Epic Games to Charge 12% Fee for App Sales From Alternative iPhone Store

[kiv.atso]

That might be you, yet there’s millions upon millions of applications, software, models etc provided for free because the person who made it thinks it’s a good thing to do.

Just like all the different browser addons for Firefox or chrome. That’s the reason almost nothing exists for safari as it cost more than just their spare time they spend on it.

I’m not being greedy. Just being realistic. Everyone everywhere just looking to squeeze as much money out of me as possible, especially the government. Time is money in this world.

However, I do find free apps useful to showcase your skills. That’s the only thing I would ever spend my spare time for.

Otherwise, I would either do paid work or spend time with my family.

 

[Sophisticatednut]

The no cut is for in app purchases; so to do that a developer would need a freemium model where the game is free to download but requires in app purchases to get more features. If you sell the game via Epic you have the split although in app purchases appear to still be free via a third party processor.

It will be interesting to see what Epic does if developers offer freemium games to use their store and get access to their user base without paying a cent; and if they allow from day 1 free apps that are limited until you make an IAP via a 3rd party processor.

This has been possible for 3~ years already.

You can sell the game and use epics payment processing or your own solution.

True, but my point was Epic wants a cut if you use their engine, just like Apple if you want too use resources they created. In Epic's case, a forever cut of your revenue no matter how you sell it.

Well only a cut if you sell it outside their store.

Still, Epic is setting rules to access to its FN storefront to protect their revenue and complaining when Apple does the same with theirs. Epic is preventing developers from creating items independently and selling them via Epic.

Again how is this similar? Fortnight is a game with DLC, not a storefront, and there’s no rules to access their storefront, nobody can access it.

If Fortnite supported mods then people could sell that if they wanted.

The AppStore= sells first and third party products
Epic store = sells first and third party products
Fortnight = doesn’t sell third party products

Does anyone know whether the 12% fee charged by Epic includes the typical 3% payment processing fee, or are the developers expected to manage that on their own?

Else, this actually works out to 15%, which is in line with what Apple is charging small developers, and the Epic games store famously isn't profitable (it's really being propped up by Fortnite money). So I find it a bit weird that people are pointing to a seemingly unprofitable and unsustainable business model, expect Apple to ape that, and then act all shocked and outraged when Apple doesn't.

It includes the fee. It’s 12% using their payment system, and 0% if you use something else.

I’m not being greedy. Just being realistic. Everyone everywhere just looking to squeeze as much money out of me as possible, especially the government. Time is money in this world.

However, I do find free apps useful to showcase your skills. That’s the only thing I would ever spend my spare time for.

Otherwise, I would either do paid work or spend time with my family.

Never said you’re greedy, just that people constantly makes free stuff for the public.

 

[jlc1978]

This has been possible for 3~ years already.
You can sell the game and use epics payment processing or your own solution.

Interesting. Reading their announcement, it appears IAPs can be used to avoid paying Epic. However, reading this:

88/12 revenue share and the same programs you can leverage to keep 100% of revenue using your own payments for in-app purchases

it appears Epic may limit IAP to apps that aren't freemium.

I do wonder how long they'll happily lose money to poke a tick in Apple's eye and try to build a relevant broad based store. Even at 12% they aren't that much cheaper than the 15% Apple charges most developers, and Apple has much more lucrative use base.

Well only a cut if you sell it outside their store.

Why should they? Just because you use UE?

Then there's the whole per seat license for non-gaming use, another example of Epic's greed and hypocrisy - setting different rules for different uses.

Again how is this similar? Fortnight is a game with DLC, not a storefront, and there’s no rules to access their storefront, nobody can access it.

My point exactly - they built they own walled garden but whine about Apple's. My opinion is Epic wants completely free access to the App Store because, well, why should Apple make money providing them with a lucrative way to sell their game?

If Fortnite supported mods then people could sell that if they wanted.

Maybe the EU should force them to; it's time the walled garden around games and digital content be torn down, as well as Spotify's preventing rights holders from selling and advertising via Spotify..

 

[OneBar]

Sure that’s easy considering the law considers goods sold what digital content is sales of goods and not as a license:

Consumer Sales Act (2022:260)

1 § This Act contains provisions on the protection of consumers in the purchase of goods where the buyer is a consumer and the seller is a trader.

'goods' means movable object, with or without digital parts,

'goods with digital elements' means movable goods that are integrated or interconnected with a digital conponents or service in such a way that the absence of the digital objects or service prevents the sold goods from being used as intended.
Scope of the law

Section 3 This Act applies to the purchase of goods sold by a trader to a consumer.
When purchasing a product with digital components, the digital content or digital service is included in the purchase of the product, unless otherwise stipulated in the purchase contract. It also applies in cases where the digital content or digital service is provided by someone other than the trader.

