Epic may pay flat 30% fee on PlayStation, Nintendo, and Xbox with no reduced split for Fortnite

Despite Fortnite's incredibly high revenues, Epic Games apparently does not enjoy a more favorable split like the deals Xbox signed for Call of Duty.

2 minutes & 30 seconds read time

Although Fortnite is a big breadwinner that makes billions of dollars a year, it appears that Epic Games pays a flat 30% commission to all platform holders as part of a blanket fee structure.

The ongoing Epic v Google trial has revealed quite a bit about the Play Store, Google's failed games aspirations, and the Fortnite-maker's business. We've learned that the Play Store has a 70% operating margin (such a high margine unheard of in the realm of gaming, especially for a company that doesn't actually make games...well any more, that is), that Google once floated the idea of actually buying Epic Games with Tencent's help, and that Fortnite has earned $20 billion in revenues.

Now we have some other information that could highlight Epic's current overspending. According to The Verge's live blog of the Epic v Google case, Epic Games CEO Tim Sweeney has confirmed that Nintendo, PlayStation, and Xbox all charge a 30% commission for games. This isn't a surprise and is generally common knowledge. While on the stand, Sweeney answered questions from Google's legal counsel regarding each platform holder's share take, reiterating a general 70-30 split that the Big 3 charge in order to maintain profitable store infrastructures.

According to The Verge's Sean Hollister, who was in attendance at the Epic v Google trial during this particular day, Google's lawyer Jonathan Kravis brought up that Epic pays a 30% fee on consoles. Sweeney then answered "yes" when Kravis asked if Sony, Microsoft, and Nintendo all charge 30% fees.

If Epic Games actually pays a flat 30% commission to the Big 3, then this comes as a surprise.

While the 70-30 split is standard, this scale is typically adjusted for big earners. Fortnite, for example, was one of the best-earning video games on PlayStation throughout 2018, accumulating some $5 billion in revenues for that year. Fortnite generates billions every year for Epic Games, which could equate hundreds of millions of royalties for the Big 3.

This gives third-party publishers like Epic Games more bargaining power to secure better splits--for example, an 80-20 split.

Case in point: Activision was able to negotiate an 80-20 split in the publisher's favor with Call of Duty on Xbox. The FTC v Microsoft case revealed that Activision CEO Bobby Kotick was prepared to withhold Call of Duty from the Xbox Series generation if Microsoft didn't agree to a more favorable commission.

Activision also used Call of Duty's thunder to negotiate a similar deal with Sony, with PlayStation taking a "discounted margin" on Call of Duty revenues.

It would be interesting to know exactly whether or not Epic Games pays a flat 30% fee to the Big 3, and if so, why the company hasn't negotiated better terms for its billion-dollar Fortnite revenues.

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NEWS SOURCE:theverge.com

Derek joined the TweakTown team in 2015 and has since reviewed and played 1000s of hours of new games. Derek is absorbed with the intersection of technology and gaming, and is always looking forward to new advancements. With over six years in games journalism under his belt, Derek aims to further engage the gaming sector while taking a peek under the tech that powers it. He hopes to one day explore the stars in No Man's Sky with the magic of VR.

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