail stores take a profit on sales as well here when the players could just ask you to mail them a copy?

There's a gross misunderstanding of how these platforms have allowed games to get into the mainstream and therefore have allowed these people to sell more.

And if the platform is making more than cost, that also means the publisher is making even more than that. So, the complaint is the game is profitable?

[Bladesfist]

I understand the complaint from the game developers perspective, especially for lower budget indie titles as it could reduce the risk on a project if you didn't have to sell as many copies to turn a profit but I really dislike how the companies bringing forward these lawsuits are pretending that they are fighting for the consumer, there was no cut in prices when games went predominately digital on PC even though the returns were better and I doubt it will be the case this time but they keep pushing that story.

[Christopher]

None of these cases are about consumers at all. Just people fighting over his much their cut should be.

[MadLad]

Developers are getting pathetic.
Unreal hands you a license for their development tools that you only have to pay for after you meet a profit threshold.
You put your games on Steam because you know it's a popular service, and you want the visibility, and it can offer that to you.
Unity provides new devs with a framework to better help bring their ideas to fruition without costing an arm and a leg.
Every year it only gets easier and easier to try your hand at game development, and bring your product to consumers.

There's a reason most devs don't try to sell their product via their own website. They know there's more sales, thus more money, to be had being hosted on storefronts like Steam; but then they turn around and cry about their take.
Do I find 30% to be a big cut? Yes, I do. Though I also know that cut is an investment, and that being on Steam results in more sales.

I find it funny that devs take advantage of this, agree to that cut knowing it will most likely result in more profit, and then turn around and cry about the deal they knew they were making.

[chronoforce]

It is only natural they question what they paying for and why they are paying for it. Nobody pays a penny to Microsoft every time someone buys software on Windows outside the MS Store. Microsoft have to sell copies of Windows whether it is to an oem, organisation or an individual.

Epic and Valve for example have already voiced their displeasure at the idea of Microsoft being able to do to them exactly what they do to the developers that make use of their platform.

Valve has first hand experience making their own OS so they know when a player in the market is very dominant it is difficult to reverse the trend. If Valve and Epic would protest a 30% cut being taken by Microsoft I can't see how developers using Steam or the Epic store would not equally want lower or no fees. Developers do not have to use Steam and Valve does not have to use Windows but they do because that is where the market is.

[MadLad]

MS, much like Sony and Nintendo, use the game sales to subsidize the cost of their hardware.
There's a reason you can get something like the Xbox Series X, or a PS5, for as cheap as you do.
As for Valve, yes. Like every other platform I disagree that a digital only storefront, on PC, should be taking the same cut as console manufacturers. But taking no cut at all? That's you asking a company to spend the money it takes to run a storefront that hosts thousands of games, ever growing, and make no money from it?

[KillBill]

"Microsoft announced it will reduce, starting August 1st, its fee for PC games distributed via the Microsoft Store to 12%."

[sourOG]

30% for the privilege of being on a platform is way too much imo. I’ve heard all of the arguments for it and I still can’t see it justified. Consoles will be more expensive, consoles sell at a loss etc. it doesn’t matter, 30% is dumb. Excusing the abuse of developers by greedy corporations just because you save 75 dollars on a console. Yeah I’m not for that.

[JEECE]

Well, no one forces anyone else to develop a video game or to put it on any specific platform. It's optional.

[sourOG]

They are all the same lol. It’s the same arbitrary number industry wide, 30%. That number holds no secret sauce value. It was pulled out of an ass.

[Christopher]

Well, look at it this way: How many fewer games do you want Sony and Microsoft to make? Would you rather have everyone be like the EGS or the features that are on Steam? If profits go down so do things that are made based on those profits.

[sourOG]

If they make good games they won’t have to worry about taxing people 30% for a shelf spot. Sony does make good games and makes a fortune on their games. A %15 slash would not stop Sony making even more games lol. Microsoft will, I believe. I hope for those studios sakes. Every time I see someone defend the 30% it’s “don’t make a game then” like they don’t know why 30% is a good idea. Or it’s a profit loss that can’t be redeemed like it’s throwing away free money. That’s true but the side effects would be a better economy. Possibly even more exclusives. That Microsoft plan was solid. Even 30 to 20 would be awesome. The amount of deals they would make on that would be monopoly status imo.

[Christopher]

***A %15 slash would not stop Sony making even more games lol. ***

A 15% slash would cut revenue in half, meaning profits would be impacted way more. If you don't think that massive of a hit to revenue wouldn't result in less games, you're insane and don't understand the profit focus of businesses and not revenue focus. Sony was making some profit with their VAIO but sold it off because it wasn't enough.

[sourOG]

That 15% shelf tax isn’t the glue that holds Sony together lol. Sony’s games would support Sony’s games without any tax at all. It’s not like that revenue stream can’t be made up either, it’s not lost to the ether forever. Businesses adapt, if MS lowered it the others would soon follow, they wouldn’t have a choice and they would adjust easily. Sony would make more games to make up the profits and the better economy would bring more money as well. So the whole “Sony would fall apart without f****ing over developers” is just an excuse to me and it isn’t justifiable.

