Are app stores taking advantage of developers?

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.

"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."

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.

"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."


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."