Recently I've been thinking a lot about the launch of the new Epic Games storefront for digital game purchases.

The real selling point has been an 12-88 revenue split (with 88% of purchases going to developers), and that's actually rather significant.

From a sales perspective, you can expect about 3% of a purchase to be lost in transaction fees (unless you're using STEEM, but we're not going to worry about that yet), and then you need to consider the cost of running a marketplace.

As a result, the Epic Games revenue split is probably about 25% or so for covering transaction fees (I never read any legalese for them, however, so that might be a cost given to the developer), with the remainder covering the cost of running the service and being profit for Epic Games.

Under a 30-70 revenue scheme (which is pretty standard in the industry; DriveThruRPG, where we release our games, is more-or-less at this level and so is Steam), the split is pretty much going to be all profit, especially in the current day and age of extremely cheap hosting and bandwidth (in the early internet, a 30% take made more sense; it was harder to start up a digital shop and the hosting costs were greater).

The Economics

Technically, you could run an e-shop for something like $100 a year. In practice, the time and effort that go into it probably push the price-tag to around $5000 or so, if you count all the associated potential issues, but that's an estimate based on the notion that you then need to self-service customer complaints and such; you could probably outsource this for a similar amount of money.

If you were selling 10,000 titles at $5 a pop (our estimate for the price, though not the sales figures, for Genship Exiles), you'd wind up with possibly a $10,000 net benefit from going your own way, but you need to be able to drive 10,000 sales on your own personal shop, which is not necessarily going to happen. I'm not expecting more than 100 sales on Genship Exiles, which means that I probably shouldn't be pumping as much money into it as I am, but I can dream.

To be (or not to be) on a big storefront?

The justification for this right now is that the fee covers the benefits of being in a large marketplace, but there's some flaws in that logic as well. I'm going to give a brief overview of what the big benefits and weaknesses of being on such a marketplace are.

Pros:

• Really easy hosting and management; the "fire and forget" method of owning a business. You still have to do your own marketing, but even on DriveThruRPG months after a release we see a trickle of traffic.
• Most marketplaces have a system for making sure people get updates and are informed when you release a new title.
• You get to have exposure from a broader audience that might otherwise not have seen your work.
• Partnerships and other opportunities that come from being on a big platform, the convenience of use for people who are already on that platform (versus tracking down download links or using other clients).
• Sometimes the fees cover automatic affiliate benefits, which mean that people get rewarded for reviewing your stuff if people click through.
• A well curated market with a good review process fosters sales.

Cons:

• Fairly large fee above and beyond transaction fees.
• You still need to do your own marketing a lot of the time; word-of-mouth helps, but is not tremendous.
• You can be drowned out by a sea of competitors.
• May be fees or gateways to using the storefront.
• Poor curation and shoddy reviewing systems can make customers wary.

Epic Games vs. Valve

Right now the Epic Games storefront is basically hitting Valve where it hurts. Game library fragmentation is an issue, but with a lot of major AAA titles not releasing on Steam, it's more and more likely that users have just learned to grin and bear it if they want to play the latest games.

Valve's also had a lot of issues involving the curation of its storefront and how developers have been treated (or, rather, not treated). While a lot of that's not really Valve's fault so much as something that always happens on publishing platforms, it is worth noting that having developers jump ship is going to be a pain, and 18% is a heck of an incentive.

The real challenge for Valve is convincing people to stay on the platform; if developers flee and offer benefits (like exclusivity or discounts) they're going to have issues, and Epic's offering free games on their new storefront as a sort of lure for users who are hesitant.

Valve does offer a lot of things that Epic's not offering, however, like social networking features and server hosting (though I'm not sure how much of this Valve does and Epic may have their own offerings I'm not aware of).

Our Practice

For us at Loreshaper Games, there are a few other considerations. We do a lot of pay-what-you-want releases, and then whatever cut gets taken off of that would be taken, but setting this up would be extra time and effort on a bespoke e-shop solution.

Now, with that said, we could just have a download link somewhere, or make a freebie link and then a paid version available simultaneously, but those both have major disadvantages versus the sleek PWYW solution on DriveThruRPG.

However, in general, here's my position.

The fees we pay at a digital marketplace generally are worth, at least for our current volume, the cost of doing business.

DriveThruRPG offers an opportunity for print on demand, which I hope to take advantage of with Genship Exiles, and also provides a really reliable platform for distribution. While I'm not 100% certain how much traffic on DriveThruRPG comes from other sources versus DriveThruRPG itself (they have tools for this, but I never set them up), users browsing the site are likely a major source for our traffic.

We'll see how things change if we get our release volume up and continue increasing social media followings. I suspect that at a certain point we may have a point where we want to switch over, especially if I ever finish a project (I have so many slow burning projects that if I die, I will probably end up in development hell myself).

Other Companies

I don't have any working relationship with other companies, but I have looked around to see where they are sold and I have a little insight into some of their functions.

If you look at Wizards of the Coast and D&D Beyond, they clearly feel that it's not worth it for their fifth edition titles, but the fact that they've published most of their back catalogue on DriveThruRPG or its sister sites tells us that they're willing to have the convenience factor and print on demand services at the premium of losing a larger cut than they would on D&D Beyond sales.

SIXMOREVODKA does not operate any DriveThruRPG shops for Degenesis (though a third-party has created free Degenesis content and uploaded it on DriveThruRPG). Marko has stated openly that Degenesis is a labor of love and does not return a profit; the degree to which this is "doesn't make as much money as using resources elsewhere" or "actually is a financial loss" is unclear, but Degenesis has an absurdly high production value so I wouldn't be surprised if it's actually a financial loss.

Rowan, Rook, and Decard offers their books on DriveThruRPG, and on their own site at cheaper prices. I don't know how exactly their financials are doing, but they have had several successful Kickstarter campaigns and are producing content frequently. Their release schedule looks a lot better than ours.

A handful of other publishers used to operate both DriveThruRPG and their own sites, but most of them have since just consolidated on DriveThruRPG as far as I can tell. Prices tended to be the same on both platforms, and it was a major detriment to the value of those secondary storefronts versus DriveThruRPG if there's no pricing incentive to buy from there, since it leads to a fragmented games library.

The Overview

The Epic Games storefront is going to shake up digital distribution for a while. In video games, it makes a lot of sense to switch over from Steam, because of the fact that the Steam marketplace has been suffering from a few unfixed problems and the difference in the developer's cut is so great.

However, there are also a lot of reasons why a premium marketplace makes sense, and I'm not going to take Loreshaper Games off of DriveThruRPG any time soon.