We collected some expert opinions on how the recent Epic v. Apple court case ruling will affect the video game market and whether game developers, both big and small, can benefit from the recent Epic v. Apple case conclusion.
The court’s decision: Apple must let iOS developers contact their customers to tell them about payment options available outside the App Store.
It means Apple is not confident in their case and Epic has a better shot than conventional wisdom would tell you. Their "concession" wasn’t much. Hurray, you can send an email telling people they can pay somewhere else! That’s not exactly providing a choice in how the player wants to pay.
Chris Heatherly, Former Disney and NBCUniversal Exec, Games Industry Veteran & Advisor
In a separate Fortnite case, a federal judge decided that Apple’s App Store business model should change fundamentally and that Apple must now allow other forms of in-app purchase. In a conclusion to an antitrust lawsuit launched by Fortnite maker Epic Games, U.S. District Judge Yvonne Gonzalez Rogers ruled that Apple must allow app developers to lead customers to alternative forms of payments.
How will the new rules affect the market? Is that a win for game developers?
On September 10, the court ruled Apple should not limit developers to use App Store as the only payment option so links to alternative systems must now be allowed. Competition has a great impact on how corporations do their business today.
We cannot overlook the Web2app payment model as a valuable option for companies working with apps. However, brands don't usually want to allow such payment forms on their platforms. Apple used to strictly punish companies using this model, but now the court ordered to authorize alternative methods. Starting in 2022, developers of reader apps will even be able to provide a link to an external website so that users can register and manage subscriptions.
Why is it good for games and studios? Familiar platforms will still have good projects for users, and Apple will not lose developers who are actively looking for new opportunities to reduce commissions and increase profits.
The war with commissions from platforms turned into a war between corporations and the government. Developers' unions have been created to advocate for lower commissions. New progressive platforms have been launched (Epic Game Store with lower commissions, for example), and even Steam has changed the terms for developers. We live in an era of amazing digital changes, and it is too early to talk about the absolute power of any corporation, even within its platform. Antitrust cases in the last 2-5 years have been and will remain one of the most notorious in IT.
Konstantin Ivanov, Brand Director at AdQuantum, AppQuantum, PlayQuantum.
The court decisions prove that there are ways to influence Apple's policies, but it appears the company will not lose its monopoly that easily.
Although it is still early days on determining the level of the potential impact of Apple’s decision, this represents a positive incremental first step in expanding consumer choice as well as increased flexibility in monetization and business models for developers who sorely need it. We believe this is a net-positive for the industry, but execution and implementation on the part of both Apple and developers will be key.
Yoshio Osaki, President/CEO at IDG Consulting
Big companies like Epic Games or Riot can benefit from the changes by offering slightly lower prices and saving 30% on commissions. The question is whether small companies can win too.
I think for the 98% of game developers that make less than $1 million per year, this doesn't change much. For large game developers, they are all probably exploring how they could pay Apple less than 30%, but none of that is clear yet. I think Apple will continue to be pressured to make more concessions, but given that there are billions of dollars at stake for them, they'll probably move as slowly as they can to make changes. Will Google make changes as well? That will be interesting to watch.
I'm glad Tim Sweeney has taken up this fight because it's already caused some positive changes for game developers. I think for smaller developers, it's best to just focus on making games (and making them better) while the big guys struggle. Let developers with plenty of money for lawyers take the initial risks of trying to grab some of Apple's profits away. In a year or two, the best strategies for developers should be much more clear.
Steve Peterson, 20th Level
Several companies have already started helping developers use the situation to their advantage. Xsolla responded to the shift with a direct-to-consumer solution designed for F2P cross-platform games to unlock global revenue potential and increase profit margins.
Xsolla anticipated this seismic shift earlier this year, when we launched multiple products actively used by the world’s largest game companies to increase profit and build closer relationships with mobile and pc players. We combined this highly effective suite of products into a solution called Xsolla Web Shop.
Chris Hewish, President at Xsolla
2020 was a strong growth year for the video game industry, bringing thousands of new gamers to the market. The challenge for mobile studios is how to increase their profit margin after paying 30% platform fees and UA and ads campaign costs. In addition, Apple’s IDFA initiative makes acquiring new users a costly effort.
Xsolla’s response addresses recent market changes: The Epic v Apple decision allows App Store developers to direct users to other payment systems, mitigating the effect of Apple’s 30% cut. Apple also agreed to allow the use of alternative payments methods outside the App Store. Finally, South Korea ruled Apple and Google must open their platforms to alternative payment systems.
In 2020, digital and mobile wallets generated roughly 45% of global e-commerce payment transactions, making the digital wallet the most popular payment method worldwide. Analysts expect this number to grow by over 60% in 2025. Xsolla anticipates the Web Shop for Mobile Games solution will provide developers access to more than 700 payment methods.
Xsolla further expects that with Xsolla Web Shop, game developers should expect up to 40% revenue growth.
The implemented solution will also help reach players in previously unavailable regions, improve discoverability, improve profit margins, help developers gain control over the user experience, provide access to localized payment methods, facilitate cross-game marketing, improve user acquisition efficiencies, and more.
With help from Xsolla Web Shop for Mobile, game developers can focus on scaling their games across multiple platforms to expand their business into new markets and grow their audience. With the inclusion of Top Up, opportunities are broader than anticipated, according to Partners who integrated this combination of products; hence, why we combined them into one very timely solution.
Anton Zelenin, Head of Game Commerce, Xsolla
Developers will appreciate two benefits of Web Shop for Mobile Games. First, the Xsolla fee is limited to only 5%, plus channel processing, thus saving developers up to 20% per transaction. Second, the toolkit lets teams reach players in 250+ countries and allows them to pay using preferred local payment methods with access to 700+ payment types.
With the help of Xsolla Top-up, we unlocked new markets that were impenetrable before. By partnering with Xsolla and utilizing Xsolla Top Up, NetEase was granted scalable access to 700+ pre-integrated payment methods in 200+ countries, all through a single API integration. Also, now we work closely with influencers to drive traffic to our Top Up page, and this brings us 20% more sales than before.
John McNuggets, VP of marketing from NetEase
Xsolla also plans to reach out to influencers that make relevant content to help promote games and increase conversions. Xsolla believes that with the cross-promotion and coordinated marketing efforts, developers can expect up to 40% revenue growth.
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