In the ongoing Epic vs. Google trial, Epic Games' Chief Financial Officer Randy Gelber clarified the company's stance on the 30% commissions charged by Nintendo, Sony, and Microsoft compared to Google. Read on to know more.
Epic Games Explains Why They Aren’t Suing Other Platforms Over Fees
The legal dispute centers around the fees these platforms (Nintendo, Sony, and Microsoft) impose on transactions, with Epic challenging Google's rates. Google's lawyer highlighted Epic's willingness to pay the same 30% commissions to Sony, Microsoft, and Nintendo for transactions on gaming consoles previously in the trial.
Epic Games Says the 30% Fee Offsets Losses Incurred from Hardware Sales
According to The Verge, Gelber outlined in a taped deposition that the three console manufacturers subsidize their hardware, often selling at a loss. He explained that the 30% fee charged by these platforms is necessary to cover the losses incurred from hardware sales. "Well, they subsidize hardware, so they sell their hardware, as far as I can tell from widely published reports, at a loss, and so the fee needs to cover that."
He further emphasized, "We believe those (Xbox, Switch, PC) to be competitive markets, and we believe that the fee, their cost structure, is entirely different than a mobile app store."
Gelber contended that mobile apps, despite being low in size, incur higher costs. And that, additionally, customer service costs for mobile apps are higher, as users typically contact the developer directly rather than the platform provider.
Epic Games Owes Google Almost $400k in Damages
In another aspect of the trial, Google disclosed its estimate of $398,931 damages owed by Epic. Likewise, Google’s economist Dr. Gregory Leonard stated that Google is owed 30% of the $1,329,770 revenue Epic Games generated during the brief period when Fortnite implemented a hotfix that enabled direct in-game payments before the game was removed from the Play Store. (via The Verge)
Console Platforms Earned Fortnite A Huge Amount of Revenue
Court documents disclosed ahead of the legal battle revealed the revenue distribution from Fortnite on different platforms. The PS4 emerged as a substantial contributor, generating 46.8% of Fortnite's total revenue from March 2018 to July 2020.
On the other hand, Xbox One accounted for 27.5% of the revenue during the same period. iOS represented only 7% of total revenue, with the remaining 18.7% split between Android, Nintendo Switch, and PCs.
Sony is an Epic Games Stakeholder
Additionally, it’s worth noting that Sony is an Epic Games shareholder, with a $200 million investment in 2021. In 2022, it was reported that Sony spent $1 billion to acquire another 3% stake in Epic Games.
Sources:
Why didn’t Epic sue Microsoft, Sony, or Nintendo?
Epic explains why it hasn't sued Nintendo, Sony and Microsoft over 30% fee | Epic vs Google
Fortnite’s cash cow is PlayStation, not iOS, court documents reveal
Epic Games has received a $200 million strategic investment from Sony
SONY IS SPENDING $1BN TO BUY ANOTHER 3% STAKE IN EPIC GAMES TO HELP ‘BUILD THE METAVERSE’
