HomeOpinionsCommentary: Epic Games' business strategy has become the gaming industry's newest blueprint

Commentary: Epic Games’ business strategy has become the gaming industry’s newest blueprint

Epic Games has been acquiring studios over the course of a few years. This is a normal occurrence in the business world for the most part, mergers and acquisitions happen every year, but not in the manner in which Epic Games has done it. Their current business model revolves around making the acquired studios’ games free to play and implementing their microtransaction system.

Epic Games grows ever closer to being a monopoly with every new studio or property purchased and modified.

According to GGRECON, an aggregate gaming news site, “Epic Games later decided to streamline their micro-transactions, creating battle passes for players to purchase every so often. They also started drastically changing maps, characters, and weapons during the game’s development cycles, which they referred to as seasons. These seasons each had different battle passes and perks, which drove more microtransactions and proved to be largely popular with players and streamers alike.” GGRECON called the model “a wildly successful formula.”
The system stems back to their 2018 game “Fortnite: Battle Royale.” Before the model was popularized, the gaming industry had other avenues for making games free-to-play.

“League of Legends,” “Dota 2” and “Counter Strike: Global Offensive” have existed longer than the Epic Games model and have always been free-to-play, but they are all owned by competing studios. The desire to secure the other games’ player base allowed for a dynamic where everyone was competing to introduce newer, better and more refined features as well as gameplay elements. That dynamic is not present with Epic Games’ acquired subsidiaries. The games they buy are in a competition with themselves, exhibiting the same tried and true model that generates so much revenue for their parent company. This is all well and good for Epic Games and their shareholders, but the almost-monopoly Epic Games has does not allow for progress.

While their model is not technically a monopoly, as there are other studios still releasing games, competing studios’ releases do not compare to the force of Epic Games. They show no signs of stopping in their race to acquire studios.

Crunchbase, a site centered around gaming company transparency in business, lists that so far Epic Games have acquired 18 properties. Their model is similar to the Disney film model. Their top games right now are “Fortnite: Battle Royale,” “Fall Guys” and “Rocket League,” which were the 2nd, 5th and 12th most popular PC games during July 2022, according to newzoo, a source for games and esports analytics and market research. These games began to put out collaboration cosmetics, which are visual features in the game that do not affect game play, but instead change the appearance of player items and players models in partnership with other well known properties such as Marvel or Dragon-Ball, at a faster rate than before they were bought by Epic Games.

The Epic Games strategy has not existed in a vacuum. It has had an effect on the rest of the industry. Take “Call of Duty,” one of the largest and most successful video game series of all time, creating an offshoot game that is completely free-to-play, funded by cosmetic collaborations and a tiered reward system for playing the game.

The effect on the industry is evident when the biggest game developers like Activision start shifting their priority focus like this. Additionally, another gaming giant in the form of Blizzard has taken their swing at things with “Overwatch 2.” The first “Overwatch” game was released before “Fortnite: Battle Royale” was popularized, but “Overwatch 2” will be released in 2022, six years after this model started being lucrative for Epic Games. The first game was normally priced, the microtransactions were in the form of loot boxes, and had little to no similarities of any kind with “Fortnite: Battle Royale.” “Overwatch 2,” however, has turned on its head completely, at least regarding the way the game is marketed.The game will now be free-to-play, will include a tiered reward system that you use an in-game currency acquired with real money to purchase, and the possibility of future collaborations.

Another example would be “MultiVersus,” a relatively new fighting game that has already garnered an audience. The game itself is an answer to “Super Smash Bros.” The game pits characters from different franchises against each other on a 2D platformer scale. The game itself is not necessarily influenced through its design or gameplay, but once again it’s all about the marketing. The game is free-to-play, features a tiered reward system that you buy with in-game virtual currency purchased with real money, and cosmetic collaborations you purchase with the same currency. The similarities write themselves; this is not correlation, this is causation.

The video game industry is often the subject of scrutiny in both politics and within the industry itself for a variety of reasons, but Epic Games’ actions seem to go by without as much discussion. There is a dialogue to be had here about Epic Games and namely Fortnite’s effect on the switch to the “Games as a Service” model within the video game industry. The more time that passes, the more developers consider that maybe they should follow in their footsteps in an effort to mimic Epic Games. According to TweakTown, a source for technology, science, space, and gaming news and reviews, “Epic Games now has a valuation of $31.5 billion-nearly double what it was worth two years ago. Epic Games said its valuation was roughly $17 billion back in 2020.” This rise in valuation is all linked back to over-monetization, a seemingly endless stream of boought content. Game Rant, a source written by gamers for gamers with an emphasis on news, reviews, unique features, and interviews, says “One thing about gaming as a service is that everything seems to cost money. Buying the game, buying the expansions, buying the cosmetics and upgrades, buying the in-game currency that also happens to buy those things, the list just goes on and on. Some games go free to play in an effort to seem more attractive to those who dislike this aspect of gaming but what tends to happen is that once players download that free game, most of everything in said game costs money through microtransactions or DLC packs, etc.” This problem is noticed by those who cannot necessarily afford everything in these games, but are tempted by the constant stream of cosmetics. It is not the best practice to rely on merely consumerism, focus needs to shift to a friendlier ethos.

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