Section 4 In addition to what is stated in section 3, for a product with digital elements to be delivered, it is required that the digital content or digital service has been provided to the consumer. If the digital content or digital service is to be supplied continuously over a period of time, delivery is deemed to have taken place when the supply has commenced.

The Digital content provided with the goods composed of digital elements is considered supplied when the consumer is given access or access to the content or to a means suitable for accessing or downloading it.
The Digital services included with the goods containing digital elements is considered deliverd when it is made available to the consumer.

Contract terms that deviate from the law

Section 10 Contract terms which, in comparison with the provisions of this Act, are detrimental to the consumer are ineffective against him, unless otherwise provided by law.


Section 2: In addition to what follows from Section 1, the goods shall:

1. be suitable for the purposes for which goods of the same kind are generally used,
2. correspond to the quality and the trader’s description of a sample or model that has been made available to the consumer before the purchase,
3. have the quantity and characteristics and other features regarding durability, functionality, compatibility, safety, and other features that are normally present in goods of the same kind and which the consumer can reasonably expect considering the nature of the goods,
4. correspond to such information about the goods’ characteristics and other features or use that the trader or someone in a previous sales link or on behalf of the trader has provided in the marketing of the goods or otherwise before the purchase, and
5. be accompanied by the packaging and other accessories as well as instructions for installation, assembly, use, storage, and maintenance that the consumer can reasonably expect.

Section 3: Before the purchase, the trader shall inform the consumer about such conditions relating to the goods’ characteristics or use that the trader knows or should know and that the consumer can reasonably expect to be informed about, provided that the information can be assumed to affect the purchase.

Source Swedish consumer protection laws and contract law

Konsumentköplag (2022:260)

www.riksdagen.se

You missed where there was no monetary exchange for the OS. There was only monetary exchange for the hardware of the phone itself. Therefore this law doesn't apply as there was no sale of a good, real or digital. You have no means of accessing iOS or downloading it. Therefore you do not own it.

As I said, show me your receipt of purchase for the OS and/or the license key for your specific copy. You own your copy of Windows. You bought it, you have a license key, and your itemized receipt will show a charge for the purchase of the OS. You will not have any of that for iOS or macOS.

 

[jlc1978]

You missed where there was no monetary exchange for the OS. There was only monetary exchange for the hardware of the phone itself. Therefore this law doesn't apply as there was no sale of a good, real or digital. You have no means of accessing iOS or downloading it. Therefore you do not own it.

That depends on local laws as well as court decisions; and you may have specific rights as to how you can resell and use the copy you have. You certainly do't own the IP any more than that of the phone, but that is separate from ownership of the device and associated software.

As I said, show me your receipt of purchase for the OS and/or the license key for your specific copy. You own your copy of Windows. You bought it, you have a license key, and your itemized receipt will show a charge for the purchase of the OS. You will not have any of that for iOS or macOS.

By your argument, an bundled OS, even Windows is not owned by the buyer of the PC since they have no itemized receipt for the purchase, just a device specific license and associated key

 

[Sophisticatednut]

Interesting. Reading their announcement, it appears IAPs can be used to avoid paying Epic. However, reading this:

88/12 revenue share and the same programs you can leverage to keep 100% of revenue using your own payments for in-app purchases

it appears Epic may limit IAP to apps that aren't freemium.

I do wonder how long they'll happily lose money to poke a tick in Apple's eye and try to build a relevant broad based store. Even at 12% they aren't that much cheaper than the 15% Apple charges most developers, and Apple has much more lucrative use base.

Can be a special case for iOS considering Apple takes a .50€ fee.

Considering they have spent millions upon millions to stick it to steam and purchasing games exclusivity for a few years, I’m fairly confident they will do it forever.

Why should they? Just because you use UE?

Yes, the use of the UE you pay 5% royalty after you have earned 1.000.000$ revenue for the game.

Then there's the whole per seat license for non-gaming use, another example of Epic's greed and hypocrisy - setting different rules for different uses.

Then don’t use UE5, there’s a million other programs. But UE5 is used because it’s one of the best tools.

My point exactly - they built they own walled garden but whine about Apple's. My opinion is Epic wants completely free access to the App Store because, well, why should Apple make money providing them with a lucrative way to sell their game?

Epic don’t care about the AppStore, they want to be able to sell games to iOS users without apple butting in.

Epic doesn’t have a walled garden if anyone can enter as they want

Maybe the EU should force them to; it's time the walled garden around games and digital content be torn down, as well as Spotify's preventing rights holders from selling and advertising via Spotify..

EU have already done that, there’s no walled gardens around games. You as a consumer owns the games you purchase and retain any rights to do as you wish with them.

Just how steam isn’t legally allowed to prevent you from selling your game account, and developers can’t prevent you from selling mods etc.

