Tim Sweeney
speaker
640 appearances
1 recordings
1 series
first heard Apr 2025
last heard Apr 2025
Tim Sweeney’s voice in public audio — every appearance, attributed to the second.
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But, you know, companies seeking to compete, especially underdogs seeking to compete, have to offer some unique value, have to offer something that's not available through the competitors. And I get that Steam users who just prefer using Steam and buying games on Steam or have the library in one place don't like this, but...
You're never going to have competition for better deals if you don't support the competitive mechanisms that allow competitors to come about.
I think if Valve were forced, through Epic Games Store's success, to compete with Epic Games Store, then developers would be getting a better deal, consumers would be getting a better deal, and these 30% fees would be driven down quite a lot towards the actual costs that are required to support the stores.
Well, here's the conundrum. The exercise of soft power by all of the competing stores... has made it intractable for almost any developer to offer a better price through the Epic Games Store than through Steam.
You can imagine that if the effect of Epic revenue sharing 12% to developers was that games just cost 22% less on Epic Games, sorry, 18% less on Epic Games Store, that that would actually start to reshape consumer behavior significantly. People would start coming here for the better deals.
But I feel like Steam giving developers nasty phone calls and so on when they propose to do that prevents developers from passing on savings to consumers. then what's the mechanism that drives users away from the incumbent store to the store that offers a better deal?
If basically developers are fearful of competing on price through stores, what can possibly be done to get a dominant store with something like 90% of revenue share among multi-publisher stores competing? you know, in line so that a much, much smaller store can compete? I think some answer is required there. A better UI is great. Like, Steam is super polished.
Epic Games Store and, you know, Time will hopefully be as polished. You know, how does that overcome the fact that your entire library over the past 15 years is there? If developers have been afraid to exercise their own economic interest, because it's in a developer's interest to sell on Epic and get, you know, 18% more of the revenue. I think there's a real power to incumbents.
It's very hard to overcome through just being there and being as good.
Thanks. One more bit on that exclusivity point is that when we told Google that we were going to launch Fortnite outside of Google Play and go into competition with them, they viewed exclusivity as such a powerful competitive force that they went around to the top 30 publishers and paid out hundreds of millions of dollars to them in order to agree not to do exclusive deals with competitors.
And that was called Project Hug. H-U-G. Hold developers close. And that was one of the major pieces of evidence on which the jury found their practices to be illegal and anti-competitive. And the one more data point on that, you know, we talk about 30%, and there's always a lot of people defending Steam. Well, of course, they have more costs because they have more features than Epic.
We have data on that that's very detailed. The all-in cost of operating the Google Play Store, stocking it, maintaining it, the software, the entire ecosystem, is around 6% of revenue. So, you know, in a competitive market, would a company whose cost is 6% be able to charge 30%? Like, absolutely not. And Apple's costs are similar. Apple runs an even more efficient and lean operation than Google.
So their costs are also likely in the range of 6% all in. They market up from 6% to 30%. Like, only a monopoly can do that. Look at competitive businesses. They have a margin of a few percentage. The numbers there are strikingly supportive of just outright anti-competitive market distortions.
Yeah, there's one constant in gaming that I think the industry manages to lose sight of from time to time, astonishingly, and that's fun. People play games for fun. Our whole job is to deliver fun. When you look at a lot of the games that failed recently... they just didn't deliver fun.
Or they didn't deliver fun in a manner that was nearly competitive with the other sources of fun that exist in people's lives. And so, you know, at a basic level, we don't need a terribly complicated theory to explain a lot of the malaise in the game industry. There's been a degradation of the capabilities of a lot of publishers. partly because of competition for talent.
Companies with really vibrant game businesses like Epic or Riot or others are hiring the best developers and accumulating them. Big tech companies are hiring the best game developers because there's super talent there. In some cases, companies aren't competing robustly or getting worse. They're making games that are less fun and I think everything else that's happened is a sideshow to that.
There's always political drama and so on, but I think the core is a failure to deliver fun. The nature of fun is changing. It turns out that playing a game together with your friends in a really socially engaging way with voice chat is just way more fun than playing a solitary game for the most part. And there are exceptions to that.
But I think we're seeing much, much more playtime shifting towards games you're playing together with your friends. And not just random internet strangers who happen to play that game too, but people actually know in the real world. And that's certainly been the case with me and with almost everybody I know who's playing Fortnite or similar games.
And that has really significant effects in reshaping the whole game business. Because a single-player game, if you have 20 people with 20 different opinions of which game to play, each one might buy a different single-player game. But in a multiplayer game...
If there are 20 games out and each one might have their own completely individual preference and each one we're independently choosing which game to play, each one might buy a different game. But they're all realizing that they want to play together. And so what players are doing increasingly is playing...
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