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Embracer Group CEO Lars Wingefors has said the company spends more on platform fees than it does on game development.

In a Q&A session during Embracer’s AGM on Thursday, the executive was asked for his thoughts on the recently announced Epic First Run program.

The new exclusivity scheme will allow developers of any size to claim 100% of revenue if they agree to make eligible titles exclusive to the Epic Games Store for six months.

After the six months are up, the game will revert to the standard Epic Games Store revenue split of 88% for the developer and 12% for Epic Games.

In comparison, Valve has traditionally taken a 30% share of game sales on Steam, although in 2018 it introduced a revenue share tier system which offers more to developers if their games meet certain sales thresholds (75%/25% on earnings beyond $10m and 80%/20% on earnings beyond $50m).

“At the end of the day, I think it’s good having competition to Steam, because it puts them on their toes to deliver their best experience,” Wingefors said of Epic First Run.

“Obviously, we would like to pay less fees to platforms. In reality we are paying more fees to platforms than we spend on game development every year, and if you just think about that number, it’s crazy.

“So, there are margins with the platforms that I would preferably have within building more games and some more margins, but I think it’s great that Epic is there trying to build a competitive platform.

Embracer says its ‘crazy’ spend on platform fees exceeds its spend on game development | VGC

It also says a new Epic Games Store exclusivity scheme will help keep Steam on its toes…

www.videogameschronicle.com

 

[Tiago Rodrigues]

They bought all those studios like there was no tomorrow and are now trying to save face. This group will have a tough time i fear.

 

[Interfectum]

Yeah it's Steam's fault. Didn't expect that defense.

 

[RoboFu]

They will sell more on steam though. No one seems to put that in these articles . Unless the game sucks. lol

 

[FearlessBelgian]

Take Epic's money and die in silence.

 

[Jinzo Prime]

100% of $0 is still 0.

 

[DeepEnigma]

In reality we are paying more fees to platforms than we spend on game development every year

Make better products that appeal to the masses.

 

[bbeach123]

I bet 100% Dev LOVE to "spent more fees to platforms than we spend on game development every year" .

Its mean they make like 4-5 time the game dev cost -every-fucking-year.

Its sound ridiculous on both side .

 

[GHG]

If you want to take the EGS moneyhats just take them, spare us the bullshit.

 

[DeepEnigma]

If you want to take the EGS moneyhats just take them, spare us the bullshit.

It all reads like a bunch of amateurs getting in over their heads.

Not as easy is it? Even when you have money to buy shit. You need proper planning and production.

 

[Shubh_C63]

His statements are facts, no judgements from my side.

Also Steam unlike literally every other storefront out there fucking works 10/10 in 95% of the areas.

 

[tryDEATH]

It's daylight robbery when it comes to platform fee's and Engine fee's. Neither is capped and can rake in hundreds of millions from a single game if its successful. It's no wonder publishers are making their own game clients and refuse to put things on steam. Imaging having to forfeit 30% of your income to just be on a platform that's absurd.

 

[Robb]

Considering the products they put out I am not surprised to hear they spend less on game development than the fees.

 

[BlackTron]

Imaging having to forfeit 30% of your income to just be on a platform that's absurd.

 

[DeepEnigma]

Imaging having to forfeit 30% of your income to just be on a platform that's absurd.

Imagine if they had to spend tens of billions building their own hardware platforms to sell their games on. Every 5-7 years.

 

[Kilau]

If you are paying “a lot” in fees aren’t you also bringing “a lot” of revenue?

 

[GHG]

It's daylight robbery when it comes to platform fee's and Engine fee's. Neither is capped and can rake in hundreds of millions from a single game if its successful. It's no wonder publishers are making their own game clients and refuse to put things on steam. Imaging having to forfeit 30% of your income to just be on a platform that's absurd.

Imagine hobbling together some shitty storefront/launcher in order to capture 100% profits but then realising nobody wants to use it because it lacks basic features and is a buggy POS.

 

[Tsaki]

So this game publisher spends less than 30% of their earnings back into game development? LMAO

 

[tryDEATH]

Imagine if they had to spend tens of billions building their own hardware platforms to sell their games on. Every 5-7 years.

If we're just throwing around absurd numbers just make it trillions.

 

[DeepEnigma]

If we're just throwing around absurd numbers just make it trillions.

It's not absurd. Each console maker spends billions in R&D for their platforms. There are currently 3 major console players that afford them opportunity to sell their games on. If they had to do it themselves.... then conservatively it would be in the tens of billions.

They have mismanaged and now they're whining about it. In over their heads. Amateurs.

 

[GHG]

It's not absurd. Each console maker spends billions in R&D for their platforms. There are currently 3 major console players that afford them opportunity to sell their games on. If they had to do it themselves.... then conservatively it would be in the tens of billions.

They have mismanaged and now they're whining about it. In over their heads. Amateurs.

It's a common theme for him, sympathising and making excuses for businesses that point the finger and blame others instead of getting their shit together.