And Spotify isn’t a store so that doesn’t make any sense. You are comparing non stores with stores

You missed where there was no monetary exchange for the OS. There was only monetary exchange for the hardware of the phone itself. Therefore this law doesn't apply as there was no sale of a good, real or digital. You have no means of accessing iOS or downloading it. Therefore you do not own it.

This law applies to anything as its consumer protection law, as well as contract law.

Did you miss the part when goods with digital content is is classified as a sale of goods? The fact monetary exchange for the OS never happened is completely irrelevant when you purchased goods containing it.

The moment you can use the goods it’s considered delivered.

As I said, show me your receipt of purchase for the OS and/or the license key for your specific copy. You own your copy of Windows. You bought it, you have a license key, and your itemized receipt will show a charge for the purchase of the OS. You will not have any of that for iOS or macOS.

iPhone is advertised with iOS as part of the product, and it’s unusable without the integrated software.

The license isn’t legally binding for the failure to inform the consumer of the content and to agree to it before the sale is concluded.

 

[OneBar]

That depends on local laws as well as court decisions; and you may have specific rights as to how you can resell and use the copy you have. You certainly do't own the IP any more than that of the phone, but that is separate from ownership of the device and associated software.

You might have a case with local law but you still have the case of not purchasing the OS. Since you cannot divest the OS from the compute device, you can't actually resell the OS itself. I could burn a copy of my Windows 10 Pro here and sell that with the key, though. Probably not legally but I could make it happen.

By your argument, an bundled OS, even Windows is not owned by the buyer of the PC since they have no itemized receipt for the purchase, just a device specific license and associated key

No, it is owned because you bought it and have a license key that can be retrieved that is specific to your copy. Everyone running iOS 17.4.1 has the exact same copy. You do not have a product key or license that is different to mine. Just because you can't find or didn't get an itemized receipt is meaningless. My only point with that was that if you got an itemized receipt, you'd see the charge for the OS. I got one on both of my Dells that I bought and paid for Windows XP Home and Windows VISTA Home. I owned those copies of the Windows OS and had specific and unique product keys for them.

 

[OneBar]

This law applies to anything as its consumer protection law, as well as contract law.

Did you miss the part when goods with digital content is is classified as a sale of goods? The fact monetary exchange for the OS never happened is completely irrelevant when you purchased goods containing it.

The moment you can use the goods it’s considered delivered.

iPhone is advertised with iOS as part of the product, and it’s unusable without the integrated software.

The license isn’t legally binding for the failure to inform the consumer of the content and to agree to it before the sale is concluded.

Let's assume you're correct for the sake of the argument. Why hasn't there been a whole avalanche of suits against Apple for a myriad of things you can't do on iOS? The answer is there's no case because you don't own the OS.

But back to your points. The goods are the hardware. You can argue the digital goods delivered aspect but that does not impart ownership of the digital goods according to that law.

In fact, the DOJ in 2015 told Apple to unlock a phone running iOS 7 because it was Apple's software and not the owner of the phone's software and therefore was not protected.

 

[Atomicow]

Apple already does this. If you sell your game on apple arcade, you can't sell it in the normal iOS app store.

Incorrect. The top 3 games in arcade right now are Solitaire by Mobilityware, NBA2K24, and Bloons TD6. All 3 are available outside of Apple Arcade.

 

[Abazigal]

Incorrect. The top 3 games in arcade right now are Solitaire by Mobilityware, NBA2K24, and Bloons TD6. All 3 are available outside of Apple Arcade.

@macfacts To add on to that, the last 2 games I played on Apple Arcade (Slay the Spire, Battleheart Legacy) are also available on the App Store as paid apps.

The main difference is that the arcade version of battle heart legacy has its UI optimised for the iPad Pro, while slay the spire finally supported iCloud sync (which also wiped out 2 years of progress for me; but I have since clawed that back). But otherwise, they are the exact same games.

I don't know exactly what goes on behind the scenes and why some games are released exclusively on arcade, but it appears that Apple does not strictly require that your app be exclusive only to their arcade platform.

 

[jlc1978]

Can be a special case for iOS considering Apple takes a .50€ fee.

Considering they have spent millions upon millions to stick it to steam and purchasing games exclusivity for a few years, I’m fairly confident they will do it forever.

At some point I suspect they will have to decide whether it is worth it. Unless they can make their store become big enough to generate profits, it makes no sense to keep it going.

Yes, the use of the UE you pay 5% royalty after you have earned 1.000.000$ revenue for the game.

Sure, just as if you use Apple's services Apple should be allowed to charge a fee for that use; which the EU law allows. If you want to use the Apple ID, Apple's tools, etc, Apple, like Epic, should be free to set fees.

Real sideloading, where a developer uses 3rd party dev tools, their own DRM (or none) instead of an Apple ID, etc. should not be expected to pay Apple.

