StormingKiwi

Join Date 09/2012

+10

Perplexing Partnership between Stardock-Ironclad and Epic Games Store

On the Sins 2 Distribution Controversy

I am perplexed by the partnership between Stardock-Ironclad and the Epic Games Store.

I have seen Stardock staff state two justifications for the partnership; these two justifications are the foundation for my confusion.

1) The B2B revenue split. As far as I am aware, most other digital distributors, including Steam, have a 70-30 revenue split, where the developer keeps 70% of revenues generated by the game and pays the distributor the remaining portion, 30%, for the services provided.

By comparison, Epic Games Store has an 88-12 revenue split.

2) The Cash Advance for Development, where Epic pays the developer an advance payment to support the development and reduce risk.

Stardock staff have implied that without this cash advance, Sins 2 would not get made and hence would not exist at all, so the Epic exclusivity deal is the lesser evil.

Stardock is a software company with a simple business model. They develop software they sell to the market to fund the business's costs. That's the model. If Stardock does not sell software, it cannot support its costs and will go out of business. If Stardock has no software developed, they cannot sell it.

Concerning 1:
While on superficial examination, it makes sense that Stardock would choose the deal that gives them the larger fraction of the pie, this decision doesn't stand up to deeper scrutiny.

In 2021, Steam revenues were 6600 million, whereas EGS revenues were 840 million.

70% of 6600 is greater than 88% of 840.

A smaller fraction of a larger pie is greater than a larger fraction of a much smaller pie.

Also, with the established history of EGS giving away free games to entice customers to use their web store, I very much doubt that EGS users have the same spending propensity compared to users of other distributors.

Concerning 2:
The Cash Advance for Development topic concerns risk vs reward. The developer invests money and gets a return on their investment. There is a risk that their investment will not yield the expected return.

It makes sense to minimise risk and maximise reward from a business perspective.

Therein lies the rub; it has already been established that the potential reward (revenue from sales) is higher with Steam than with Epic. Going with Epic appears to me much riskier than going with Steam. Although there is a guaranteed cash advance when going with Epic, the potential sales pool is much smaller throughout the exclusivity period, which is a substantial source of risk in and of itself.

It's also surprising that Stardock requires a cash advance for the development of the next game in the pipeline to be viable, given the simplicity of their business model.

sins of a solar empire ii

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ultimaaxe
KidInTheHall28
Hartsock92

Hello, you should consider posting over on the Steam forums. There is a small group of people over there talking about how this store switch is a good thing because of the revenue split, not understanding the difference in total revenue between the two stores, and at the same time also saying it’s great, because steam is a monopoly all while not understanding what a monopoly is lol. A monopoly being a majority of the total revenue in a market, with effort and funds being put toward making an unfavorable environment for competition. If the majority market is due to having the best product, distribution, or marketing then it’s just good business and or no viable or quality competitor which is also a sign of good business foresight. Personally I dislike needing to use multiple platform clients, however my bigger concern is with EGS directly, my concerns being lack of functionality, features, customer support, terms of service, accusations of spyware imbedded in the client, and finally tencent purchasing 45% of the company! Anyone who has done a lick of research knows that tencent is a CCP operation. Tencent in addition to just being a terrible company for customers and gamers in particular is also a privacy threat, anticompetitive, and does not honor international copyright law. What happens if they are able to obtain the majority interest in EGS?

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WHIPperSNAPper2008

Join Date 03/2008

+126

Regarding Storming Kiwi's concern, much of this hinges on how you believe people make purchasing decisions. Do they (1) See a game at a store and then buy the game only because it's at the store they like, (2) See a game they have never heard of at a store they like, investigate the game, and then buy it if it looks interesting, or (3) Learn about a game, decide they want it, and then go to the store selling it to buy it?

I'm not a computer game marketing expert, but my guess is that most people learn of interesting games through channels other than game stores and become interested in it that way, so I think (3) is the primary vehicle that drives sales. However, option (2) which has a marketing component is also important. Presumably option (2) will be covered when the game shows up on the Steam store with some fresh marketing.