 

[SlimySnake]

30% is too much. Physical retailers took 20% and that made sense because they have to run the actual store, and distribute the physical copies everywhere.

Digital servers are much cheaper. You dont need 4 bestbuys, targets and walmarts and 10 gamestops in every city. You need like 1 server farm for like 10 states. The cost of running those server farms is way below running brick and mortar stores and yet they are charging 10% more.

 

[RoboFu]

Let me take you youngins on a little sega Saturn dev journey about costs.

Back in 1995…

Saturn Dev cost:
Sega Saturn Dev System I w/Hitachi E7000PC ICE - $30575
Cart.Dev development kit - $4800
Programming Target Box - $7475
Sound Target Box - $4800
Saturn Cart.Dev SIMM Buffer Board - $275
Modified Saturn for Cart.Dev - $700
Saturn Virtual CD Emulator Kit - $ 8100
Mirage Saturn CD Emulation System - $3000
Hitachi E7000PC Kit - $15000
SH2 CPU Board - $200
Yamaha 4x CD Encoder - $2500
Write-once blank CD box of 5 - $75

Total cost: $77,500 1990s money for one dev kit. Lol

They also suggests an SGI Indigo 2 workstation for 3D modeling, which is not included. That, in 1995, was about a $100k rig.

A cd game cost anywhere from $2 - $5 a disc but you also had to buy a certain amount and pay a distributor.

This also doesn’t include misc platform license fees or submission fees. You had to pay for each submission.

And after all that it was still completely up to you to advertise the game. No game banner in a “what’s new “ public digital store list. Lol

 

[Braag]

Uhhh I want to see the math with which he came into that conclusion.
Either way, Embracer just like Deep Silver is one of those publishers that want to cut their spending as low as possible, thus Tim Sweeney's offer tempts them so much.

 

[DeepEnigma]

Let me take you youngins on a little sega Saturn dev journey about costs.

Back in 1995…

Saturn Dev cost:
Sega Saturn Dev System I w/Hitachi E7000PC ICE - $30575
Cart.Dev development kit - $4800
Programming Target Box - $7475
Sound Target Box - $4800
Saturn Cart.Dev SIMM Buffer Board - $275
Modified Saturn for Cart.Dev - $700
Saturn Virtual CD Emulator Kit - $ 8100
Mirage Saturn CD Emulation System - $3000
Hitachi E7000PC Kit - $15000
SH2 CPU Board - $200
Yamaha 4x CD Encoder - $2500
Write-once blank CD box of 5 - $75

Total cost: $77,500 1990s money for one dev kit. Lol

They also suggests an SGI Indigo 2 workstation for 3D modeling, which is not included. That, in 1995, was about a $100k rig.

A cd game cost anywhere from $2 - $5 a disc but you also had to buy a certain amount and pay a distributor.

This also doesn’t include misc platform license fees or submission fees. You had to pay for each submission.

And after all that it was still completely up to you to advertise the game. No game banner in a “what’s new “ public digital store list. Lol

Adjust for inflation please.

 

[RoboFu]

Adjust for inflation please.

$77k kit would be what about.. $125k now?

 

[SlimeGooGoo]

Mismanaged company, no surprises

 

[tryDEATH]

It's not absurd. Each console sends billions in R&D for their platforms. There are currently 3 major console players that afford them opportunity to sell their games on. If they had to do it themselves.... then conservatively it would be in the tens of billions.

They have mismanaged and now they're whining about it.

Their "platforms" revolved around hardware primarily when it comes to R&D not software development for their stores. All 3 platforms have their games developed almost the same way with just newer versions of engines for decades. Selling games on steam and giving them 30% is insane, MS themselves have lowered that insane 70/30 split that only Sony and Steam still hold, it's basically developer robbery as this point. Having gamers twerk for platforms/clients when it comes to profit splits is even worse than console warring.

 

[DeepEnigma]

Their "platforms" revolved around hardware primarily when it comes to R&D not software development for their stores. All 3 platforms have their games developed almost the same way with just newer versions of engines for decades. Selling games on steam and giving them 30% is insane, MS themselves have lowered that insane 70/30 split that only Sony and Steam still hold, it's basically developer robbery as this point. Having gamers twerk for platforms/clients when it comes to profit splits is even worse than console warring.

Ok.

 

[GHG]

Having gamers twerk for platforms/clients when it comes to profit splits is even worse than console warring.

Have you ever thought that gamers will simply "twerk" for the storefront/platform that gives them the best overall experience and that those storefronts/platforms just so happen to be the ones that charge the higher fees?

If you don't like it then look towards those charging lower fees and ask them to up their investment in their storefront/platforms in order to improve the user experience for their prospective customers.

This whole situation is not coincidental. Some storefronts are willing to drop their pants as far as fees are concerned because there is next to zero reinvestment and/or ongoing development for their platform.

