Is Epic's publishing deal good?
Here's how Epic's game publishing terms stack up.
On top of everything else, Epic Games
is now a publisher. Fortnite baron Tim Sweeney and company announced the news this week by outlining Epic's financial agreement with the developers it'll be working with, which include Remedy and Playdead. That would've been a weird way to announce a publishing wing for another company—most don't shout their contract terms from mountaintops—but we're getting used to it with Epic, which revealed its store in late 2018 by announcing an 88 percent revenue share for developers.
For those of us who don't make games ourselves, though, it isn't immediately obvious how Epic's proposal compares to other publishing deals. For starters, here's what Epic's announcement outlines, and a short explanation of what it means:
● Developers will have "full creative control" of their games. This claim is hard to assess without seeing the exact wording of the contract, but I'll mark it down as a commitment not to meddle with the creative details—a nice sentiment to start with.
● "Developers retain 100% of all intellectual property." In other words, the developer gives Epic a license to distribute its game and take its share of the revenue, but holds onto ownership of all the copyrighted code, character designs, art, and so on. Practically speaking, this means that if Remedy wanted to make a sequel to one of its Epic-published games, but didn't want to involve Epic, it could theoretically do that. (Give or take any stipulations laid out in the contract.)
● "Epic Games Publishing will cover up to 100% of development costs, from developer salaries to go-to-market expenses such as QA, localization, marketing, and all publishing costs." The "up to" suggests this will vary from contract to contract, but
one of Remedy's press releases confirms that Epic is providing the entire budget for two of its games.
● "...Once costs are recouped, developers earn at least 50% of all profits." After Epic makes back its investment and covers retail, marketing, and other costs, it'll split the rest of the revenue 50/50. The "at least" here suggests that, in some cases, the developer will get a bigger net revenue share. In Remedy's case, it's 50/50.
How Epic compares to other publishers
After clocking the reactions on social media and talking to people in the industry, I've gathered that a 50/50 split is pretty good, and that developers retaining ownership of their intellectual property is very desirable but not aberrant. What makes Epic's offer exceptional is the part where Epic pays for the entire cost of development.
Another publisher's deal with Remedy makes for an excellent comparison: For investing €7.75 million into Remedy's development of Control (which
cost between €20 and €30 million to make) and handling marketing and distribution, 505 Games
secured publishing rights for 20 years. For that 20 year period, Remedy gets 45 percent of Control's "net revenue," which refers to revenue after the investment is recouped, retail costs, marketing costs, and so on.
Remedy's deal with Epic is clearly better. In both deals, Remedy keeps ownership of its intellectual property, but Epic is investing 100 percent of the development costs and paying 50 percent of the net revenue back. The numbers: they're bigger.
Practically, this means that if Remedy's new games flop and Epic never recoups its investment, Remedy won't have lost money, because Epic paid for the entire cost of development. The deal with 505 Games didn't even cover half of Remedy's development expenses,
and took a 5 percent greater net revenue cut. Epic is bearing more of the risk.
Vlambeer co-founder Rami Ismail
expressed awe at Epic's terms, saying that each bullet point exceeds industry standards. "I have rarely heard of anything even close to this," he tweeted.
Publisher Devolver Digital
jokingly took offense at Ismail's comment, and tells PC Gamer that its publishing terms are "similar to those proposed by Epic." It offers a 70/30 revenue split, with the larger portion going to the developer.
That's obviously better than the 50/50 deal Epic has with Remedy, but we can safely guess that Epic is investing a lot more money into Remedy than Devolver put into, say, the development of Hotline Miami, which was made by two people. The kinds of games Epic is funding can cost tens of millions of dollars to make, and again it's that commitment to 100 percent funding that makes the whole deal stand out.
Nightdive Studios director of business development Larry Kuperman, who has worked in the industry for two decades, says that Epic's terms seem "very favorable"—but also notes that the devil is in the details, which we don't have many of.
For instance, most publishers tie funding to milestones, which can frustrate developers. "This seems straightforward, but in practice, it impacts the course of development," says Kuperman. "You do things in the order that gets you paid rather than what makes the most sense in your opinion."
Does Epic's guarantee of creative control and full development funding mean that it's taking a different, maybe better, approach to game production itself? We don't know. For now, Epic says it's only discussing what's in the announcement and that it will "share additional information in the future."
What does Epic Games Publishing mean for PC gamers?
Epic is funding the development of two new Remedy games (Remedy says one of them is its "most ambitious" yet), a game from Limbo creator Playdead, and a game from GenDESIGN, which includes some of the people behind PlayStation 2 classics ICO and Shadow of the Colossus. So, it's good news, at least if you want to see what those famous developers create with their finances covered and the promise of total creative control. I definitely do.
The three deals announced so far aren't the only publishing contracts Epic has signed, either. "Additional information, development partners, and games will be announced in the coming months," it says.
Because Epic is publishing these games, it's obviously likely that they'll be Epic Store exclusives on PC—but we don't know that for sure. For one thing, we don't know if Epic will still be doing store exclusives when these games release. A lot can change over the several years it takes to develop a game. (Just a few years ago, the Epic Store didn't even exist.)
Even if Epic Store exclusives remain a thing, I'd expect timed exclusivity for these games. Epic wouldn't be a very good publisher if it didn't do everything it could to turn a profit for itself and its developers, and so I'd expect to see year-long exclusivity periods at most—the same as it's been doing with other games. It'll have to negotiate with itself on that one.
As for whether the game publishing industry as a whole will shift in response to Epic's publicized terms, I think it's too early to say. Epic can't publish every developer's game, and given how much money it's putting down for each, I have to assume it'll be selective. Meanwhile, Steam didn't adopt the Epic Store's more generous revenue model just because Epic said it was fairer and snagged some exclusives—and as far as I can tell, Steam and Valve are doing just fine.
For now, I'm just glad to see that Epic is investing some of its revenue into developers, taking risks rather than growing conservative and sitting on its Fortnite cash (or perhaps swimming in it, Scrooge McDuck style). Obviously a company worth billions doesn't do anything just to be altruistic, but if Remedy and other developers truly do find a better source of funding in Epic, that's good news to me.
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