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Are app stores taking advantage of developers?

Following his comments at Devcom, Epic CEO Tim Sweeney and leading mobile developers discuss Apple and Google's 30% cut

Tim Sweeney has been known to slam any platform he believes is not open enough for developers, but this week he set his sights on the leading marketplaces in the mobile world.

During his keynote speech at Devcom in Cologne, he claimed that it was "unfair" that Apple, Google and other app stores take a 30% share of revenue developers generate on mobile. He warned studios that these marketplaces are "pocketing a huge amount of profit" from their games, and urged them to pursue better terms. "We should be angry about this, and we should constantly be on the lookout for other solutions, and new ways to reach gamers," he said.

Speaking to GamesIndustry.biz later that day, Sweeney maintained his stance and encouraged mobile developers to demand better from the marketplaces that enable them to sell their games. He also suggested concentrating on more agreeable platforms until app stores make the changes he believes are necessary.

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Tim Sweeney, Epic Games

"We have the most opportunity to improve this situation right now with open platforms, which means PC and to some extent Android because you can still side-load programs from other stores and websites. We game developers should really be aggressively negotiating with every store and really trying to reach as many stores as possible to foster competition. Besides Steam, there's also GOG.com, Itch.io and others that have interesting and compelling terms available. If we make a concerted effort to reach lots of stores, then competition between them is the way to push fees down.

"With the truly closed platforms like iOS, that's a bigger concern. I feel like those platforms should not be closed. Any general computing platform that reaches hundreds of millions of users and supports running general programs of any type ought to be open to installation of software from any source, including the web. Until they are open, there's going to be this massive market disfunction where you have this single monopoly app store that not only monopolises commerce and takes too large a fraction of revenue from the platform, but also can impose its own censorship regime on the type of applications available.

"Developers should be aggressively negotiating with every store, trying to reach as many stores as possible to foster competition"

Tim Sweeney, Epic Games

"One of the decisions we made very early on with Unreal Engine 4 is that Epic would exert absolutely no creative control over projects built with the engine. Our licence attached to the engine, which is available to the general public, says you can build any lawful content and ship it without our permission. I feel like that should be the norm on all platforms. They should all be open in that regard."

It's all well and good to argue for platforms that better serve developers without taking too much of their revenue, but the fact is the largest addressable audience is on mobile. With billions of smart devices on the market it's understandable, perhaps inevitable that so many studios will accept Apple, Google et al taking a 30% cut if it means reaching the maximum number of players. However, it's this thinking that Sweeney believes has enabled the app stores to charge so much.

"We created this situation ourselves as game developers," he says. "100,000 developers each deciding to accept those terms, we've created this monster that we're now trapped with - and it's taking 30% of revenue. We always need to take the long-term view and decide where we want to be in the future.

"If you look, there are a lot of awesome PC games businesses. EA runs one; it only distributes EA games for the most part, but Origin is a great service. Battle.net is a great service, but it only distributes Blizzard games. Riot Games has a great service but it only distributes League of Legends. Each of those are potential vectors that could distribute third-party games. I would love to see them all opened up, so you have more venues for buying and selling software."

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Rami Ismail, Vlambeer

Following the publication of our original story, Vlambeer co-founder Rami Ismail tweeted that it was "hard to disagree" with Sweeney's comments. He later elaborated for GamesIndustry.biz.

"I mean, the reasoning offered is quite obvious," Ismail tells us. "30% on revenue makes sense if the service - through whatever method - can ensure a reasonable shot at good revenue. It makes far less sense if you're dealing with a low chance for sustainability, and on top of that a 30% markdown because of the privilege of adding content to a store.

"The argument that the stores offer server capacity are all very fair, and I understand they offer service beyond that - but for 30%, they'd have to offer a lot more. Services like itch.io prove that it's possible, and it's not difficult to wonder why they're rather unique in charging less than 30% beyond [the argument that] 30% is how it's always been."

Simon Hade, founder and COO of UK mobile studio Space Ape Games, questions Sweeney's comparison between Apple, Google et al and payment processors like Visa, deeming this a "false equivalence". Instead, he praises the marketplaces they created - especially given how young yet far-reaching they are.

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Simon Hade, Space Ape Games

"A lone developer in Vietnam working in her parent's basement [has] the power to go live in 149 countries and reach millions of people globally," he says. "It's amazing.

