An EPIC story: Learn how this programmer created a billion-dollar gaming company that makes and distributes games! [Monday: Marketing Marvels]
Miles Everson’s Business Builder Daily speaks to the heart of what great marketers, business leaders, and other professionals need to succeed in advertising, communications, managing their investments, career strategy, and more.
A Note from Miles Everson:
Happy Monday, everyone!
We hope all is well in both your personal life and work life.
Let’s start the week by talking about one of our “Marketing Marvels.” Every Monday, we feature outstanding people in the worlds of business and marketing, and highlight their experiences, contributions, and insights.
Today, we’ll focus on a video game developer who built a multi-billion dollar business in the early 1990s.
To know more about this “Marvel” and what he can teach us about marketing and business, continue reading below.
CEO, MBO Partners
Chairman of the Advisory Board, The I Institute
For the past few years, the success of Epic Games, a.k.a. Epic, has been attributed to the popularity of its video game, “Fortnite.” This sentiment only got stronger when a report revealed the company was valued at USD 31.5 billion.
While it’s reasonable to credit the gaming firm’s valuation mostly to “Fortnite,” there’s simply more to that than meets the eye.
To understand what makes Epic a billion-dollar company, we have to talk about its CEO and founder too:
Timothy “Tim” Dean Sweeney!
Photo from Wikipedia
Sweeney is an American business executive and video game developer. He attended the University of Maryland where he studied mechanical engineering for 4 years but was a credit short of graduating.
Sweeney had a passion for creating programs for personal computers (PCs) and this led him to start a computer consulting business named Potomac Computer Systems in 1991. However, that venture didn’t take off so he tried out game development instead.
Making video games was one of the things Sweeney was fond of doing. In fact, he spent most of his spare time developing his first video game.
In 1991, he released “ZZT,” an action-adventure puzzle game launched and published under the name of his first company. The title became popular among players because it allowed them to create custom content for the game.
Due to “ZZT’s” success, Sweeney decided to pursue a career in video game development full-time. Subsequently, he renamed his company to Epic MegaGames in 1992 and simplified it to Epic Games in 1999.
After the release of his first game, Sweeney went on to create other notable games like “Unreal Tournament” and “Gears of War.” Both saw critical and financial success.
Despite the popularity of these games, it was “Fortnite” that catapulted both Sweeney and Epic to the spotlight. The 2017 multiplayer game’s success has contributed a lot to the company’s prosperity.
In fact, Epic has become synonymous with “Fortnite” that it has become common to solely attribute the firm’s financial performance to that game. However, the title is just one of the few components that made Sweeney and his company successful.
How did Sweeney create and build a billion-dollar gaming firm?
- Developing a genuine asset that can be used in multiple industries.
Sweeney had a knack not only for developing video games but also for programming. With this skill, he and his team at Epic created the “Unreal Engine,” a proprietary software that provides developers with the tools needed to create video games.
The “Unreal Engine” has had 5 iterations since its debut in 1998. Additionally, the proprietary software can be used for content creation, broadcast and live event production, training and simulation, and architectural and automotive visualization.
With such a dynamic set of features, “Unreal Engine” has seen widespread use in industries other than gaming across the globe. Another factor that contributed to this is the software can be used free of charge.
A user will be charged a 5% royalty only if an off-the-shelf product incorporates code from “Unreal Engine” and if that offering exceeds a lifetime gross revenue of USD 1 million. Epic makes money through this proprietary software by offering an enterprise program for it.
- Creating a digital storefront that’s attractive for both developers and gamers.
In 2018, Sweeney announced the launching of the Epic Games Store where both Windows and MacOs users can purchase video games.
As part of his strategy, Sweeney came up with a generous revenue sharing model with game studios. In that particular setup, Epic takes a 12% commission on game sales. This allows developers to keep the remaining 88% of revenue.
Additionally, Epic doesn’t take a cut of any in-game purchases as long as developers use their own payment system. This scheme made the Epic Games Store a great platform to publish free-to-play games.
Sweeney also attracted gamers by providing free games every week. As of 2021, Epic has distributed a total of 749 million games even though it incurred USD 330 million in unrecouped costs.
The tactic largely worked as it was reported on March 9, 2023 that the Epic Games Store has over 230 million users.
Aside from these strategies, part of what made Sweeney successful is the huge importance he puts on pushing boundaries when it comes to building a business.
According to him:
“There are two types of risks in business. Everyone focuses on the risk of losing what they’ve built, because it’s so apparent. But there’s an even bigger risk: the risk of not building what you’re capable of building. This risk is unquantifiable, easy to ignore, and infinite.”
Through this principle, not only was Sweeney able to build a business worth billions of dollars, but was also able to create products and offerings that bring so much value to customers across the globe.
We hope you enjoyed the story of today’s “Marketing Marvel!”
Remember: You can also emulate Sweeney’s success by always prioritizing the creation of products and offerings that bring lots of value to your target market. If you do that, you’ll be able to build a company that customers actively remember and patronize.
Have a great start to the week!
(This article is from The Business Builder Daily, a newsletter by The I Institute in collaboration with MBO Partners.)
About The Dynamic Marketing Communiqué’s
“Monday Marketing Marvels”
Too often, industry experts and the marketing press sing the praises of some brand or company’s marketing strategy.
… only for the audience to later find out that its product was a flop, or worse, that the brand or company went bankrupt.
The true ROI in marketing can’t be separated from the business as a whole.
What good is a marketing case study if one can’t prove that the company’s efforts actually paid off?
At the end of the day, either the entire business is successful or it isn’t. And the roles of marketing and communication are always paramount to that success.
Every Monday, we publish a case study that highlights the world’s greatest marketing strategies, marketers, and communicators.
However, the difference between our articles and the numerous ones out there is that we will always make certain that the firm really did generate and demonstrate earning power worthy of study in the first place (compliments of Valens Research’s finance group) in keeping with a person’s leadership skills in the area of marketing and/or communication.
We’ll also study the greatest marketing fails and analyze what they did wrong, or what they needed to improve. We all make our mistakes, but better we learn from others’ mistakes—and earlier, rather than later.
Hope you found this week’s marketing marvel interesting and helpful.
Stay tuned for next week’s Monday Marketing Marvels!
Head of Marketing
Valens Dynamic Marketing Capabilities
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