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

[Arsenikdote]

Unpopular opinion, but a 12% cut sure beats a 30% cut.

Looking at the math....

Current App Store - Millions of customers...but for simplicity sake call it 1 million
Developer sells to 0.1% of them - 100,000
Developer charges $1
Developer makes $70,000
Apple Makes $30,000

Epic App Store
Epic will get...what maybe 10% of the users if they are lucky in five years?
So 100,000 total available users
Developer sells to 0.1% of them - 10,000
Developer charges $1
Developer makes $8,500
Epic Makes $1,500

So Epic makes money, the developer loses over $60K and Apple is "punished" ? Who is winning here? It only seems like Epic...

 

[hasanahmad]

Wait a minute..I thought running a platform doesn’t incur any cost and should be free. A macrumors user swore there is no cost to recoup for Apple

 

[pacalis]

Because even if I pay the same price the dev will get a little more, and I prefer devs getting the money rather than a huge Company ( no matter which ).

Because I would support Epic for trying to change things ( yes I know they did for their own good, but devs get a little in return as well ).

Because I like choices… that’s why.

I doubt it will be more money. Devs will get a slightly bigger piece of a much smaller pie.

Choice is good. When I buy an iPhone, I'm choosing for, and paying for, a walled garden.

For many of us, this decision is removing that wall and a platform choice.

 

[GizmoDVD]

Maybe not the feeling but his/her wallet.

30% transaction costs are too high for digital downloads. Simple as that.

It's been that way for decades now if you add sony, MS, Nintendo to the mix.

 

[hasanahmad]

Before Apple fans get confused again and start calling Epic hypocritical: the key difference is that Epic is not a gatekeeper and does not have complete control over game distribution. If developers don't like these terms they're free to use web distribution or alternative stores. That's how competition in a free and open market works.

By EU law Epic is a gate keeper a game distribution store

 

[Arsenikdote]

For many of us, this decision is removing wall and a choice.

Truly curious, what choice is being removed?

 

[foobarbaz]

Also, there should be nothing illegal about making a profit off of your platform. That's how competition in a free and open market works.

I agree with you. I guess the EU's point is that 2 platforms to pick from isn’t a free and open market. I agree with them, too.

It's also hilarious how people in here are saying 12% is better than 30%, as if Apple doesn't lower the fee to 15% after a year....

Only for ongoing subscriptions. That’s not how the game industry is earning their money.

 

[yabeweb]

I doubt it will be more money. Devs will get a slightly bigger piece of a much smaller pie.

Choice is good. When I buy Apple, I'm choosing for, and paying for, a walled garden.

For many of us, this decision is removing that wall and a platform choice.

I don’t have a walled garden on my Mac ( thank god!) I got also better deal for the same app outside of the store thanks to that, and I am happy I don’t have to now on iOS.

Looking forward for the same on iOS.

 

[sw1tcher]

Epic is a much smaller store and reaches much less people so...12% seems like a bargain for those that don't really want to sell their games. Did you expect them to be the same as Apple who has a 1000x consumer reach?

12% is what they charge developers who want to reach the billions of combined Windows and Mac users around the world.

"For games distributed through the Epic Games Store, Epic will collect a 12 percent share of revenue, which is the same fee that it charges on Windows and Mac machines."

Add up all those Windows and Mac users and you'll have just as many of them as iOS users.

Is Windows 10 too popular for its own good?

Microsoft has a serious problem on its hands, thanks to competition from ... itself?

www.zdnet.com

"In recent public filings, Microsoft has said there are roughly 1.4 billion Windows PCs worldwide. If three-quarters of them are still running Windows 10, that's a billion PCs or so"

 

[GizmoDVD]

12% is what they charge developers who want to reach the billions of combined Windows and Mac users around the world.

"For games distributed through the Epic Games Store, Epic will collect a 12 percent share of revenue, which is the same fee that it charges on Windows and Mac machines."

Add up all those Windows and Mac users and you'll have just as many of them as iOS users.

Is Windows 10 too popular for its own good?

Microsoft has a serious problem on its hands, thanks to competition from ... itself?

www.zdnet.com

"In recent public filings, Microsoft has said there are roughly 1.4 billion Windows PCs worldwide. If three-quarters of them are still running Windows 10, that's a billion PCs or so"

iOS users...in the EU...who choose to go outside of apple to download the Epic store....to buy a game.

 

[foobarbaz]

By EU law Epic is a gate keeper to their own store

Of course not. You need significant market share to qualify as a gatekeeper.

 

[MallardDuck]

Fees are bad.
Fees are unreasonable.
Unless they're our fees.

 

[Arsenikdote]

12% is what they charge developers who want to reach the billions of combined Windows and Mac users around the world.

Except that the Epic Store will not reach every potential customer so your comment is misleading. It will only reach the amount of users that actually visit their specific store.

 

[Glideslope]

“Epic Hypocrisy.”

So sick of Sweeny’s Bull****.

