EPIC grab all the headlines
Following their c.16% workforce cull last week, Epic have continued to be in the headlines for a number of reasons. Not only has their publishing director left (probably linked to the restructuring taking place), but they have also taken another swing at Apple in courts and introduced a charge for unreal engine for non-game developers. They have raised the question to the Supreme Court about whether Apple’s 30% cut (for products sold via the iOs store) is anti-competitive as a ‘less restrictive alternative’, i.e. not charging or having a smaller margin, could achieve the same results without causing the app store to change. A decision will be due by the end of the year, but the one thing we can be sure of is that this won’t be the last we hear of this titanic duel. Apple itself still has an appeal in process for an earlier ruling on ‘anti-steering’ following a court case brought by Epic in the summer.
It was very interesting, especially in the wake of the Unity run-time fee debacle, to hear Epic also mention how its own development tool, Unreal Engine, has had to introduce a charge for non-game developers, after the entire firm began struggling financially 10 weeks ago. CEO Tim Sweeney announced the news at Unreal Fest 2023, and it will target those in film, TV automotive, and other non-gaming industries , who currently utilise the programme. In terms of pricing, only an extremely vague “[not] unusually expensive or unusually inexpensive” was revealed at the time, but it will be interesting to see if these financial troubles could see it update its royalties model with developers at some point in the future.
Source: gamedeveloper.com, gamesindustry.biz
More pain to come?
The depressing prophecy from Matt Bilbey of London Venture Partners, which we quoted a couple of weeks ago, that the bulk of bankruptcies in gaming are still ahead of us, seems to be coming true. This week has seen a number of layoffs across the industry following the news that Epic was laying off 16% of its workforce, some 800 staff. We think it is worth pointing out that included in EPIC’s number was the entire team from Mediatonic, the developer of Fall Guys. Fall Guys was a headline acquisition for Epic’s game store when they purchased it for over US$100m, from Devolver Digital, and immediately switched to a free-to-play model. Clearly this did not work out and and we thought it worth highlighting the risks associated with this model given we praised Capcom's successful execution of the model with its Monster Hunt Now release last week.
Naughty Dog, the makers of Uncharted and The Last of Us, cut 25 contractors and put its online ambitions on ice; Dang has closed down; Twitch had a second, smaller round of layoffs following the 400 job losses announced in March; Team17 had layoffs including the CEO of its Games Label division; Telltale Games confirmed layoffs; and Keywords is under some pressure from the United Food and Commercial Workers Canada Union following its ‘minimal severance’ offered to employees after it laid off its Dragon Age: Dreadwolf QA team when Bioware did not renew a contract. Despite this, we think this points to supertrends moving in favour of Keywords, as gaming firms continue to look to streamline their operations. If Keywords or other outsourcers, such as Virtuous, can offer high quality outsourcing alternatives at an attractive price point, utilising their economies of scale, then it should look to mop up much of the business that other firms are creating by removing their internal capabilities. Source: gamedeveloper.com
The CMA are still worried about cloud gaming competition
In November 2022 the regulator announced it would launch an investigation into the dominance of Apple and Google in mobile web browsers and, more importantly, into the impact of Apple restricting cloud gaming services in iOs. This was delayed after complaint by the companies impacted, and only now has the CMA got round to lodging an appeal to let them continue the investigation. This follows the focus on cloud gaming competition evident in the CMA’s scrutiny of the Microsoft-Activision Blizzard deal which has now been provisionally approved following the sale of streaming rights to Ubisoft for 15 years. Source: gamesindustry.biz
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All eyes on Epic
EPIC grab all the headlines