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Fortnite maker Epic to undercut Steam with new store taking just 12 per cent commission

Valve Software faces major challenge from Epic as the go-to platform for PC gaming

Fortnite maker Epic to undercut Steam with new store taking just 12 per cent commission
Epic is banking on goodwill generated by the popularity of Fortnite to propel its Epic Games Store
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Valve Software is facing a formidable challenge to its Steam PC gaming platform with the announcement by Epic, maker of the wildly popular Fortnite Battle Royale game, of plans to open its own rival Store with games from third-party games.

But while Steam charges a flat-rate commission of 30 per cent on games and applications sold via the platform, the Epic Games Store promises to take a commission of just 12 per cent.

The Store will launch "soon", according to Epic CEO Tim Sweeney, with a "hand curated set of games on PC and Mac", with additional games coming throughout 2019. The Epic Games Store front will also be curated by hand, rather than by algorithms or paid advertising. However, the number of games on offer, at least initially, will be much lower.

Sweeney revealed the news in an interview with tech site Arstechnica.

The launch date and precise line-up of games is yet to be revealed, but Sweeney said that the Epic Games Store would "start small", but seek a competitive advantage by funding developers in return for exclusivity - similar to the business model adopted by games console companies.

Curation would be manual, with "creators" - YouTube video makers and Twitch streamers - effectively providing recommendations direct to gamers.

The news comes just days after Valve unveiled more modest reductions to the 30 per cent flat-rate commission that it charges developers.

Instead of the across-the-board 30 per cent commission rate, Valve announced plans over the weekend to cut that to 25 per cent if a game makes at least $10 million on the platform, and to 20 per cent if a game makes revenues of $50 million. The sales counter has been backdated to start on 1 October 2018.

The aim of the tweaks to the Steam commission structure is to provide a bigger incentive for the big games companies to stick with the platform, rather than set-up their own.

The 30 per cent commission figure has been established for more than ten years, with the Apple App Store and the Google Play Store on mobile platforms helping to get developers used to the commission fee in return for convenience, lower costs and reduced risk.

Steam was originally a form of digital rights management (DRM) produced by Valve Software in a bid to protect its own games from piracy. But the company was quick to recognise the value of providing both DRM to other games companies, as well as an online portal through which they could be sold.

This helped reduce both the business risks of producing and distributing games - until then dominated by physical distribution of DVDs - as well as the overall costs. It also made it easier for game makers to reach a global audience much more quickly.

Steam took off in 2006 when it was opened up to non-Valve games, a process accelerated with its Greenlight initiative in 2012 to encourage independent developers to publish their games on Steam. However, Greenlight was also criticised for flooding the platform with a lot of exceptionally poor games.

In addition to all the major games software companies setting up their own Steam-like game clients, Valve is also facing increased competition from GOG - Good Old Games - as well as the gaming social network Discord, which is widely used by PC gamers to talk to team mates during online cooperative and other games.

Steam enjoys an estimated 50-70 per cent market share of the PC games distribution market

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