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

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.

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“At the same time,” he added, “consumers are perhaps looking at things differently, that they want to be able to pick their platform, so there are many different perspectives to that, and I don’t want to go too deeply into that, but I think competition in general is great.”

Embracer has been attracted to Epic’s more favourable platform fees on a number of occasions. Metro Exodus was one of the earliest high-profile Epic Games Store exclusives, and Dead Island 2 is a current one.