Unreal Engine Funnels Developers to Epic
Valve
Epic is using Unreal Engine to turn distribution into a bundled sale, not just a cheaper store. A studio already building in Unreal can launch on Epic Games Store and avoid the engine royalty that would normally kick in after the first $1M in sales, which effectively combines engine, payments, and storefront economics into one package. That is a concrete advantage Steam cannot fully match, even with Steamworks and SteamOS scale.
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The leverage comes from workflow, not only price. Developers already using Unreal are building, testing, and shipping inside Epic's tooling, so choosing Epic's store can feel like the default path, especially for PC and cross platform launches where Epic also offers Web Shops and direct payments infrastructure.
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Epic made the bundle more aggressive by waiving Unreal's 5% royalty for games sold through Epic Games Store, while also offering 100% of the first $1M in annual net revenue and then an 88% developer share after that. Steam still wins on audience and services, with 170M plus monthly active users and a mature SDK, community, and cloud layer.
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This is similar to Valve licensing Source 2 for free to developers who sell on Steam, but Epic's engine position is much stronger. More than 50% of announced next gen console and PC games are being built on Unreal Engine 5, giving Epic a much larger installed base to funnel toward its storefront than Valve has with Source 2.
The next step is deeper bundling across engine, store, creator tools, and payments. If Epic keeps growing Unreal's share of big budget game production while extending Web Shops and mobile distribution, more studios will treat Epic as the operating system for launching a game, which would put the most pressure on Steam's long standing 30% anchored marketplace model.