Then don’t use UE5, there’s a million other programs. But UE5 is used because it’s one of the best tools.

That's the same argument used to defend Apple - you can develop for other devices and systems; but devs go to iOS becasue it is one of the best markets.

Epic don’t care about the AppStore, they want to be able to sell games to iOS users without apple butting in.

I think they want Apple to be forced to let them access Apple's App Store for free.

Epic doesn’t have a walled garden if anyone can enter as they want

Except you can't in the Fortnight market. Epic controls its cash cow as strongly as Apple.

And Spotify isn’t a store so that doesn’t make any sense. You are comparing non stores with stores

My point was about markets - if you look at the streaming music market Spotify is a major player, why shouldn't similar rules apply to them in terms of advertising, musicians selling streams independent of Spotify while using Spotify's resources?

 

[Sophisticatednut]

some point I suspect they will have to decide whether it is worth it. Unless they can make their store become big enough to generate profits, it makes no sense to keep it going.

Sure, just as if you use Apple's services Apple should be allowed to charge a fee for that use; which the EU law allows. If you want to use the Apple ID, Apple's tools, etc, Apple, like Epic, should be free to set fees.

Real sideloading, where a developer uses 3rd party dev tools, their own DRM (or none) instead of an Apple ID, etc. should not be expected to pay Apple.

I agree as long as the option exists to not using their services and pay 0

That's the same argument used to defend Apple - you can develop for other devices and systems; but devs go to iOS becasue it is one of the best markets.

Well not at all, it’s not them developing for other systems, but they choosing tools UE5 is a tool just like Unity, Xcode or anything as mundane as Adobe after effect.

You can be in the Epic store and use any of them:
UE5( Hogward’s Legacy)
Unity 5( Risk of rain 2)
frostbite 3( Dead space)
Appgamekit (any iOS/Mac game)
id tech 6( Wolfenstein: Youngblood . ,
REDengine 4(cyberpunk 2077, etc etc

The UE5 isn’t a platform. B

I think they want Apple to be forced to let them access Apple's App Store for free.

As far as I have seen they want the ability to have free access to iOS customers outside the AppStore.

Except you can't in the Fortnight market. Epic controls its cash cow as strongly as Apple.

It’s a game selling only DLC made by Epic.
Just like 100% of other games.

But there numerous markets outside of it allowing the selling of skins etc
However, Epic Games has made it clear that trading isn't supported:

"Trading with other players is not a supported feature in Fortnite. Drop items for other players at your own risk, so if you do choose to trade by dropping items, please be cautious of scams that can result in losing your items."

My point was about markets - if you look at the streaming music market Spotify is a major player, why shouldn't similar rules apply to them in terms of advertising, musicians selling streams independent of Spotify while using Spotify's resources?

I understand, but Spotify isn’t a market.
Spotify unlike Apple doesn’t sell anything, there nothing to purchase, nether by consumers or artists etc.

Same with the AppStore, the DMA isn’t dictating access to the store as that is a specific service Apple provides.
But the ability of the owners of the device itself to conduct transactions with other services without Apple being the middle man.

Exactly how the Mac works. A user can opt to use only the MacAppstore, and developers can opt to only use the Macappstore.

But users can also choose to not using the Macappstore exclusively and developers can choose to not use the Macappstore exclusively and sell in steam, epic or their own website/ store etc simultaneously.

 

[jlc1978]

Well not at all, it’s not them developing for other systems, but they choosing tools UE5 is a tool just like Unity, Xcode or anything as mundane as Adobe after effect.

However, the underlying argument is the same - If you don't like X's rules, use something else.

As far as I have seen they want the ability to have free access to iOS customers outside the AppStore.

However, the customer base they have is so small they need Apple's App Store. I suspect they would love to have a base as large as Apple's; but until and if that happens they appear not wanting to pay Apple while still accessing Apple's usr base via the App Store.

A telling sign would be to pull their apps from Apple's store in the EU to get users to go to their store.

It’s a game selling only DLC made by Epic.
Just like 100% of other games.

And it's still a walled garden within the Fortnight market. Why should games be different once they reach a critical mass? That's the argument used to create gatekeepers.

I understand, but Spotify isn’t a market.
Spotify unlike Apple doesn’t sell anything, there nothing to purchase, nether by consumers or artists etc.

Gatekeeper status extends beyond the sale of items in a store. If the argument is one company has significant market power and thus needs to be regulated based on that you can make the same argument for other types of markets, such as music and specific games.

I agree music is somewhat different as a song is the same no matter who streams it and musicians are free to go on multiple streaming services. To me, once a service or game reaches a certain size it is worth looking at regulating it. I doubt any games will reach that point; my point was Epic is happy to tightly control access to it's cash cow but complains about Apple doing the same.

It will be interesting to ee how the EU's definition of gatekeeper evolves over time as different markets get companies with significant market power or evolve into duopolies.