 

[steve09090]

You'll have to elaborate on how Epic are being hypocritical because from what I'm seeing

(1) the 12% fee is less than the 15% or 30% fee Apple charges;

(2) they're allowing app developers to use their own payment processing method, something Apple doesn't allow ("there are no fees for apps that offer in-game purchases and use their own payment processing method.");

(3) they're not blocking app developers from advertising alternative payment methods, something Apple doesn't allow

Google charge them 4%. That’s how they are hypocritical.

 

[Glideslope]

Fees are bad.
Fees are unreasonable.
Unless they're our fees.

Yup. Yet the Mice continue to follow The Piper off the pier……

 

[neuropsychguy]

Unpopular opinion, but a 12% cut sure beats a 30% cut.

Epic loses money with their Windows game store. 12% is not covering their costs. Maybe that will change in the coming years, but so far it’s not enough of a fee to make them money. Supposedly Epic says 12% covers costs, but with its other spending to grow market share and whatnot, the Epic Store loses money. Apple needs to do more with the App Store than just distribute apps (develop programming languages, APIs, etc.) so it's easy to see how 12% won't cut it for Apple to make any money.

This is also explained using margins below. This is from a comment I made a while back.

Apple's services’ gross (not net) margins are about 70%. Let's just assume the App Store is at a 70% margin (there’s a claim from a judge it’s maybe 75%, but we’ll go with what we know about Apple’s overall services margins -- we do not know Apple's App Store margins though). With an assumed 70% margin and a 30% fee (most developers are not paying that much), Apple gross "break even" point is a 9% fee. That's gross margin and Apple would lose money at that fee. Apple’s overall net margin is about 60% of gross margins. If Apple needs a 9% fee to break even with gross margin on the App Store, Apple needs about a 13% fee to make money. This fits with Epic’s supposed loss by charging 12% fees.

Most developers pay 15% fees. Let's assume Apple still makes money on that and is grossing a 70% margin (which isn't likely because the higher fees bring in much more money from the big companies -- most developers pay the 15% fee but most money comes from the minority paying the higher fees). In any case, Apple’s gross "break even" point is a 4.5% commission. Again, that's not net, so a 4.5% commission would lose Apple money. Again Apple, while charging most developers a 15% fee, collects most of the money from the companies paying 30%, which means Apple margins likely come from the bigger developers who will subsidize the smaller ones paying lower fees.

In any case, what this means is 5% will lose Apple money. 9-10% might be a break even point, but it's likely the net break even point is around 13%. Apple could likely have App Store profitability if everyone paid 15%, but profits would take a considerable hit. It's no coincidence that Apple charges 15% to most developers.

 

[AppliedMicro]

Really, did you forget that hosts pay a fee for internet bandwidth and traffic usage?

No, I didn't.
Even a large 1GB App Download costs a few pennies at most. Look up CDN pricing.

 

[hasanahmad]

Of course not. You need significant market share to qualify as a gatekeeper.

So is that why Apple products were declared not gatekeeper status because their share in App Store and other products is considerably lower ?

 

[pacalis]

I

Truly curious, what choice is being removed?

The choice to have a walled garden. I have kids and the security and payment controls on Apple are way better than they are on other platforms. I like chromebooks for education this reason too.

Now I would never buy a chromebook for myself, so I get where folks are coming from.

Maybe EPIC can force an appstore on all chromebooks next.

 

[ranmasaotomes]

It’s just ironic that Epic is doing this now

The Epic store app has been on Android for years. To this day it has 2 apps. No other apps on the service.

It’s not a store. It’s a glorified launcher.

If they wanted to show how they would do this. They should have started getting non Epic games in that store years ago.

 

[Arsenikdote]

The question is if it’s okay for Apple to make money from app fees, or does Apple have to lose money?

What question? Do you mean like a "public opinion" question?

I can't be a business question, because it would be silly to ask whether or not a for profit business should make money or not.

 

[AppliedMicro]

t's been that way for decades now if you add sony, MS, Nintendo to the mix.

Sony, Microsoft and Nintendo sell game consoles at discounted prices, often at a loss (on the hardware itself).

Apple doesn't sell iPhones at a loss.

 

[steve09090]

Looking at the math....

Current App Store - Millions of customers...but for simplicity sake call it 1 million
Developer sells to 0.1% of them - 100,000
Developer charges $1
Developer makes $70,000
Apple Makes $30,000

Epic App Store
Epic will get...what maybe 10% of the users if they are lucky in five years?
So 100,000 total available users
Developer sells to 0.1% of them - 10,000
Developer charges $1
Developer makes $8,500
Epic Makes $1,500

So Epic makes money, the developer loses over $60K and Apple is "punished" ? Who is winning here? It only seems like Epic...

And this is only in the EU? Or are you comparing World wide distribution compared to EU. Plus your 0.1%. Where did that come from? Based on your logic, I should have 100,000 apps on my phone.

 

[quietstormSD]

Now that is stifling innovation. You charge a 12% for folks that utlize your app store, a friggin app store. You didn't create and maintain the phone, operating system, ecosystem etc, just a friggin app store. Get a life Epic. I don't play your dumbass games anyway.