Facing Revenue Pressures, GOG Cuts Their Fair Price Program

The effects of the Epic Games Store are becoming felt across the industry. For Steam, it's the surprise loss of games like Metro Exodus. For the DRM-free store GOG, which recently laid off at least a dozen staff, it's the closure of their "Fair Price Program".

In a post earlier this morning, GOG announced that their Fair Price Package would come to an end by March 31. The program was intended to "make up the price difference between various countries" for games that are priced differently across different countries.

Facing Financial Pressures, GOG Quietly Lays Off At Least A Dozen Staff

Amid a month full of mass layoffs across the video game industry, the digital store GOG quietly let go of what it says was a dozen staff last week. GOG, which is owned by The Witcher 3 developer CD Projekt Red, did not say why the layoffs happened, but one laid-off staffer tells Kotaku that the store has been in financial trouble.

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"In countries where the game is more expensive, we give users the equivalent of the price difference in GOG Wallet funds," the storefront wrote. "In actual numbers, on average, we give users back 12 percent of the game price from our own pocket. In some cases, this number can reach as high as 37 percent."

The company explained that while they could cover the difference in the past while still making a profit, increased revenue cuts for developers mean that is no longer the case.

"With an increasing share paid to developers, our cut gets smaller. However, we look at it, at the end of the day we are a store and need to make sure we sell games without a loss," GOG said.

The storefront has come under increasing financial pressure of late, according to a former staffer who was made redundant in the recent layoffs. "GOG’s revenue couldn’t keep up with growth, the fact that we’re dangerously close to being in the red has come up in the past few months, and the market’s move towards higher [developer] revenue shares has, or will, affect the bottom line as well," they told Kotaku.

The reach of GOG has also cropped up as an issue. After initially promising that Thronebreaker would be exclusive to the GOG store, the 30-hour standalone game game was quickly released on Steam. "The reach of GOG is incomparably smaller than that of Steam," CD Projekt Red co-chief executive Adam Kicinski told investors in November.


Comments

    Dang this was a good part of gog, knowing that I wasn't getting ripped off and was paying what was more or less the same price as anyone else was.

    I'm actually starting to wonder whether this 88% cut that the Epic store has introduced is going to be sustainable for them in the long term, and how it'll affect the price of games moving forward.

      Epic games will be the warehouse of online store fronts. Service will be at a minimum with people only shopping for lowest price. I don't buy a game off steam everyday, but I use it everyday. I'm honestly not interested in buying more games off a different platform, at least with GOG I don't even have to have galaxy running :D or an internet connection :D

      it wont be, Epic is basically following the Amazon Playbook of running at a loss until you've either killed the competition or absorbed it

        To use a couple of random numbers, its like they realise that the $40m a month they make from Forknife is enough to absorb the $5m a month loss they make from the store. The store is making a loss, but overall Epic isn't.

        That's their control with this. The amount they made, and continue to make from the viral success of Fortnite lets them be a little decadent with the store. The question will be more about what happens when Fortnite isn't bringing that revenue in any more.

        Apex Legends is already chewing through Fortnites player base, when means chewing through the revenue stream as well. So what will it be like in 6 months? Will the store be self sufficient by then? Will their cash reserves be enough to keep operating at a loss until it is? Will it ever get there? What damage will be done to the industry by then?

        Competition is generally seen as a good thing, but in this case maybe it wont be. Already you see signs of it disrupting established services, and while that may reflect things that probably need to change, it may also reflect that the outcome wont be good for anyone.

          I wonder too whether they're counting on revenue from their engine as well. There seems to be deals related to "use our engine and our store". So in a way they're double dipping.

    I'm actually starting to wonder whether this 88% cut that the Epic store has introduced is going to be sustainable for them in the long term, and how it'll affect the price of games moving forward.

    I was actually wondering this myself this morning after reading that Fortnight's revenue last month dropped by half. I'm assuming this has something to do with Apex, but i kinda hope its people playing all the other 8 or so new games that came out over the last few weeks.

