Epic challenges Steam with zero percent fee for first $1 million per game

In context: Epic Games launched its official digital distribution service for PC in 2018 with the ambitious goal of challenging Steam’s dominance within a few years. While it hasn’t reached that target yet, the Epic Games Store is offering some compelling deals to game developers.

Epic Games recently announced a new revenue policy for its digital game store. Starting in June, the company will implement a developer-friendly change: any new payment processed through the platform will carry a zero percent fee for the first $1 million in annual revenue. The standard 12 percent cut will only apply to earnings beyond that threshold.

Since its debut, the Epic Games Store has sought to challenge Valve’s near-monopoly in digital game distribution by offering more attractive revenue splits. Even before launching the store, Epic introduced a “royalty-free” policy for developers using Unreal Engine and the Unreal Development Kit, waiving royalties on the first $50,000 in game sales. In 2020, that threshold was raised to $1 million in lifetime sales.

According to Epic, the new revenue-sharing policy will apply on a per-app basis, meaning developers with multiple games can benefit from the $1 million exemption for each title. The company continues to position itself as a champion of indie developers, in stark contrast to Steam’s tiered revenue model. Valve currently takes a 30 percent cut on the first $10 million in revenue, with reductions to 25 percent after that and 20 percent once a game reaches $50 million in sales.

In a 2018 email to Valve, Sweeney sharply criticized the company’s policies toward smaller developers. The Epic Games founder accused Valve of favoring major developers with preferential treatment while imposing a uniform 30 percent revenue cut on independent creators. Sweeney went so far as to call Valve executives “assholes” for what he saw as unfair treatment of the “little people” trying to break into the Steam marketplace.

In addition to the upcoming zero percent revenue share policy for the first $1 million in annual earnings, Epic has also introduced a new “webshop” feature. This allows developers to launch their own storefronts hosted on the Epic Games Store, offering players a direct way to make purchases – bypassing traditional mobile app stores.

Epic criticized Apple, Google, and other platform holders for charging what it called “exorbitant” fees on in-app purchases, but noted that recent legal rulings have curbed those practices. Developers can now offer tax-free payments through third-party platforms on Apple devices, and they will soon be able to link users directly to their own webshops – provided the host platform permits it.