The Epic Games Store is nothing if not generous with its free games. For several years, the company has released a free game every week, and in the last few weeks, these free offerings have massively increased in quantity. This practice of releasing free games stands in contrast to a lot of Epic Games' more controversial business practices. Be it accusations of spyware, unexpectedly draining battery life with its store app, or the hordes of exclusives, Epic Games is no stranger to controversy. Combined with recent news that the store is hemorrhaging money for Epic, why is the studio only ramping up its delivery of free games?
In short: the Epic Games Store can afford to lose money. In return, the Store attracts a ton of returning customers who are likely to spend a lot of time in the app. Having a weekly reward for loading up the store app massively increases the likelihood of repeat customers. Further to that, the ability to add free triple-A games to the store can attract impassioned players, ones more likely to buy something in the Epic Games Store. This is the case with the coming week's two free titles, including 2020 classic Alien: Isolation.
In general, the store has to fight an uphill battle against Steam, which is currently the market leader in PC game stores. So, with its many investors, the Epic Games Store can risk money on exclusive games and free titles as long as it causes some egress into the marketplace as a PC storefront. Ultimately, not having a competitive audience is more problematic for the store than anything else. A storefront being a loss-leader is nothing new, and it is entirely necessary for the Epic Games Store right now.
Well, the answer is in the hundreds of millions. In the anti-trust lawsuit between Epic Games and Apple, Epic filed a few court documents that put how much money it was losing into perspective. Epic Games lost over $450 million in the last two and a half years. This comes from around $181 million of losses in 2019, and a further $273 million in 2020. If current projections are accurate, Epic stands to lose another $139 million throughout 2021. A large majority of this comes from the combination of buying game exclusivity and making many of its premium titles free for users.
It is not unusual for a company to have an initiative operating at a loss. However, for that loss to be nearly half a billion dollars would spook an awful lot of companies. In spite of this imposing loss, Epic remains adamant that the 12% revenue share that the company gets from developers will be enough to support that, as it predicts that the store is likely to be profitable by 2023. With over 745 million free Epic Games store titles claimed since 2018, the store certainly may have the audience.
In a tweet responding to news about the cost of competing with Steam, Tim Sweeney revealed how many free titles were released on the Epic Games Store: over 103. In the last week, 3 games became free on the Epic Games Store in one go. These included the full Deponia collection, Ken Follett's The Pillars of the Earth, and The First Tree. These games have a combined base retail price of nearly 100 dollars. By giving a staggering three games out in one week, the store could be seen as losing a lot of potential sales.