"I'll concede that small teams and indie developers feel the 30% cut the most, and in certain cases it may determine whether a game is viable financially. But for many studios the issue isn't the 30% cut; it's the harsh reality that by removing barriers to entry for developers, consumers now face a paralysing abundance of choice.

"I do believe platforms can improve. For example, they should focus on incentivising and enabling developers to be innovative, experiment and take the kinds of chances in development that are needed to make the next breakthrough entertainment experience. In fact, I think the platforms have a huge opportunity to produce the tools to help developers identify which games they should invest their time in. For many game companies the biggest cost in gaming isn't the platform's cut - it's the opportunity cost of not working on the game that will take their studio to the next level."


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Jon Ingold, Inkle

Meanwhile, Inkle co-founder Jon Ingold believes that a 30% "just the cost of doing business" in mobile and not the "parasitic loss" that Sweeney sees. For the 80 Days studio, it's no different to paying tax.

"When we're pricing and costing, we work with 'post-Apple tax' revenue in the same way as you might factor out VAT in another industry - which is to say, we pass the cost onto the consumer, and we don't see that 30% as 'our' money to be lost," Ingold explains.

"More generally, the App Store is an evolving market and Apple - in their own opaque way - consistently experiment to keep premium and indie games alive, and they have a very large and fairly loyal customer base. I feel less happy about paying 30% to the Play Store, as they do no curation and offer no support for indies, but then Android users don't seem to like premium games.

"Whether or not 30% is the 'correct' rate is really hard to say, though, since there's no competition. A reduction would be welcome, of course, but knocking it to, say, 20%, would not save the indie titles that disappear unnoticed, nor would it make user acquisition spending any more sensible for premium and smaller budget titles."

Wrapping up our time with Sweeney, we asked what individual developers can do to encourage change in the mobile industry and start to fight back against these hefty fees.

"Support more stores, negotiate with all the stores and if you're forced to do something you're unhappy with, say so," he says. "We should all be open to expressing our opinions on these things and we shouldn't accept the status quo as okay. It is the status quo, but as soon as we accept it as okay, nothing is going to reverse it."

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Latest comments (4)

Bjorn Larsson CEO & Executive Producer, Legendo Entertainment27 days ago
A sliding scale renumeration approach would certainly not hurt independents. That aside, keep in mind the industry standard 30% does not apply to everyone, never did.

Edited 1 times. Last edit by Bjorn Larsson on 25th August 2017 4:53pm

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Ron Dippold Software/Firmware Engineer 25 days ago
Certainly Apple's not providing 30% worth of costs - it's almost pure profit for them. But Jon Ingold has it right in that it's more of a tax - really, it's an agent fee. It's getting your game where consumers can (and hopefully will) buy it.

The alternative is forgoing mobile and other storefronts and selling your product directly from your own website. Extremely few companies can manage that. Mojang did (once), F2P giants like Wargaming.net can, Blizzard could (though they also use storefronts). For almost everyone else it's too much to pass up.

As far as getting the 30% down, if you're paying the full 30% you didn't have sufficient negotiating power to begin with or you'd be paying less. Everyone would have to get together in an industry guild and agree to let it negotiate with all the storefronts, up to including everyone agreeing to pull their games from everywhere as a strike action. Even if you could manage that, the instant that group formed it would be an internal bloodbath, starting with all the big boys jockeying for control.

For PC you have some options - for mobile there's a duopoly and you just have to work with that or stay out of that market.
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Andy Cowe Mobile developer, Moonjump24 days ago
Many digital web stores asked for far much more than 30% before the Apple App Store came along, so I welcomed the 30%. Apple do quite a lot for their 30%, although more would be welcome, and I would like the Play store to do as much.

Things have scaled up quickly, so Apple are making much more than they anticipated originally. It would be nice see some of that money spent on improving discoverability. However, I fear the upcoming App Store change to follow the terrible trend for oversized presentation will mean fewer options are shown to the customers, so discoverability will be worse.
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Charles Cecil Managing Director, Revolution Software21 days ago
We have short memories. Those of us who developed games for publishers in the retail era will remember that costs of goods were deducted from any gross revenues, and we were then allocated 20% of net revenues (effectively 7% of the retail price) against which were deducted all development costs and often additional costs like a contribution to localisation and QA. In comparison, receiving 70% from a platform holder that has created the platform, set up the store, collects revenues, host the data etc. is reasonable. Apple was the first to offer the 70% split, which seemed extraordinarily generous at the time: they radically changed the ecosystem for developers which we all now take for granted.
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