Back in August 2020 two major players in the tech/game industry came to a clash in court. The outcome would be a game-changer to the gaming industry at large. The question came down to the way the Apple store works. Apple takes a 30% cut from any transaction. They also don’t allow you to up the cost just because you’re on an Apple device. They require the same price on their platform as off. In comparison, Google’s store has the same rates. Normally the way around this was an external subscription service or SAAS (Software as a service).
This conflict started when Fortnight decided to have in-app purchases directly through Epic over Apple’s system. This directly violated Apple’s terms of service agreement. Because of this Fortnight was pulled from Apple’s store. This means players will not receive updates and won’t be able to download the game again.
EPIC WIN
Epic took the fight to court, claiming to be the ‘good guys’ fighting for gamers and developers everywhere. While I support their efforts, I question their motive. While it’s a good move for the people, it’s more of a financial gain for Epic Games.
As of today, there is finally a decision. The court decided on an injunction to the Apple’s store that they are no longer allowed to prohibit external payment methods. This means that Epic Games can continue to sell purchases in-game for a cheaper price. A major victory for developers and Epic Games.
The injunction also address a long-standing complaint made by developers that link to an external sign up. Apple will no longer be able to block links for an external sign-up. This will directly impact Apple’s store sales which was $64 billion last year 2020.
What this means for Apple
Apple, on the other hand, may have to switch gears and rethink their business model. Apple is one of the top-performing companies in the USA, only behind Walmart and Amazon, third in the USA and sixth in the world.
Apple gets most of its revenue from the store, not hardware sales. Interesting to note that 70% of THAT revenue is from games. From that, mobile games make most of Apple’s income. Apple is a game publisher.
Most of the purchases are done from in-app purchases (the freemium model). Most of the user base that plays mobile games do it for free, but most of the in-app purchases are from less than 10% of the user base. These people are usually referred to as whales. I personally question the ethics of whale hunting.
While the court decision will not change that in any way, it’s interesting to see how many companies will cut Apple out of their profits. Apple will still offer the convenience of their store, which is less friction to make purchases. It will be interesting to see what happens going forward.
What now?
It’s still too early to tell what will happen. Apple may fight this injunction (which goes into effect in 3 months) or may not be able to. As things look right now, Apple will take a major hit to their bottom line and may have to change their business model.
What does this mean for games? If you’re not aware, Valve also takes a 30% cut from all purchases. 30% is a better deal than going through traditional publishers, who traditionally take 50-60%. Epic Games has its store and PC gamers may not see anything from this for a while. But the standing of monopolies may change the gaming landscape. A higher profit margin for game developers is usually a good thing.
Legal and political development moves at a much slower pace than technology. It’s too early to tell, but it will be interesting to see what will happen going forward.
