Gamasutra: Ian Griffiths Blog – Apple & Epic: The State of the Intervention
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Most will have seen the news of Apple and Epic’s showdown over platforms, distribution, and billing. Other journalist articles will do a much better job of explaining the details than I do, but suffice to say that Apple was not considered a monopoly, but its approach of requiring developers to only use the Apple’s payment system and not allowed to point to their own, was found to be anti-competitive and against the law.
My position is that what looks like a short term gain for developers will not be good for them or for the market in the long term. While most will feel happy to have more choices within a closed platform, attacking the platform’s revenue stream is likely to have many unintended consequences,
In short, I am not a lawyer and I am much more interested in how this affects the behavior and interactions between the parties and its effects on the future of the markets.
Most developers will welcome the news as it opens up their apps to other payment instruments, which in theory will pave the way for payment completion and reduce the share they will pay, which is currently 30 % of all IAP income, or less in some cases. subscriptions.
Epic Games did not come out unscathed, the judgment was in favor of Apple in all cases except this one. Perhaps more worrying for Epic, Apple is no longer prohibited from stopping authorizing Epic’s products on their platforms and systems.
Apple’s potential loss of its 30% âapp taxâ can have unintended consequences. It’s not unpredictable that Apple will start charging developers a much higher fee in general, not to mention the cost of hosting store content, downloads, and many other associated platform costs – all things. which probably would not even be subject to the sole coverage of the “cost” of such things.
There is an argument that competition will mean Apple will have to do more for those who stick to their payment platform. For example, maybe they would give developers free access to analytics and information that could become a paid feature.
Most players are unlikely to see a big difference as most are not spenders in the first place. Those who spend may have to go through a more cumbersome process. The user experience of connecting to another payment system, and if it is not a well-recognized third party, may lead to some hesitation.
I wouldn’t be surprised to see targeted promotions aimed at the biggest spenders without the built-in buying limits that Apple currently implements. There may also be an increased risk of fraud and getting refunds can become a more delicate issue.
While this is a victory for Apple and similar closed systems like Xbox and PlayStation, the impact of having to forgo revenue is a somewhat daunting prospect. While I suspect not all revenue will stray from Apple’s systems, many free-to-play developers are likely to open up preferential payments to their biggest spenders, Epic has led the way with their own discounts. . Since most free-to-play games have a Lorenz Curve that would make the United States blush, there are many advantages to not having to pay that 30% “app tax” and convincing a relatively small number of users. Big spenders going with another payment provider can be worth it for many developers.
It is in the best interests of the platforms to discourage this, although they are unlikely to be allowed to do anything harmful like removing apps from the store for using third-party payment systems. They could certainly refuse to feature apps that do so through their promotional opportunities, such as highlighting an app in a âGame of the Dayâ feature or similar. Or as mentioned above, charging for things like submission testing, analytics services, etc.
The market at your fingertips
The introduction of the iPhone and the App Store has led to an explosion in game development. The universality of touch controls and the ubiquity of smartphones have opened up games to many more people than the traditional consoles and PC audiences.
There are over a million games on the App Store today, and many developers are employed to create these games. The games themselves are very popular, the infamous Candy Crush has had over 2.7 billion downloads, and who hasn’t played Angry Birds?
With so many developers and so many consumers benefiting from the innovation of iPhone, App Store, Android and Google Play Store, as well as third party stores on Android, I don’t see any kind of market failure. . Could it be more developer friendly? Of course, and we’ve seen platforms react to this in modest ways. Were income levels preventing new market entrants or making exploitation impossible, not as far as I can see.
In terms of a free market and contractualism, this market seemed to work perfectly well without needing much intervention outside the usual consumer protections. The market had come to an equilibrium with a competitive standard where platforms take a 30% reduction in all IAP sales in exchange for using the platform, hosting, certain operating tools. and the possibility of presenting in store. The intervention we have seen here was basically initiated by Epic offering themselves to Apple’s approach to gaming on its mobile platform.
Bringing the state into that market, which I accept is enforcing the law, and essentially forcing a change in payments and that balance. Do we really expect these platforms to do everything they are currently doing while at the same time risking losing all of their revenue? Games and apps are part of an iPhone’s selling point, but they might just need to develop whole new ways to monetize their end of life.
There are also other ramifications; if the well-established free market approach that has naturally come about is not acceptable, if the platforms are expected to forgo a certain amount of revenue, what will be the long-term impact? Will there be another mobile operating system if the most efficient and easy to implement revenue streams become unsustainable? As with so many âprotectionistâ laws, I mean that in a commercial and not a national sense, the greatest risk is to create permanent holders. After all, Apple can absorb these losses, the next new competitor that would have been, may not be able to. I think this is a case, be careful what you wish.
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