 

[Sophisticatednut]

However, the underlying argument is the same - If you don't like X's rules, use something else.

Well is it? The Epic store doesn’t require you to use any tool. Other tools that competes against the Unreal engine 5 in both costs and capabilities.

However, the customer base they have is so small they need Apple's App Store. I suspect they would love to have a base as large as Apple's; but until and if that happens they appear not wanting to pay Apple while still accessing Apple's usr base via the App Store.

The epic store is already established on windows and Mac. So the customer base is pretty large. And you can have the Sam game in the epic store and the AppStore at the same time, so why would

This is just them allowing iOS games to be published and allowing cross platform ownership to be offered. Essentially you could sell BTD6 for iOS, Android, Mac and windows simultaneously in one place.

Or Hades etc etc

A telling sign would be to pull their apps from Apple's store in the EU to get users to go to their store.

Or have a limited app in the AppStore and tell them to buy the full game in the epic store. It’s up to what developers think is best.

And it's still a walled garden within the Fortnight market. Why should games be different once they reach a critical mass? That's the argument used to create gatekeepers.

Well what would a game gatekeep from?

On iOS, you can only purchase apps made by 3rd party developers from within Apples AppStore. And Apple own apps also competes with 3rd party developers.

You can only buy and sell within the walled garden Apple created.

In any game, developers are free to sell 3rd party content and users are free to use that content inside or outside the “garden”.
Fortnight or Skyrim doesn’t prevent anyone from selling content to the game independently.

There’s no commissionaire and no commission.

Gatekeeper status extends beyond the sale of items in a store. If the argument is one company has significant market power and thus needs to be regulated based on that you can make the same argument for other types of markets, such as music and specific games.

I would say it doesn’t, it only extends towards a company acting as the sole gate for content to enter and exit, preventing any alternative doors from being used.

Its about a business being the only allowed commissionaire between the company and the customer.

I agree music is somewhat different as a song is the same no matter who streams it and musicians are free to go on multiple streaming services. To me, once a service or game reaches a certain size it is worth looking at regulating it.

It will be interesting to ee how the EU's definition of gatekeeper evolves over time as different markets get companies with significant market power or evolve into duopolies.

Unlikely to change as it follows existing definition of dominance and antitrust legal precedent in EU.

 

[Sophisticatednut]

I agree music is somewhat different as a song is the same no matter who streams it and musicians are free to go on multiple streaming services. To me, once a service or game reaches a certain size it is worth looking at regulating it.

This is also true for games but in even more extent than music.

A game developer is free to publish the same game on multiple store services and platforms.
The game/software is the same irrespective of what store it’s downloaded from (unless it’s restrictive like the MacAppstore)

And You purchase the game instead of exclusively streaming it.

I doubt any games will reach that point; my point was Epic is happy to tightly control access to it's cash cow but complains about Apple doing the same.

Epics cash cow isn’t Fortnite, it’s the Unreal Engine that currently dominates the developer community and is being favored over developing your own game engine or using Unity after their terrible licensing agreement debacle.

Fortnight is to Epic as Halo is to Microsoft.

 

[jlc1978]

This is also true for games but in even more extent than music.

A game developer is free to publish the same game on multiple store services and platforms.
The game/software is the same irrespective of what store it’s downloaded from (unless it’s restrictive like the MacAppstore)

And You purchase the game instead of exclusively streaming it.

However, isn't the gatekeeper argument that even if their are alternatives the gatekeeper is simply too big; not that there aren't alternatives since there are for each of them? They have defines some markets very narrowly, IMHO. To be consistent, shouldn't the same argument be applied to other digital markets?

Epics cash cow isn’t Fortnite, it’s the Unreal Engine that currently dominates the developer community and is being favored over developing your own game engine or using Unity after their terrible licensing agreement debacle.

And Epic steers people to UE and ties two products together with their store terms; something that is anti-competitive.

EPic's 12% cut is simply a way to try to look like the good player in this fight, when neither side is perfect.

I wonder if Epic forgoes all of that12% cut for being on their store for sales of games outside of tehir store that use the UE but have a copy on their store? If so, a smart developer could pull a Spotify and jack up the price on Epic's store 12% to get free access to UE even after selling a million dollars or Euros worth of a game and avoid Epics 5% permanent cut.

Fortnight is to Epic as Halo is to Microsoft.

I was looking more at the profitability rather than raw numbers, but fair enough.

 

[Lihp8270]

You missed where there was no monetary exchange for the OS. There was only monetary exchange for the hardware of the phone itself. Therefore this law doesn't apply as there was no sale of a good, real or digital. You have no means of accessing iOS or downloading it. Therefore you do not own it.

As I said, show me your receipt of purchase for the OS and/or the license key for your specific copy. You own your copy of Windows. You bought it, you have a license key, and your itemized receipt will show a charge for the purchase of the OS. You will not have any of that for iOS or macOS.

“goods that are integrated or interconnected with a digital components or service in such a way that the absence of the digital objects or service prevents the sold goods from being used as intended.”

 

[Sophisticatednut]

However, isn't the gatekeeper argument that even if their are alternatives the gatekeeper is simply too big; not that there aren't alternatives since there are for each of them? They have defines some markets very narrowly, IMHO.
To be consistent, shouldn't the same argument be applied to other digital markets?

I wouldn’t say they defined it narrowly, but it’s just a more clearly defined legal therm in EU with listed criteria’s than it is in the U.S. legal system, and the argument is that there’s ether no competition to the storefront and/or the company running the store discriminates against competitors by limiting them from accessing the same functionality as they themselves use, as well as

With the antitrust ruling against google they also established that iOS and android aren’t competitors nor relevant markets to each other as they work largely independently from each other . Apple sells phones that compete against other phones, as in iPhone 15 pro max competes with Samsung galaxy s12. It’s never apple selling iOS that competes against the Samsung os fork.

Apple iOS Appstore doesn’t compete against the google play store, in the same way Walmart (was out competed ~2006) doesn’t compete against German Karstadt, Swedish ICA or any other Hypermarket stores in EU.

In the same way Ford, GM or BMW or any other car manufacturer can’t prevent their car dealers from selling competitors in the same building (in EU that is) as their cars,

And Epic steers people to UE and ties two products together with their store terms; something that is anti-competitive.

EPic's 12% cut is simply a way to try to look like the good player in this fight, when neither side is perfect.

What do you mean, what terms are you referring to? Nothing is tied together, you can use the epic store and the Unreal engine separately. Have you read any actual terms? Or their FAQ?

Epic doesn’t need to be the good guy, and personally I don’t like epic because of the timed exclusive games they paid publishers for, but the core issues and facts can stand by themselves irrespective of the company that makes the argument.

I wonder if Epic forgoes all of that 12% cut for being on their store for sales of games outside of tehir store that use the UE but have a copy on their store?

They do. Any game in the store that is sold somewhere else doesn’t pay 12%, they keep all the revenue. If you have an alternative store listed in the Epic store, it will also keep all the revenue of the games sold inside their store, as have been done for years. Same with steam and GoG etc who don’t take anything for sales done outside the store.

If so, a smart developer could pull a Spotify and jack up the price on Epic's store 12% to get free access to UE even after selling a million dollars or Euros worth of a game and avoid Epics 5% permanent cut.

What would that accomplish? Unreal Engine is already free to download, the revenue is per game, so if you you made 4 games and they earned 1,000,025$ in revenue each giving you 4,000,100$ then you would pay 5$ to Epic in royalties

You won’t avoid paying royalties for the UE5 engine tho, it’s just in their store they choose to waiver the fees.

And reading their terms they also don’t take a royalties if you earn less than 10.000$ per quarter

I was looking more at the profitability rather than raw numbers, but fair enough.

They have over 100% profit margins on their UE 5. They’re making a ton of profit.

Reading though through the news it seems they will be making a market for user created content in Fortnite as wel.

 

[jlc1978]

What do you mean, what terms are you referring to? Nothing is tied together, you can use the epic store and the Unreal engine separately. Have you read any actual terms? Or their FAQ?

You won’t avoid paying royalties for the UE5 engine tho, it’s just in their store they choose to waiver the fees.

Which is my tying argument - you avoid fees by using their engine but have to pay if you chose a different one. That is anti-competitive, no?

 

[Sophisticatednut]

Which is my tying argument - you avoid fees by using their engine but have to pay if you chose a different one. That is anti-competitive, no?

You pay 12% if using their payment service:

• you use their engine
• Use different engine
• Sold on the Epic store front
• Use their IAP system

You pay 0% if you Use your own IAP payment system

• Use different engine
• Use their engine
• Sales done on other stores
• Sales done on your own store
• Sold on the Epic store

A 5% royalty is due only if you are distributing an off-the-shelf product that incorporates Unreal Engine code (such as a game). You will only owe royalties once the lifetime gross revenue from that product exceeds $1 million USD; in other words, the first $1 million will be royalty-exempt.

Epic also offer custom licenses that can include negotiated terms for lower royalties, no royalties, or a different basis for royalty calculation.

What if my project requires custom licensing terms?​

If you require terms that reduce or eliminate the 5% royalty in exchange for an upfront fee, or if you need custom legal terms or dedicated Epic support to help your team reduce risk or achieve specific goals, we’re here to help. Contact us for more information.

Are any revenue sources royalty-free?​

Yes! The following revenue sources are royalty-free:

• Ancillary products, including t-shirts, CDs, plushies, action figures, and books. The exception is items with embedded data or information, such as QR codes, that affect the operation of the product.
• Consulting, work-for-hire services, and in-house projects using Unreal Engine. This applies to using the engine to create architectural, automotive, or other visualizations, as well as consultants receiving a development fee for creating custom projects.
• Non-interactive linear media, including movies, television shows, animated films, and cartoons distributed as video.
• Amusement park rides and live installations.
• Truly free games and apps (with no associated revenue).
• Location-based experiences, such as interactive amusement park rides, coin-op arcades, or VR experiences.

Can I study and learn from Unreal Engine code, and then utilize that knowledge in writing my own game or competing engine?​

Yes, as long as you don’t copy any of the code. Code is copyrighted, but knowledge is free!

If I release my product on the Epic Games Store, would the 5% royalty apply to revenue earned from the Store?​

No. Revenue generated from the Epic Games Store will be excluded from the calculations of the 5% royalty due for Unreal Engine. When you release a product on the Epic Games Store, you pay Epic 12% of the revenue earned and keep 88%. There is no additional Unreal Engine royalty due on the revenue.

What about downloadable content, in-app purchases, microtransactions, virtual currency redemption, and subscription fees, as well as in-app advertising and affiliate program revenue?​

Revenue from these sources is included in the gross revenue calculation above.

 

[jlc1978]

In answer to your earlier question, yes I have read their terms and FAQs,\, which is what I base my conclusions on.

You pay 12% if using their payment service:

• you use their engine
• Use different engine
• Sold on the Epic store front
• Use their IAP system

You pay 0% if you Use your own IAP payment system

• Use different engine
• Use their engine
• Sales done on other stores
• Sales done on your own store
• Sold on the Epic store

I'm not sure that is the case per the licensing terms. The following statement:

If I release my product on the Epic Games Store, would the 5% royalty apply to revenue earned from the Store?​

No. Revenue generated from the Epic Games Store will be excluded from the calculations of the 5% royalty due for Unreal Engine. When you release a product on the Epic Games Store, you pay Epic 12% of the revenue earned and keep 88%. There is no additional Unreal Engine royalty due on the revenue.

implies Epic gets 12% of store revenue. From my read, Epic will let you use IAP for add-ons but not the actual game. In addition, the exemption is not total since Epic also states:

What about downloadable content, in-app purchases, microtransactions, virtual currency redemption, and subscription fees, as well as in-app advertising and affiliate program revenue?​

Revenue from these sources is included in the gross revenue calculation above.

So in exchange for not taking a cut upfront they want a forever cut if you grow successfully; and they want a cut of all revenue, not just that directly related to the use of UE. I guess the argument would be UE enables you to earn that revenue, but the same can be said for Apple's App Store.

I suspect, if Apple suddenly adopted Epic's model, they would not be happy with it.

What is interesting, on a side note, is Disney took a big stake in Epic, and Apple and Disney are pretty close.

A 5% royalty is due only if you are distributing an off-the-shelf product that incorporates Unreal Engine code (such as a game). You will only owe royalties once the lifetime gross revenue from that product exceeds $1 million USD; in other words, the first $1 million will be royalty-exempt.

Not a bad deal. I'd give someone 5% if they could bring me in a million in total revenue for my software product.

Epic also offer custom licenses that can include negotiated terms for lower royalties, no royalties, or a different basis for royalty calculation.

And Apple offers similar terms to companies, depending on the product they sell.

 

[MacFarmer]

damn, the more I hear about Epic, the more I hate it. And that sweeny guy too.

 

[Arsenikdote]

The minority of smartphone gamers that just happen to account for 90% of the AppStore’s revenue?

That the UnrealEngine 5 can easily be used on ~100% of the computers on the market, while Xcode can only be used on ~15% or so of computers on the market?

Xcode that can only make games to only two systems?

while Unreal Engine 5 can make games to 100% of all systems and platforms that are capable of playing games?

I am not sure what you are doing here? You keep pivoting your topics. Are you just trying to "win"? Fine you win. I don't really care about winning, I care about discussion. If you want to have a real discussion then great!

90% of App Store revenue from gaming? No. Try closer to 60% and that includes games that broad audiences play such as Monopoly Go, which has ranked in the top 10 for quite some time. The types of games that make up the bulk of the App Store revenue don't give two %#&$ about the unreal engine. They are the premium games that my aunt plays and her Words With Friends and other games don't need anything from Epic. They need eyeballs, which the main App Store will have.

Again, if you are talking about the minority of gamers and game that need and will use the unreal engine, you have a very valid point. And all of those people moving to some alternative App Store will lower revenue for Apple, raise revenue for Epic, and potentially overall raise the post-cut revenue from those specific developers.

But for the Candy Crush games, the ones that represent the bulk of the 60% of the App Store revenue, they won't change as it would be a bad business decision, especially considering the age of their audience.