[sourOG]

It also wouldn’t cut revenue in half. That’s assuming the 30% is their only revenue stream. A 15% slash would cut 15% off of their profits and its 15% they should have never had in the first place. They did absolutely nothing to earn 30% of every sale, none of them have.

[Christopher]

***That 15% shelf tax isn’t the glue that holds Sony together lol. Sony’s games would support Sony’s games without any tax at all. ***

It's the glue that allows them to put out as many games as they do. Where's the money to create the games with the greatly reduced profit from the huge cut to revenue?

I'm going to assume you don't understand how much money comes from MTX alone?

***It also wouldn’t cut revenue in half. That’s assuming the 30% is their only revenue stream.***

It is the mass majority of it. Hardware isn't a profit center, they make less on boxed sales (they only get licensing fees with storefronts taking the profit they normally would), and only make more on their own IPs. Why do you think Microsoft is going the GamePass route? And MTX and DLC are massive profit clouds with zero retail presence outside of digital storefronts.

Analysts say that digital revenue accounts for over 70% of revenue and is the highest area of profit due to less overhead costs. Ignoring any other costs, that's a minimum 1/3 cut to revenue from the most profitable sector, it's a massive hit. Take into account costs, that's where you get to 50%

If people don't want to lose so much on digital sales, why aren't they putting them out on disc? Because they don't think it will sell well enough for the upfront cost but it's okay to use PSN as a security blanket and complain that Sony provides that security blanket at a cost that earns them more profit?

[neutralgamer1992]

Correct me if I'm wrong but didn't epic try to do the same thing and PC gamers complain that they liked steam more. This nonsense has to stop if any company out there is trying to put more money into the developers pocket we as gamers should be supporting it. If one company takes 30% and the other takes 12%, how is the one taking 30 better than the one that's taking 12

And don't give me the crap about 10 cent having investing money in epic. They have invested money in every company they're worth close to 1 trillion dollars.

[MadLad]

The problem being, and is being shown more and more as information on their lawsuits are being released, Epic is simply doing whatever they can to corner and take over the digital marketplace.
In a hypothetical situation where they managed to become the market lead, I promise you they'd instantly up that cut to where everyone else is at.

Do I find 30% on a purely digital storefront excessive? Of course. I give consoles a slide because you have to take into consideration the costs of physical distribution, and that that cut helps subsidize the cost of the hardware. There's a reason consoles are had for as cheap as they are.

I give Epic no credit though. They're a wolf in sheep's clothing, and every thing they do is to make themselves look good as they try to dominate the market through shady practices.

[neutralgamer1992]

Oh I didn't know that I thought they were fighting for the small guy to get them more of the profit. Doesn't surprise me because these multi billion dollar corporations are greedy on some levels and look for leverage/advantage

[milohighclub]

"I give Epic no credit though. They're a wolf in sheep's clothing, and every thing they do is to make themselves look good as they try to dominate the market through shady practices" you don't develop games do you? If you only knew the amount of money they've invested in developers over the last 12 month alone. More so than any other company in industry.

[MadLad]

@milo

Purely to lock off sales from other platforms. I am aware of the money they've spent to wall off releases to their store.
You don't exactly need to be a game designer to know numbers.

The day they start acting like a publisher; seeing the game from start to finish, marketing it, and bankrolling the whole thing, I'll happily support them.
What they're doing here is simply throwing money around, trying to screw over the other storefronts in an otherwise open market.

There's nothing to respect about their business practice. Again, the more that comes out in these lawsuits, the more it's obvious that Epic is driven by nothing but Greed and wanting to take over the digital games landscape and make the rules all their own.

[Vits]

A main issue with EGS is that while they are better for the developer/publisher they are not so much for the consumer. Because they will have to deal with a worst store, that don't offer the same features as Steam nor is even trying to do it.

And you have the risk for the future. Epic is trying to corner the market and is doing it with terrible practices and once they managed to have that market. What they can do is just pretty scary. After all we are talking about a company that currently own one of the most popular third party engines out there. A service package for multiplayer, communications, etc. And is buying more and more softwares for use in game development.

But they are also a company that break contracts with partners, that will buy out games with open pre-orders in other platforms. That doesn't support consumers - hell their CEO went on record saying that user reviews should be opt-in by publishers - and whose big money maker is literaly target to children.

[Pyrofire95]

30% is a huge portion and based on the cut physical stores took for the literal physical infrastructure. Proportionally a game client doesn't not need to take that much and Epic and Humble Store prove that. It's just greed they can get away.

[kryteris]

I'm sure there is some crypto content management system to replace steam and do it all for near no cost other than paying for cloud storage. BTT?

[plmkoh]

It's really no difference to running a phyiscal store. Your products need to be 4 x times the cost at a minimum to survive. Rent:Stock Cost:Wages:Profit.

[Binarycode]

Where the hell does all this money go, millions to make a video game is beyond a joke now, As for Movies. Paying actors millions for a few lines in a movie. The same with Football. Hundreds of thousands a week kicking a ball.

Sorry the world has gone bonkers and needs a reset.

33% is taking the piss end of.

[Psychotica]

Why don't all the game publishers get together and create their own PC game store where they all share an equal burden at creating and maintaining it? Once done then pull out all their games from Steam and starve it to death.