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CEO of Epic Games is not happy about app stores. Tim Sweeney declared the iOS App Store’s high charge “a parasitic loss”, stating that developers are losing too much money from the cut of app revenues taken by the marketplaces.
Sweeney took time at Devcom this Tuesday to talk about the business models of mobile gaming. Sweeney thinks that the current system in operation by the iOS App Store, Google Play, and others is “pretty unfair at the moment.”
These app stores take 30 percent of your revenue for distribution. That’s strange because Mastercard, Visa, and other companies that handle transactions take 2 percent or three percent of the revenue.”
Yes, the stores deal with content delivery and customer service, but it is still difficult to believe these extra costs have to take more than 5 percent to 6 percent of revenue for their operation. “So they’re pocketing a huge amount of profit from your order – and they aren’t really doing much to help us anymore.”
Sweeney also pointed out that the current mobile game charts are dominated by “a few games with $100 million marketing budgets,” making it unreal for smaller studios to survive. These small teams have to spend money on social networks and advertising, valued at around $3 per installation for a free-to-play game by Sweeney.
This is a market failure. Gamers really want to find great new games, developers want to reach gamers, and there’s a lot of opportunity for discovery that isn’t really working out in an effective way.
Sweeney thinks that developers should be angry about this and that they should “constantly be on the lookout for other solutions, and new ways to reach gamers.”