Tim Sweeney on buying exclusives:
The creative director of Phoenix Point and CEO of Snapshot Games on their exclusivity deal with EGS:
"Keep in mind that we knew there would be backlash. We knew there would be refunds. If we had to refund 100% of currently pre-orders, we'd still be in the black. We didn't make the decision lightly"
"Obviously I can't go into details about the deal - but it's for a minimum guarantee - which means Epic will guarantee that we will sell X number of copies. Even if we don't hit that number, they still pay us."
"Again, let me just be clear. Yes, we're being "paid" by Epic (it's actually a minimum sales guarantee). This wasn't a decision we made over night"
"We knew there would be upset, anger and outrage. We knew there would be refunds. This was all factored into our decision."
"Still a lot with a minimum guarantee. Enough to keep the studio running for years to come - and that was the point of this. It significantly reduces our risk on launch and means we can continue to provide content and updates"
So, how much did Phoenix Point receive from EGS? Well, they raised over $2 million in funding before the exclusivity deal, and they say even if they had to return all the funding they'd still be in the black, and further, that the amount EGS gave them is "Enough to keep the studio running for years to come". Therefore, it makes sense that EGS gave Phoenix Point far more than $2 million for the exclusivity deal. Maybe even far more than $5 million for it.
EGS isn't trying to turn a profit on these exclusives, but to buy a customer base and large market share for the EGS platform. And with Epic Games making $3 billion per year, mostly from Fortnite, the company currently has a lot of money to spend.
According to a financial report by the publisher of Remedy's Control, Tim Sweeney apparently paid €9.49 million ($10.44 million USD) for timed-exclusivity rights:
Tim Sweeney suggesting EGS is not making any profit while doing paid-for exclusives:
Tim Sweeney stating that EGS' 12% fee isn't sufficient to cover EGS transaction fees in all situations:
Tim Sweeney stating that a 30% / 70% profit-split ratio isn't necessarily greedy or excessive, acknowledging that it can even be barely profitable for small to moderate-sized companies:
Tim Sweeney being hypocritical regarding business practices he formerly condemned and called on people to rally against, which he now espouses for EGS:
Microsoft wants to monopolise games development on PC. We must fight it
Microsoft's Windows app strategy comes under fire: 'The most aggressive move Microsoft has ever made'
Tim Sweeney blasts Microsoft's "aggressive UWP initiative"
Epic Games: Microsoft can't be allowed to control PC gaming
Fig backers and gamers commenting about Phoenix Point making their game EGS exclusive:
As a company you shouldn't take people's money by making certain alluring promises, spend that money, and then when things are going well for you back-track on promises before giving the money back when customers' money and satisfaction is no longer as pivotal for your long-term success and survival. Customers aren't there to act as temporary interest-free loan services, they are there to back projects so they can support the fulfillment of certain promises.
And as far as games go, ensuring they release on stipulated platforms is an important part of that. Add on as many platforms as you want, but do not take away any of them, especially if it means breaking your word after you have people's money and done what you need with it. It will only make backers feel like they have been used and exploited, rather than valued as huge contributors to getting the crowd-funded game off the ground.
I think what makes this particularly galling is how they basically used us backers as an interest-free loan. They took our money, developed to the point where it was mature enough to attract external investors, then totally changed the game plan and fully expect us to withdraw our cash, since they're now out of the high-risk phase of the project.
The conned us into lending them the money, and manoeuvered it so we'd be sitting on the bill if the development project failed. For a game that sold itself based on community involvement, with backer builds and all, this is just awful.
Information about monopolies
A lot of online commentators have asserted that EGS is good because it's competition and reduces Steam's supposed monopoly. Well, those comments are made using a very narrow and anti-consumer interpretation of what competition is, and without understanding for what a monopoly is and why or when a monopoly is even bad.
First, and without elaboration at this time, Steam hasn't been a monopoly.
Now, the bigger point that I want to address is that a monopoly actually isn't a bad thing unless the position of having the monopoly begins being abused, and outside of the position becoming abused and creating harmful effects for consumers, a monopoly is actually nothing to be concerned with.
Some key indicators that a monopoly is being abused are the use of exclusionary practices, reduced consumer choice, and rising prices.
As is obvious, EGS paying for exclusives is an exclusionary practise.
As can be seen, EGS is causing reduced consumer choice.
And EGS' exclusivity deals are also causing an increase in game prices: Anno 1800 and The Division 2 Prices Rising Without Steam
And the increase in prices caused by EGS' exclusives isn't limited to the two games talked about in that article. Because EGS doesn't do regional pricing, the cost of a game from EGS for regions outside North America are higher than those games cost on Steam before they were removed from Steam due to EGS buying exclusivity deals for them.
More information on monopolies: Monopoly - Economics Online
The disadvantages of monopoly to the consumer
Monopolies can be criticised because of their potential negative effects on the consumer, including:
Restricting output onto the market.
Charging a higher price than in a more competitive market.
Reducing consumer surplus and economic welfare.
Restricting choice for consumers.
Reducing consumer sovereignty.
The traditional view of monopoly stresses the costs to society associated with higher prices. Because of the lack of competition, the monopolist can charge a higher price (P1) than in a more competitive market (at P).
As you can read there, a monopoly isn't inherently bad, but potentially brings negative effects - with multiple of those negative effects being things that are being caused by EGS' practice of paid-for exclusives, and the practise of exclusives itself being one of the potential negative effects of a monopoly. So, EGS is engaging in monopolistic practices.
Further resources for inclusion: