This made sense at one time, but now it is too much.
Some weeks ago, Epic launched what seemed at the time to be a real David vs Goliath endeavor: Seeking to force Apple to reduce their 30% cut of all revenues app developers make on their app store ecosystem.
“Good luck”, we thought, then Microsoft Joined the Game. Now things are getting interesting.
We think it’s about damn time.
We’re not alone, and there are even people in Camp Apple don’t agree with the 30% cut - it’s just too high.
When the App Store was new and relatively unpopulated, you could mentally justify giving up 30% of gross revenues as you could spend less on marketing as you get a boost by being in a relatively uncrowded space. However, in the span of 6 months you were already in a noisy environment, with 15,000 apps competing for the same small piece of screen real-estate.
Today, you pay 30% just to exist in the ecosystem. You have no choice, there is no competition. Apple continues their iron grip on their platform, and they place themselves directly on your chart of business risks.
Apple made $260 billion in 2019. 52 billion came from the App Store, of which Apple’s 30% cut is around $15 Billion. This brings up a second point: The revenue generated from these apps is all Apple’s revenue, and they provide 70% to app developers as a cost to earn this revenue. This directly benefits Apple’s valuation and leverage, which is additive to their very generous 30% cut. It’s hard to overstate how important it is that all developers revenue flows through Apple. It simply ads a tremendous amount of potential value to their company, benefiting their shareholders in the form how a higher market cap.
30% is also not justified when you look at other market examples: Epic takes 12% (and throws in Unreal Engine for ‘free’), and Microsoft takes as little as 5%.
Fast forward a few weeks, and a coalition of companies is forming up against Apple. Yes, these are large companies, however they are the ones to take on this fight. If they win, developers large and small will win. For game developers, in particular small game developers, any reasonable reduction in that 30% cut will make a big difference. Wouldn’t Apple want developers on their platform, who work hard to make it better, to succeed more often?
I would think they should.
Hopefully the outcome of this lawsuit will change them in the necessary ways. Hopefully it will garner more than a moment of reflection at Google and at Valve as well.
Time will tell. Give ‘em hell Epic.