The Epic Games Store

The readings this week made me think a lot about the things I have read online about the Epic Games Store. For those who don’t know, this is an online platform run by a company named Epic, known for Fortnite and the Unreal Engine, that is used by consumers to purchase video games to play on their PCs. It was developed in response to the dominant player in the PC gaming industry, Steam.

            Epic had the right idea to break into this market. It is comparatively easy to have your own platform for selling games and thus the threat for competitors is high. However, it is hard to get people to switch to your new platform if consumers already get the games they want from somewhere else. The Epic Games Store has been trying to combat this through a variety of techniques. Namely, Epic has been offering game developers and producers better deals than Steam. They typically offer an 88/12 split to Steam’s 70/30 split. In doing so, they secure exclusivity deals with the developers so that for a set amount of time the only way to purchase the game is through the Epic Games Store. In this way they secure the supply channel for a time and if consumers want to play the games when they are released, they must be purchased from Epic. The problem is, Epic has forgotten about the power of the buyers.

            Buyers are not happy about these exclusivity deals. Even if Steam is by far the dominant platform, many people are complaining about there being too many platforms that they have to wade through to figure out which one hosts the game they want to play. In addition, Epic has been rocked by security snafus, such as many people’s information being stolen through Fortnite. Consumers are afraid to use their gaming platform in case their personal information is stolen. This has all been compounded by increased digitization that is putting customers in the driver’s seat. I am not a PC gamer and have never used any of these gaming platforms. The only reason I know about all of this controversy is through conversations on social media platforms. Buyers are trying to mobilize and leverage their power to force the Epic Games Store to change. Some buyers are even trying to get others to boycott buying games on the Epic Games Store, instead opting to wait out the exclusivity deal to show their displeasure in how Epic Games is doing business.

            All in all, the Epic Games Store shows what happens when you don’t analyze all factors that could affect your strategy.  The company has effectively bypassed the barriers to entry and is waging an effective war to rival with Steam, but they neglected the buyer’s opinions. If the buyers can mobilize and Epic Games fails to listen to their opinions, the company may suffer.

References

“‘Borderlands 3’ Is An Epic Games Store Exclusive And There Is No God.” n.d. Accessed April 3, 2019. https://www.forbes.com/sites/erikkain/2019/04/03/borderlands-3-is-an-epic-games-store-exclusive-and-there-is-no-god/#5c4f3add6f21.

“Epic Games Gets ‘F’ Rating from BBB after Fortnite Fans, Other Gamers File Complaints against Company - The Washington Post.” n.d. Accessed April 3, 2019. https://www.washingtonpost.com/technology/2019/01/10/fortnite-maker-epic-games-earns-f-rating-better-business-bureau/?utm_term=.edbda7ec94d9.

Greensberg, Ezra, Martin Hirt, and Sven Smit. 2017. “The Global Forces Inspiring a New Narrative of Progress.” April 2017. https://www.mckinsey.com/business-functions/strategy-and-corporate finance/our-insights/the-global-forces-inspiring-a-new-narrative-of-progress.

Porter, Michael E, James C Collins, Jerry I Porras, Mark W Johnson, Clayton M Christensen, Henning Kagermann, W Chan Kim, et al. 2000. “HBR: The Five Competitive Forces That Shape Strategy,” no. january: 25–40. https://doi.org/Article.