Over the past few years, Epic Games, well-known for products like the Unreal Engine, Gears of War, and Fortnite, has fought a quiet yet desperate battle against monolithic games store Steam.
Its weapon of choice in this fight has been the free game, not indie darlings or reprogrammed Flash games but triple-A titles that were sometimes available at the time for full price.
It’s an almost paradoxical business decision, as the funds it forks out to publishers to reduce each game’s cost to zero means that the Epic Games store can't possibly be financially sustainable on its own. Of course, that doesn’t really matter. Epic, like Valve, EA, and Activision, is in possession of seemingly unlimited funds courtesy of its wider product library.
However, after increasing its giveaways to 52 a year, the equivalent of one free game per week, questions have to be asked about the impact of this wanton generosity on the wider industry.
After all, devaluing the work of thousands of creatives to nothing doesn’t exactly inspire customers to delve deep into their wallets. Seven million people joined Epic to get GTA V for free, for example, but none of them had to spend a penny throughout the entire journey.
Thus far, there have been several hundred games given away gratis by Tim Sweeney’s empire, including Saints Row: The Third, Nioh, World War Z, Into the Breach, Subnautica, and Super Meat Boy.
An effort on Reddit to catalogue each title that Epic has offered to fans for free ended in August 2020 at 114 with Total War: Troy, which means that the total number today is either approaching or has exceeded 200 games.
Total War: Troy was basically released for free in the same month. Considering that Total War: Three Kingdoms shifted one million copies in its first week hints at how much Epic must have to pay to each publisher to cover their complete lack of conventional income over such a critical period.
Epic’s larger business model seems to be based around the concept of ‘whales’ in games with microtransactions, like Fortnite. These are users who spend so much money that it doesn’t matter if nobody else forks out a penny. It’s not easy to see how this works in a store, though, especially one that continues to ramp up its freebie program.
Here’s where things get a little complicated. In the wider world, free stuff is an almost guaranteed audience pleaser, albeit with several caveats. However, much of the research done on this area of marketing is based on getting something free with purchase.
Some of the most memorable instances of freebie culture include the likes of McDonald's Happy Meals, which came with a free accompanying themed toy, and the items given free in Walkers' crisps and Kellogg's products in the 1990s, like reflectors for bike wheels. Today, this activity is generally more elusive, but can still be seen in commerce. A recent example involves the Samsung Galaxy S21, which came with two gifts (headphones and a security tag) if pre-ordered.
Online, it's customary for video game developers to provide digital gifts for game pre-orders, as well. The Operator Edition of Call of Duty Modern Warfare was bundled with extra value items to use in the game.
Most introductory offers on casino websites utilise this model, too, with deposit bonuses serving as a good example. A deposit bonus usually means that players will receive small gifts like free spins on slots games when they add money to their account. This is normally a nominal amount, like £10.
This practice is so common that comparison sites have become commonplace as a means of documenting all these offers and distinguishing online casinos from one another. Casino Countdown, for instance, notes that Casino Lab, LeoVegas Casino, and Novibet Casino are the best online casino sites for this kind of deal.
In the case of Casino Lab, the player gets a 100% bonus of up to £100. As this site shows, bonuses are just one aspect that contributes to a casino's reputation, and whilst there are many factors that influence their ranking, an inductor offer is a persuasive one for customers.
According to Harris Interactive, quoted by Business Wire, 90% of people who receive these gifts with a purchase will become returning customers, even if there are no further presents to be opened.
A further 65% of the same group will tell a friend about a positive experience with a gracious merchant. Inevitably, this kind of marketing isn’t widely appreciated by companies themselves, with less than half of the businesses surveyed interested in gift-giving.
The problem is that the free gift item must have value to the recipient but, as Epic continues to devalue games and hard work, and even the concept of gift-giving, helping it become more of an expectation than a surprise, it’s debatable whether this pipeline of free games now has anything positive about it at all.
Epic has also been extremely slow to develop its storefront, only adding achievements and other functions in the last year. At the end of 2020, PC Gamer magazine referred to the store as irresistible bait for players and a golden ticket for developers, due to its 12/88 revenue split in favour of the latter.
In comparison, Steam utilises the industry-standard 30/70, something also in use at Amazon, Google, Apple, Sony, and Microsoft.
Once again, it’s hard to see where Epic Store’s money is coming from, as even its payment model is a gimmick. In fact, it seems to operate as lots of sports teams do – in massive debt. In the last three years, it has lost $181 million, $273 million, and $139 million, respectively.
The obvious concern is that none of this can last. Epic’s generosity towards both gamers and developers seems to have an expiration date.