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Royalties with Epic and Steam

Hey guys,

Before I’m flamed, I know there are hundreds of posts on these forums regarding the EULA for Royalties, but most of them are either out of date, contain just general trolls who don’t really answer the questions and “copy and paste” the wordings from the EULA and then bold the important words, or the topic just doesn’t make sense.

I’ve just graduated from university in Games Programming and would like to setup a Games Studio with a group of friends, where we can use the Unreal Engine and Steam is our distributor. The concerning question, is how Epic get the royalty for Gross Revenue of over £3,000 per calendar quarter. What I have done, is created an excel sheet to help me understand it using formula, and hopefully someone can either confirm or deny my understanding of how it works.

Please see the below;

Hopefully it’s straight forward, but if not I’ll explain it below.

Month = Month…
Units = How much of the “Product” we sold in said “Month”
Revenue = Units x £9.99
Steam = The 30% steam take
Which Leaves = Revenue - Steam
Minus 3000* = All 3 months in “Which leaves” added up - 3000
Epic?** = How much Epic should receive?
Left for Company = Revenue - Steam - Epic? = Profit before Expenses/Tax

I look forward to seeing your responses, to finally confirm this up!

Before anyone mentions it, the EPIC AY Royalty relates to the Annual/Yearly payout, added up by the rows in “Q1/Q2/Q3/Q4 Payout” and not the the months added up together. (i.e Q1 = 437.41 + Q2 = 259.44 + Q3 = 174.13 + Q4 = 466.78 = 1337.76)

Thanks,
SR

*As Epic deal with Royalty on a quarterly basis, I thought this was the best way to work out it, if not please let me know.
** Please only look at the Q1/Q2/Q3/Q4 Payout row, the other numbers are there just to work out how much the “Company” would receive in a month

That’s incorrect
First, it’s USD, $3,000 is less than £3,000

And the royalty is counted on the quarterly gross - $3,000 meaning the 5% is calculated before taking out any of the other fees like Steam.

So lets say you make $15,000 in a quarter, the royalty fee to Epic would be ($15,000-$3,000)5% = $600 and the fee to Steam would be ($15,00035%)= $5250 leaving you a total profit of $9,150

@Stoovey

If you’re open to feedback… Its very hard to make those numbers work as a business imho.
Question: The figures for Units sold vs Price… The source for those is hypothetical???
I encourage you to leave that spreadsheet alone for now… Instead make a different one…
On this new sheet write out how many social media Influencers you have access to atm…

  1. In particular, how many influential vloggers have you access to, that can help promote this game.
  2. Write out if you have any Savings that can be used to pay those influencers or for any marketing.
  3. Any local biz interested in a partnership to promote your app / game along with their ‘pizza biz’ etc.
  4. Any contacts or ongoing conversations with Publishers: Anyone interested in promoting the game…
  5. How about IndieGoGo / Kickstarter campaigns… Any leads get generated that might help with 1-4…

If you can focus on Unit sales and Promotion, some of the other numbers may take care of themselves.
Why is that important? Steam sales tend to happen early-on 30-90 days max, then trail off dramatically…
Its likely you’ll get hit for Epic’s 5% in the very 1st quarter and generate little in the others to spread costs out…

Even from AAA in most cases the sales figures are a free fall after first release week, very rarely a stable bar like that.
And yes, Epic don’t care about Steam cut, that’s why they say 5% of “gross revenue”…

My mates games have been played by people who have ~500k subs, 100k subs, accumulating 2k - 15k views per video.
Did not affect his sales. He had no sale increase during the videos peak of popularity.

Promotion never helps anyone and I am laughing to be honest when see ads, no ad has ever made me consider buying anything in my life. No letsplay, no review, not a paid promotion(if its an ad, I just skip it or turn off the sound and consider the vlogger and the game to be pathetic)

Money should be spent on development only, especially if it’s a small-mid game.
Your game will get the attention it deserves by itself. Overpromoting it will not increase sales.
Look at stats of visits/buys for your game on steam. It is usually 1% or less, so promoting will cost you more than you will gain from it.

Crowdfunding is not worth even trying and is the most demoralizing thing you can do for your game.

Your project will never get funding unless its some isometric/ pixel/ topdown/cartoonish game with 99% of effort being spent on useless cheap concept art, and 0% effort on code.

People are dumb there. Doesnt matter if all the expensive coding has been done by yourself already and you just need money for 3d models, if customers dont see cool pictures, they wont give you money.
They will give money to artists who will need to hire expensive programmers and create a whole game from scratch rather than to a finished game that only needs models and graphical stuff.

You will see that projects that can be done in a week for free get 50K dollars(obviously it’s pixel crap), anothrr project of this level will get 0 because they didnt offer t-shirts or didnt invest into marketing, and a really good game will get 0. It is a trashbin and developers cant benefit from it without investing into pr, selling t-shirts and showing useless concept arts of already created things.

People outside this forum are incredibly non-familiar with how the things work, and this is regarding to anything.
So if you want kickstarter, be ready to deal with people’s lack of knowledge and adapt your development process to that.

Great - Thanks for pointing out the £/$ issue - something I will need to keep track off.

So to confirm, If my gross revenue in a quarter is £50,000 both Steam and Epic want royalty off the £50,000 and it doesn’t matter that the nominal value that I get straight away is lower because Steam take their cut?

Thanks, the numbers for this example are fluffed.

[USER=“434”]BrUnO XaVIeR[/USER] Same as above, numbers are fluffed just to make sure I understood the concept.

Thanks for pointing out where I went wrong - easier to work it out now, now that I know Gross Revenue is before Steam.

(Just need to remember it’s dollars and not pounds!)

Thanks,
SR

This is correct.

I think Epic want 47.000, not 50.000.

Right, you would calculate the Epic royalty of 5% of (50,000-3,000)

Well, there was no mention of time period, so I didn’t assume that it was necessarily over one quarter.

Your sheet excludes tax withholding’s as to the net bottom line on a per purchase bases.

With Steam your dealing with international distribution so tax laws can get foggy real fast that in my opinion a simple spreadsheet will not get the job done.

Looking at the numbers suggest positive returns as to on going growth so it’s a good time for someone to think in terms of what would be best for the business and less about the fun of making a game so that the financial health of the company continues.

If anything you should be making a list of steps that needs to be taken rather than counting up the booty you think you may or may not have.

Step one for example do you have a business license?
Step two do you have a business account at your local bank?

With a business license the business becomes the legal entity decreasing legal liabilities away from the individuals and with a business account your bank can supply you with templates and better advice you could get from a message board. :wink: