Epic Games' Free Game Strategy: A Risky Move to Challenge Steam's Dominance

Attracting Attention with Loss Leaders

Epic Games, the company behind the popular game Fortnite, has been making waves in the gaming industry with its strategy of giving away free games every week. This bold move is aimed at attracting attention and getting people to browse their store, known as the Epic Games Store. Similar to the tactic used by Costco with their rotisserie chickens, this strategy, called a "loss leader," involves intentionally selling or giving away a product at a loss in order to generate interest and potential sales.

Targeting the Fortnite Audience

The primary goal of Epic Games' free game strategy is to acquire users and get them invested in the platform. By offering free games, Epic Games aims to target the Fortnite audience, which consists mostly of kids with smaller Steam libraries. The intention is to build long-term loyalty and preference for the Epic Games Store, ultimately challenging the dominance of Steam in the PC gaming market.

The Determination to Continue Despite Financial Losses

Despite the financial losses incurred, the CEO of Epic Games, who is also the majority shareholder, is determined to continue with this strategy. The company is investing significant amounts of money annually in an attempt to gain market share from Steam. However, thus far, Epic Games has not been successful in achieving its desired market share.

Challenges Faced by the Epic Games Store

In its early stages, the Epic Games Store faced challenges such as lacking essential features like support forums, shopping cart, and gifting options. Additionally, the store experienced data breaches, hindering its usability and appeal to potential users. However, the company has been working to improve these shortcomings and enhance the overall user experience.

The Potential Payoff and Future Uncertainty

The long-term payoff for Epic Games is expected to come from having a regular audience and running a successful digital storefront, which can generate significant revenue. The hope is that by offering free games and exclusives, users will become attached to the Epic Games Store and make it their default game launcher. However, it is worth noting that people who primarily visit the store for free games are not necessarily making additional purchases, which undermines the intended goal.

According to Forbes, the Epic Games Store is still losing money even after five years, indicating that the strategy has not been as successful as anticipated. The ongoing investment and the CEO's determination to continue with this strategy despite the financial losses have raised concerns. Some view the free game strategy as a cost-sunk fallacy, suggesting that the losses incurred may not be recoverable.

It is interesting to note that other companies have not adopted a similar strategy of giving away free games every week, possibly due to the lack of success demonstrated by Epic Games. The future of the free game offering from Epic Games remains uncertain, as it may be discontinued if the company successfully gains market share from Steam.

Epic Games' free game strategy is a risky move to challenge Steam's dominance in the PC gaming market. While it has attracted attention and garnered a dedicated fan base, the financial losses and the lack of significant market share raise questions about the long-term viability of this strategy. Only time will tell if Epic Games can achieve its goal of putting a dent in Steam's dominance and establish the Epic Games Store as a major player in the industry.