    The reach of GOG is incomparably smaller than that of SteamThis is what people don't seem to understand when discussing the reach of Steam. The "alternatives" are a tiny part of the market compared with the massive reach of Steam. Steam has no real peer or competitor.

      Arguably the Windows app store has as much reach, if not more, than Steam. The problem is that it also has some insane restrictions on how software can behave that's essentially antithetical to PC gaming (you can't mod games from the Windows app store) and major publishers haven't really embraced it yet.

      At some point in the future, Microsoft are very likely going to mandate that the only way to install software on Windows is through their app store, which will mean the end of stores like Steam, GOG and Epic.

        They'd have both the EU and US governments coming for them if they tried that.

          Would they though? Apple and Google both do it and nobody seems to have an issue with that.

            Pretty sure the EU would think it's a problem. They've gone after Microsoft for far less. More than once at that. Ditto for Apple.

            Just go back to the early days when Microsoft merely bundled IE with Windows. This would be a scale of magnitude above that.

            You can sideload on Android, and iOS has a smaller market share. Windows has a huge reach and will attract attention if such restrictions occurred.

            And MS won't do that - it means wiping out legacy support, which is crucial to Windows being so widespread. Even Apple haven't done it with macOS.

            Except you can still install APKs from 3rd parties without needing to use the app store, at least on Google, not sure about Apple. There's a difference between mandatory and preferred and at the moment both Google and MS are "preferred".

            I don't think MS can afford to make it mandatory anyway. Even assuming they wouldn't be sued by the EU. There is so much legacy software that people use that isn't using their app store that it'd be a monumental clusterfuck.

            Side note: I for one, have bought absolutely zero apps/games from the MS store. Unless they sort out a bunch of the issues and restrictions then there's no way I will ever get stuff from there.

            You can on google, there have been many third party app stores and you can install unsigned apks.

        On the flip side, the confinement/sandbox system also means the games can't do things that they shouldn't. The game cannot install a kernel driver that interferes with the running of your system. Or install a keylogger to record passwords you enter in your web browser. Or to monitor what other applications are doing on the system.

        This is kind of the opposite of DRM: rather than restricting what you can do with the game, it is intended to restrict what the game can do with your computer.

      Ive been on GOG since back when they only sold GOG lol

    So basically the moral of the story is that Epic's storefront is bad for consumers, bad for the sustainability of the storefront and in the end bad for the developers because they suddenly have no consumers and nowhere to sell. Who wins again?

    But, but... the Steam-haters online told me that Epic is good because competition is good for consumers!

    *eyerolls*

      It should be to be fair, it is just that the Epic store has gone about it in the worst way possible (undercutting, buying exclusives, shit customer service, etc).

    Goddamnit. I've always used GoG as much as possible partly because of CD Projekt's unwavering commitment to pro-consumer policies set out when they started it, this marks the first one of those they've really had to backpedal on.

    I'm going to keep using it - it's still DRM free, after all - but this is a bad sign. I understand, of course, that if people are starting to lose their jobs, well, nobody wants that either, and they need to make money. Just hope this doesn't mark the start of a slippery slope.

      I don't have an issue with a company making a profit. They're transparent about it;

      "With an increasing share paid to developers, our cut gets smaller. However, we look at it, at the end of the day we are a store and need to make sure we sell games without a loss," GOG said.

      I think at some point the devs also need to look at how much they're making and how much they're charging in different territories and bear some of the responsibility.

    Also epic gets to double dip to a degree where the other storefronts don't in regards to unreal engine revenue.

    Part of the thing about GoG was that they were re-releasing old games, made playable on Windows, which unless a game is being completely remade doesn't happen by the people that actually made the game originally. Now they play the part that Steam has for years and other companies are doing to make more money. (and overprice a lot of things from my point of view). Also while Steam now display's AU pricing, GoG have been for many years before (probably from when they were just a website).

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