Epic Games is one of the biggest video game companies with a revenue of $4.2 billion. For most of us, Epic Games is simply the guys behind one of the most successful games of all time; Fortnite.
Let’s take a step back and have a look at the history of Epic Games, from it’s humble beginning to becoming a powerful company able to take on both Apple and Google.
Potomac Computers to Epic MegaGames
The very first version of Epic Games started out in 1991 with the co-founder Tim Sweeney operating a computer consultant business in the basement of his parents home.
With the unexpected success of an action-adventure puzzle game named ZZT that Sweeny was working at the time, he decided to change the focus of Potomac Computer Systems to video game development.
It was at the time, a very small scale operation where Tim Sweeney’s father handled the orders. As of 2009 the ZZT has managed to sell a few thousand copies with the last copy being sold in November 2013.
Up until 1992, Tim Sweeney was the only employee in Potomac Computer Systems. In order to compete with other video game companies Sweeney decided to change the name from Potomac Computer Systems to “Epic MegaGames”.
In the search for business partners he hired Mark Rein, who was previously working for id Software (DOOM) and Cliff Bleszinski, who was 17-years old at the time, but Sweeney was so impressed by his Dare to Dream game that he was onboarded right away.
Cliff Bleszinski and the team would later on develop Jazz Jackrabbit which is one of the first side-scrolling platformers to come to Mac and Windows.
By 1998 Epic MegaGames had more than 50 employees working for them across the globe. The company had also released noteworthy shareware games including Epic Pinball, Jill of the Jungle and Ken’s Labyrinth.
Epic MegaGames teamed up with GT Interactive in order to reach a wider audience.
Unreal Epic Games
Epic MegaGames collaborated with Digital Extremes to work on Unreal, a well-known first person shooter game.
This game was developed by Epic MegaGames using the Unreal Engine. Unreal performed so well in the market at the time that the only other PC game that could challenge it was StarCraft. You can still get the first Unreal game on Steam for about $10.
Unreal expanded into a series of games while the Unreal Engine was licensed for game developers to use. Epic provided support for the licensees and met with the developers to get feedback on how to improve the engine. Notable games like Deux Ex and Duke Nukem Forever were developed using Unreal Engine.
In 1999 Epic relocated their headquarters to North Carolina and rebranded the company as Epic Games.
According to Sweeney they no longer had to pretend like they were a big company. They were already in the same league as the others, hence the “Mega” in their name was dropped.
By 2006 it was becoming difficult to make single player games for computer systems due to copyright infringement issues in the form of software piracy. Therefore, Sweeny decided to shift the focus of Epic Games from PC to developing on consoles in the form of “Epic 3.0”.
Epic developed Gears of War and was initially released as an Xbox exclusive, published by Microsoft Games. Gears of War was the first major shift for the company from making PC games to consoles. The success of Gears led to many more games being developed for the title.
It was not only consoles that Epic was focusing on. With the acquisition of Chair Entertainment, Epic published a sword-swiping game for iOS devices called Infinity Blade.
Infinity Blade sold more than 270,000 copies and made over 1.6 million USD within the first four days after launching. Chair Entertainment later released two sequels for the game, Infinity Blade II and Infinity Blade III, with Brandon Sanderson writing two novels for the franchise.
During the 2011 Spike Video Game awards, Epic unveiled their new game, Fortnite, which would go on to become one of the most successful video games of all time.
Epic Games as a Service
Fortnite began from an internal game jam within the studio.
However, the development slowed down due to the change in art style and the upgrade from Unreal Engine 3 to Unreal Engine 4 for better gameplay mechanics.
Epic was also interested in making Fortnite with the so-called “Games as a Service” approach. Cutting through the corporate lingo, what this essentially means is that Epic would be able to better monetize on their game with microtransactions and loot boxes while providing users with a free-to-play model.
To help them out with this model, Epic approached the Chinese publisher Tencent, who were more than happy to help. In exchange, Tencent Holdings bought 40% of Epic Games for 330 million USD.
This decision did not sit well with some of the executive members in Epic and lead to the departure of several key executives, including Cliff Bleszinski, who has been an important figure in the company since 1992.
In an interview with Destructoid, Bleszinski said “I could pitch the most amazing idea to anybody back when I was at Epic toward the end, and they’d be like ‘I don’t buy it,’ His intention was to retire from the gaming industry permanently, but there is hope that he might come back as an advisor to Gears of War franchise.
Tencent Holdings now had the power to dictate who is qualified to be on the board of directors of Epic Games. However, according to Sweeny, they did not have much control in the creative output of the company and considered this new change in direction towards Games as a Service (GaaS) model of the company to be “Epic 4.0”.
During this time Epic had considered developing a fourth Gears of War multiplayer only game. However, Microsoft rejected this idea, which lead to Epic Games parting ways with Gears of War franchise. A new studio called The Coalition was formed to develop Gears of War 4, led by the former Epic producer, Rod Fergusson.
Towards the end of 2019, Fortnite had become a cultural phenomenon with a total revenue of more than 19 billion USD, of which more than 1 billion USD was made in the form of microtransactions.
Epic & Mobile Gaming Market
On August 13 2020 Epic announced that they would be giving a 20% discount from their in-game currency “V-bucks” in Fortnite if players made the purchase directly from Epic Store.
Players who purchased the game from App Store and Google Play were not eligible for this discount as both Apple and Google take 30% of revenue.
Due to the violation of their terms of agreement and bypassing the payment systems, both Apple and Google had Fortnite removed from their stores.
In response, Epic sued the tech giants and launched a PR campaign against Apple which was already months in the works. It depicted a parody version of Apple’s iconic “1984” advertisement, but Apple was presented as the villain while a Fortnite character was portrayed as the hero.
According to Epic they are challenging the App Store monopoly and paving the road for other game developers who stand to earn more without 30% of their profit going to Apple and Google.
While there are arguments that can be made for both sides, it is also true that all the companies that are involved in this lawsuit are multi-billion dollar corporations.
There is no “little guy” in this scenario.
With the PR campaign and #FreeFortnite hashtag, Epic essentially weaponized the Fortnite player base who are on average 16 to 17 year old kids, against Apple, another billion dollar corporation.
By the end of April 2021, Epic Games was valued at 28.7 billion dollars with a 200 million dollar strategic investment from Sony. Epic has also managed to acquire a great number of gaming studios including Mediatonic, developers of Fall Guys.
The story of epic continues to unfold. From its humble beginnings to its current form as a mega corporation able to battle both Apple and Google, they have certainly come far.
Whether this meteoric rise in scale and influence is a good thing for the gaming industry or not remains to be seen.