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

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.

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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.