Epic Games paid a lot to give games away for free, but it was probably worth it
The free games helped Epic acquire almost 5 million new users in 2019.
Epic Games has been making a bold statement over the last couple of years by offering gamers a massive amount of free games on its platform. Now, new documents have come out as part of the Apple vs. Epic Games lawsuit that is currently happening that shows just how much Epic paid for some of those free games.
A huge part of Epic Games’ plan to break into the PC gaming market as a games store has been giving away free games every couple of weeks. There’s no doubt that Epic paid a significant amount of money to be able to give these games away for free.
However, the new document has revealed that this has become a pretty good investment for Epic Games. The company knew that it would have to do something big to compete with the established PC gaming store giants, like Steam, and something big has definitely been done.
This document shows the games that Epic gave away for free starting when the service launched in December of 2018, up until September of 2019.
As you can see, there was a lot of money spent on these games by Epic. One thing to note is the discrepancy between AAA titles’ values and smaller, indie titles’ values. Batman Arkham cost Epic $1.5 million whereas smaller games, like World of Goo, were worth payments as small as $50,000.
In total, Epic Games spent $11,658,000 on game rights during this period of time. This may seem like a lot of money, and it is, but to Epic, this has proven to be a pretty worthwhile investment.
The important thing to note about this document is the seventh column, titled “Epic UA Cost.” In this scenario, UA stands for user acquisition, so this column represents the cost of a new user creating an Epic Games account. The numbers across that column are considerably low, with some games having a UA cost well under a dollar. Overall, the average UA cost across all of these games comes to $2.37.
This is an incredibly low user acquisition cost. Even if every new user doesn’t spend money on the platform in the future, putting the Epic Games Store product in front of people’s eyes will definitely lead to new people spending money.
One way to look at it is that these new users will only have to spend an average of $2.37 for Epic’s investment to become profitable. Chances are that users will, in fact, spend that money over time, especially considering the growing library of games becoming available on the platform.
There’s no doubt that Epic is perfectly okay with spending this kind of money to establish itself in the market. The company had no problem losing upwards of $300 million in exclusivity deals over the last few years, and it has been said that the company won’t be profitable for another 3 or 4 years. I’d bet that all of this spending will be worth it in the end.
- Epic Games just got another $1 billion in funding so it can keep burning through cash
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