Product and distribution

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Emailed on March 22, 2019 in The Friday Forward

I've been known to argue that all business boils down to is product and distribution. While it may be an oversimplification (we can talk about it), there's one industry where the distribution side of things is really heating up:

Gaming.

Epic Vs. The World
Epic, the maker of the lighthearted online shooter, Fortnite, reported that 10.7m players watched an in-game concert on February 2nd by Marshmello, a dj.

So what does that mean? It means Epic can distribute just about anything, even concerts, through their massive base of Fortnite players.

A natural move for Epic is to distribute other games through their massive network. These days video games are mostly sold not in boxes but as digital downloads. On the pc, the market is dominated by Steam, an online store run by Valve. On Android, Google’s Play Store rules. Epic wants in.

Steam is thought to have around 290m users and 20,000 titles; its pcmarket share may be above 70%. It takes a 30% cut of each game sold.

Google Play is much bigger, estimated to generate roughly $25B per year as of 2018. 

So what's the deal with Epic? They've managed to grow Fortnite without the use of other app stores, and have now begun selling other games via a shopfront located within the Epic PC app. Later this year the Epic Android app will offer the same. 

And they're undercutting Steam and Google with only a 12% cut to developers (and additional 5% discount to developers using their Unreal engine). 

And where's the heat?
This week Google announced that you will soon be able to watch a game trailer on YouTube, then immediately start playing that game in 1-click via their new platform, Stadia.

This basically turns YouTube into another game distribution channel for Google, adding to what it already has in the Google Play Store.

YouTube has 1.3 billion users. Now just needs the product.


Sean SteigerwaldComment