 

[Arsenikdote]

True - they make the hardware and OS and should be compensated for that. They may even set a high price for them, as long as they remain competitive.

The issue is that Apple are leveraging their platform power to charge a share of revenue in other, more “downstream” markets - that are related but independent:
- mobile software applications
- in-app purchases
- media content subscriptions (Music, video, games)

…on which, on top of that, they’re competing with their own services.

I think it is a tough place for everyone to be. Apple did something that no one had before. They successfully created the mobile computing market. They did so with billions of money in R&D, they did so with no guarantee of success. They did so over the period of years and years. Their hard work and gamble paid off. Now they are being penalized for being successful. On the other hand, once something becomes so successful that everyone uses it as part of their daily life, other rules might need to apply. Rules that don't favor the creator of the successful thing (aka monopoly/anti-trust rules). I think this is tough because you don't want to penalize people/companies for taking risks and working hard and becoming successful. At the same time you need to have checks and balances in place.

Also, Apple benefits hugely from providing their ecosystem for (almost) free: Their market share in mobile phones and mobile phone OS - and mobile software application stores - is built on attracting developers of free-to-download apps.

They wouldn’t sell nearly as many iPhones, if consumers couldn’t get their bank’s app, their public transit app, Google Maps.

Remember that the first iPhone launched without an App Store. It wasn't thought that it would have one and that developers would just make web compatible apps. So Apple launched the iPhone and had multiple generations of products in their roadmap without ever thinking they would do an App Store. This shows that they still thought the business idea was sound without planning on having that revenue. So while the pivot was made, Apple didn't NEED app developers. The world before smartphones was just selling cell phones with people needed. Apple's bet was that if you could add additional functionality to the phone, such as a web browser and email, that people would rather purchase that phone than the one from Nokia. They were correct and that business model could have stood a lot longer. However, they pivoted and created the App Store and we are where we are today.

Even Spotify or Netflix:
👉🏻 the iOS platform, iPhone sales, Apple are hugely benefitting from bringing Spotify and Netflix content, comfortable user experience and their customers to iOS - for free, without Apple compensating them.
Yet when those companies want to bring iOS users to their subscription, Apple wants to charge a large percent forever….

Yeah this is tough. I don't agree that companies like Netflix should have to pay Apple commissions. I am not sure the right solution though, since I do feel like companies like Candy Crush do. Netflix existed in the real world and while it benefited from mobile devices for sure, still has a strong business regardless. Candy Crush only exists because of mobile devices. Also, remember that for any of these business, once you get past the initial year the cut drops to 15% So while they do "charge it forever" it is 15% "forever" which seems reasonable to be utilizing the platform and continued advancement and development.

Maybe look at it a different way, how does Spotify contribute to the continuation of the platform they rely on for their primary business to function? How are they taking responsibility for driving forward the advancement of mobile computing? Since they need it, and they use it, it seems reasonable they should have some skin in the game. I am not sure why people feel like 15% is too much when that includes CC processing fees of roughly 2.5% so now we are talking about 12.5% to Apple (or Google) or whomever.

Similar argument as Apple not remotely providing 30% of the value of a Spotify subscription.

I don't think I follow how this relates. I was comparing the benefits that Apple provides "random developer" by running and App Store compared to what Epic would offer "random developer" for running an App Store. Are you trying to name a developer of Spotify? If so, what I said still stands. I think Apple is offering actual value while Epic would be offering no value. Whether you feel Apple is charging too much for its value is one thing, but Epic is charging for almost (CC card fees only) nothing. Also, it is not 30%, it is 30% for the first purchase an then 15% after that. Again consider no matter where the user purchases it will be a 2.5% CC fee, so the 27.5% Apple fee in year one goes down to 12.5% for all following years. Since Spotify has only a roughly 5% churn rate on it's premium subscription, the amount that Spotify pays is no where near 30%, those numbers are just used for media hype.

 

[Arsenikdote]

No real apps use swift, only student projects, so apple would have the moral ground if they wanted to take 30% of those.

Your profile name is "Macfacts" and you just stated something as a fact. Got any proof of you fact that no real apps use Swift?

I like facts. You can do a quick Google search to find your own...but here is a small sampling of Apps written in Swift:
Lyft

The Lyft iOS app is now written entirely in Swift

Think Swift is a language that isn’t ready for prime time? The team at Lyft would disagree, as their latest app was written completely in Swift. Apple’s newest programming language has commanded quite a bit of attention since its introducti

thenextweb.com

AirBnb

Getting to Swift 3 at Airbnb

By Chengyin Liu, Paul Kompfner, and Michael Bachand

medium.com

I am not going to do the rest of the work to link to all of the references but here are more apps that are written in Swift...
Slack
SkyGuide
LinkedIn
WhatsApp
FireFox
Asana
Kickstarter