In a bid to get more attention and eventually dollars for gamers on their new store, Epic has recently re-launched a few games for free on the Epic Store. These launches help Epic acquire new store users and increase the competition with Steam for the attention of gamers. Although we have no information about the agreement between Epic and the developers, it’s likely that Epic is paying the developers on a per download basis or a fixed fee upfront for these promotions. Epic then calculates this cost as part of their customer acquisition budget, similar to paying for customers via advertising on Facebook. The goal is then to take this attention and monetize the new customers over time at a rate higher than what they’re paying the game developer for the rights to the games they’re distributing for free. The risk for the game developer letting a store offer their game free is that the content is devalued in the overall zeitgeist of the gaming community. It’s likely that’s why several of the free games offered are a few years old and have limited sales on Steam or on other stores at this point. These free game offers are an interesting advertising strategy to cater to the free-to-play audience that has gravitated to Epic through Fortnite. A similar tactic is being employed at Amazon as well. They’re offering a $15 Amazon gift certificate if a Twitch Prime subscriber buys Fallout 76, The Last of Us, or Sims 4 for $15. This alleviates the concern of devaluing the game while also still making the game free when you use your $15 gift certificate on Amazon (i.e. basically $15 of cash).
Going back to the Epic example, we wanted to see if any of our internal data showed the success of these free offers. We don’t collect information on the games people are playing or what is running on a computer, so we can only guess based on the overall number of parties being created in Parsec with a game approved by the host. In Parsec, when you want to play a game with a friend who connects to your PC with you, you have to approve them to see and interact with that game — we call this approved apps.
Recently, Epic released two independently developed games on the Epic Store for free — Enter the Gungeon and Overcooked. They were both initially released on Steam in 2016. Overcooked currently retails on the Epic Store for $16.99 and Enter the Gungeon retails for $14.99. The Overcooked developers released Overcooked 2 in 2018 while the Enter the Gungeon team released their final downloadable content (DLC) update on April 5, 2019.
Both games were significant successes for the independent developers that created them and have been impressive examples of independent developers succeeding in the PC ecosystem.
Epic released Enter the Gungeon for free on June 13 and Overcooked for free on July 4. We wanted to see how popular this was among our community of users, and it turns out, it was very popular.
On June 13, Enter the Gungeon jumped from 2–3% of parties to 6–7% of parties. Interestingly, it’s maintained a higher level for the past month following the Epic giveaway as well. Even more impressive, however, was what happened when Overcooked was released for free. The game spiked from 1% of parties to 27% of parties on July 5! It doesn’t seem to be maintaining the same enthusiasm post-launch as Enter the Gungeon did. That’s likely because of the type of game Enter the Gungeon is. Every time you play, the game is different with procedurally generated levels that make the game feel fresh every time you play. When you review Steam Charts data on the two games, it shows that Enter the Gungeon has relatively outperformed Overcooked in maintaining its audience over the long-run. Overcooked averaged about 163 concurrent players in the last 30 days while Enter the Gungeon averaged 2,362 during the same period. Again, this is partly due to the gameplay as well as the DLC that Enter the Gungeon has continued to release.
Why Is Epic Doing This?
Epic, Amazon, and others are releasing these pay-to-play games for free or nearly free to encourage new people to join their game stores. Selling games is a huge business with nearly $22.1 billion in sales in 2018 on pay-to-play games on the PC and console. In the case of Epic, they take a 12% fee to sell games normally. If you take out the credit card processing fee, they’re roughly capturing 10% of value from each sale. If Epic were paying the retail price to give each game away (unlikely), they’d need to sell roughly $150 worth of games to each person they acquire through the free giveaways. If someone is price sensitive enough to wait 3 years to try a game that costs $15, their propensity to pay for games is pretty low. Epic may also be using this to push behavior that drives increased sales in Fortnite. It’ll be fascinating to see how this model is working for Epic, and if it’s generating a positive lifetime value for each customer they acquire through game giveaways. If it is, we can expect a lot more free games on the Epic Store.