Correct, as an added bonus, they get to report X million monthly active users on top of that to their investors (that's why they make you come back every week for a new game). Likely at relatively little cost to them since they don't have to pay full price for those games.
It's probably still expensive as hell but when you have a competitor as big as Steam in the market, you gotta be able to afford some ammunition, and the Unreal Engine likely still brings in tons of cashflow.
Right. They probably wouldn’t have been able to pull this off for as long as they have been if it was just hemorrhaging money.