Personally, I would prefer to purchase the game over Steam, and ironically wanting to purchase Rebellion is how I ended up on the Steam platform in the first place. However, I'll probably purchase the game early access at Epic. I already have Epic's platform installed and have obtained a large catalog of free games from them.

I'm not upset about the game being an Epic exclusive for the time being; I understand the reasons for it. It's probably best for us fans to be thankful that Epic Games made this possible (if that is indeed the case) and that a Sins-2 is being produced at all and focus on how we can help the Devs make Sins-2 a better game and how we can get other 4X and RTS players interested in it.

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WHIPperSNAPper2008

Join Date 03/2008

+126

Quoting TerribleNate,

reply 1

my bigger concern is with EGS directly, my concerns being...accusations of spyware imbedded in the client

I don't know how true any of that is, but built-in spyware (and unnecessary bloatware) is my biggest concern.

I ended up getting the Epic platform initially for the game Unreal Tournament 4 which ended up unfinished when the Devs left to make a fortune creating Fortnite Battle Royale. I played Fortnite some and also three other free games (Killing Floor 2, Antstream Arcade, and Civilization 6) via the Epic Games Store (EGS). Personally I'm OK with it.

My biggest concern regarding Sins 2 and EGS is whether Sins functionality will be tied to EGS in any sort of a way. Ideally, I would purchase Sins and never have to think about EGS again though I'm guessing it will be necessary to launch EGS every time I want to play Sins so that it can check for updates. As long as mods, custom maps, and online multiplayer have no connection to it or any other platform I'll probably be happy, though I would prefer to do it through Steam.

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Quoting WHIPperSNAPper2008,

reply 3

Quoting TerribleNate,

reply 1

my bigger concern is with EGS directly, my concerns being...accusations of spyware imbedded in the client

I don't know how true any of that is, but built-in spyware (and unnecessary bloatware) is my biggest concern.

My only concern too... apart from that I could not care less where and from whom I buy the game. Spyware IS likely so I will run it on a computer dedicated for gaming only.

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Everybody seems to forget we had pandemic that made most businesses closed its door due to global economy regression. Regardless of platform, I can understand the need of the cash advance for the survival of the devs post pandemic. I am just glad Stardock and Ironclad didn't went bankrupt during the pandemic.

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StormingKiwi

Join Date 09/2012

+10

Quoting FishFillet8575,

reply 5

Oh I had not forgotten that we had a recent global pandemic, during which the video game industry had record growth in revenue...

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We all know the reasoning behind Ironclad’s decision, that decision makes sense, now whether it makes sense in the face of reality can be debated, it is what it is. It is also possible that ironclad would not have been able to continue as a company without an upfront cash infusion regardless of whether it would hurt long-term profits.

I just wish EG was a better company with a better product and a better business plan. 😔

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I certainly have issues with Tencent, which will always make me hesitant towards EGS. However, it is their business model that made me stop buying from that store (I bought Satisfactory and a few others earlier on). Now I refuse to use it at all. They made a bad product and are forcing people to use it with their exclusive deals. Their revenue split...great. Funding game dev...great. Forcing exclusivity so that I can't play the games I want using the platform I want...meh. I'm fine with UPlay, they let me link to Steam library and put the games they make on their store. I was even fine with Origin since that was only EA games. EGS is just throwing around their Fortnite money to try and buy their way into the marketplace. I can't stand that (also I'm one of the of people mad they cancelled Paragon because of Fortnite...their are dozens of us...dozens!). Steam isn't a monopoly. They made a good product that people use by choice. EGS is attempting to make a monopoly, their store just sucks so much that they can't even buy their way to the top. All of that said, if Stardock wants to make their game on EGS that is their decision. I'm just hoping SINS 2 makes its way to Steam so I can actually play it, cause I'm 100% out if its EGS.

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