Why 12%? We chose this number to provide a super-competitive deal for partners while building an enduring and profitable store business for Epic. From that 12%, we net around 5% after direct costs and that could grow to 6-7% with greater economies of scale.
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Why did Activision, EA, and UbiSoft break away and build their own stores from scratch? Because it’s way more profitable to sell their games that way than to give 30% to a store.
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You have to understand, 30% is an enormous markup. When a grocery store sells an Amazon or iTunes or Steam card, their markup is maybe 10% to 15%. That’s for a physical retail store with shelves continually stocked by workers.
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Replying to @DrUnicornPhD
In the heyday of PC retail, markups for boxed games were hard to quantify because of big retailers’ tendency to ask publishers for “market development funds” (supporting newspaper ads, etc) in addition to discounts and “price protection” (retroactive discounts).
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Our understanding was 20-30% all-in.
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