“Apple is a monopoly and it’s not just a matter of a distributor charging a commission,” Sweeney said at the New York Times DealBook Online Summit, a rare public appearance during which he also touched on topics like financial models, COVID-19, virtual events and the future of gaming. “By excluding all competitors, they’re inflating prices for consumers and they’re excluding choice and breaking the fundamental mechanisms that keep an economy in balance.”
Epic is in the midst of a rancorous lawsuit filed in August against both Apple and Google. Apple counter-sued in September. Moderator Andrew Ross Sorkin asked Sweeney about the ultimate goal of the suit, which is being contested through legal channels but also in the court of public opinion.
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“We’re conducting an awareness campaign” targeting the media, customers, regulators and others, Sweeney noted. Pressed by Sorkin about whether Epic is likely to prevail, Sweeney said, “We’re one of many legal contests that will be mounted against Apple and Google. Our hope is just that somebody wins. It might be us, it might be others. It might be federal regulators. … The best outcome would be Apple and Google changing their policies.”
In its counter-suit, Apple says Epic is hardly a humble do-gooder, but rather a “multi-billion dollar enterprise that simply wants to pay nothing for the tremendous value it derives from the App Store.”
Epic, which was founded by Sweeney in 1991, had $4.2 billion in revenue in 2019. Reports of fundraising efforts by the privately held company said it was projecting $5 billion in 2020 revenue and valued itself at $17 billion. China’s Tencent holds a 40% stake.
COVID-19 has been a boon to the gaming industry overall as well as Epic Games. In addition to its core business of games like Fortnite, the company has branched into virtual events like concerts. In April, a Travis Scott concert held within Fortnite drew more than 27 million people.
Sweeney said the capability to convene live events will grow to include movie premieres and other entertainment offerings.
As for films premiering on Fortnite, “I’m not sure it’s just going to be a linear video experience,” the CEO said. “You’re going to see a huge variety of experiences crossing over.”
The financial models for events are just taking shape. “We’ve mostly approached these as custom negotiations because we’re figuring this out as we go,” Sweeney said. “We paid generally the cost of going to the concert and then we funded some degree of it by selling” merchandise related to the event. “We’re still in the pre-economy phase of it,” though a “full, open economy” of various creators and full-fledged businesses
Simulated experiences will go well beyond the gaming world, Sweeney predicted.
“These worlds are converging,” Sweeney said. “You’re going to see more and more companies doing business online by reaching consumers with real-time visual content in a realistic 3-D simulation. Can a carmaker debut a car within a visual world and bring that can successfully to tens or hundreds of millions of people, where otherwise it would be limited to a much smaller group of buyers? I think all of these things can happen. We’ll see major works of film, television, architecture, automotive, all of these industries which are currently using real-time 3-D as part of their enterprise product development pipeline internally are going to take all of these digital assets and bring them online.”
That evolution “is going to be a lot better than social media,” Sweeney predicted. “On Facebook, Corvette reaches users by selling ads, but you can imagine now they’ll have a Corvette car configurator online. You can go in and see your car in real time.” Brand awareness within a virtual environment like Fortnite “doesn’t feel negative to people,” he added.
Asked by Sorkin how long Fortnite will retain its popularity in a marketplace known for fickle consumers, Sweeney said it will “last for as long as we’re able to an awesome job at it. It could be decades.”