 

[TheUsual]

In reality we are paying more fees to platforms than we spend on game development every year, and if you just think about that number, it’s crazy.

Embracer...do you know how to do budgeting?

Also, if you're spending more on fees than game development yearly, what are you doing with your revenue stream from games sold?
Quit being pissy that your $2 billion cash deal failed at the last minute and you can't hide money mismanagement as easily now.

 

[Jinzo Prime]

Uhhh I want to see the math with which he came into that conclusion.
Either way, Embracer just like Deep Silver is one of those publishers that want to cut their spending as low as possible, thus Tim Sweeney's offer tempts them so much.

Embracer owns Deep Silver. They spent way too much on acquisitions and now that money isn't cheap, have to find ways to drastically reduce overhead or risk going under.

 

[ulantan]

Imagine hobbling together some shitty storefront/launcher in order to capture 100% profits but then realising nobody wants to use it because it lacks basic features and is a buggy POS.

Lol no one would ever do that...lol

 

[Kilau]

30% is too much. Physical retailers took 20% and that made sense because they have to run the actual store, and distribute the physical copies everywhere.

Digital servers are much cheaper. You dont need 4 bestbuys, targets and walmarts and 10 gamestops in every city. You need like 1 server farm for like 10 states. The cost of running those server farms is way below running brick and mortar stores and yet they are charging 10% more.

It’s also much cheaper to upload your game to the server one time and sell it forever with no worries about product or shipping.

 

[Guilty_AI]

Their "platforms" revolved around hardware primarily when it comes to R&D not software development for their stores. All 3 platforms have their games developed almost the same way with just newer versions of engines for decades. Selling games on steam and giving them 30% is insane, MS themselves have lowered that insane 70/30 split that only Sony and Steam still hold, it's basically developer robbery as this point. Having gamers twerk for platforms/clients when it comes to profit splits is even worse than console warring.

Hello Mr. Wingefors. Hows that restructuring going?

 

[Kataploom]

They must be selling gangbusters then to pay that much only on fees

 

[IntentionalPun]

That's a weird way to describe them taking a cut, you aren't "spending" that money as you wouldn't have it without the store existing.

 

[tryDEATH]

Hello Mr. Wingefors. Hows that restructuring going?

Sorry, is that one of those inside jokes of you 10K posters?

 

[UnNamed]

Em

Embracer Group CEO Lars Wingefors has said the company spends more on platform fees than it does on game development.

Annual business report at Embracer

 

[El Muerto]

I guess they were really hoping for the Saudis to bail them out after spending too much acquiring studios. (E)mbr(A)cer is trying to become the next EA.

 

[Guilty_AI]

Sorry, is that one of those inside jokes of you 10K posters?

quit stalking me creep

 

[Goalus]

Make better products that appeal to the masses.

If they make better products that appeal to the masses and consequently sell more units via Steam, that would mean they'd pay even more platform fees.

 

[SmokedMeat]

“So, there are margins with the platforms that I would preferably have within building more games and some more margins, but I think it’s great that Epic is there trying to build a competitive platform.

Epic’s actually watered down their old exclusivity deal. Now instead of paying big bucks up front for timed exclusivity, you get an extra 12% of crappy sales for six months.

 

[IntentionalPun]

If you spend $100 million on game development.

And are getting charged $150 million in fees (aka the store took their cut)

That means you received around $500 million in revenue from your sales, meaning you got a return of 5x.

Even if you had $101 million in fees you still made $200 million or 2x profit lol

This is the dumb logic that makes companies create their own expensive to maintain storefronts and then go running back to Steam years later.

 

[SmokedMeat]

If they make better products that appeal to the masses and consequently sell more units via Steam, that would mean they'd pay even more platform fees.

The more units you sell, the less Steam takes.
Plus people buy games on Steam. Nobody buys anything on Epic.

On consoles it’s a flat 30% regardless of how many units you sell.

 

[NickFire]

If you spend $100 million on game development.

And are getting charged $150 million in fees (aka the store took their cut)

That means you received around $500 million in revenue from your sales, meaning you got a return of 5x.

I think DeepEnigma nailed it. Clowns are overspending thinking its easy, and trying to spin how the problems are outside of their control / someone else's fault.

 

[IntentionalPun]

I think DeepEnigma nailed it. Clowns are overspending thinking its easy, and trying to spin how the problems are outside of their control / someone else's fault.

But the math works out to them being highly profitable, is my point.

I think they are just full of shit, they are spending way more on dev than store cuts.

 

[Jinzo Prime]

If they make better products that appeal to the masses and consequently sell more units via Steam, that would mean they'd pay even more platform fees.

 

[Walter Matthau]

Please give us money so we can complete our mission of controlling every major IP and laying everyone off

 

[kvltus lvlzvs]

This is hilarious. Nothing saves face in the eyes of the common folk like.. blaming steam and saying epic is better.

Sheesh, this reminds me of the 2018/2019 EGS PR wars.