The legal and PR fight that Epic has started against Apple because of the removal of its app from the stores shows a clear rebellion against the power of the platform, which it once pointed out.
Epic Games is not David fighting Goliath. Sure, it’s tax insignificant compared to Apple: revenue of $ 4.2 billion in 2019 versus Apple’s $ 260.2 billion. But we’re still talking about billions, and it’s going to have an impact well beyond these two companies.
In the beginning, Epic looked like it was going against injustice and representation all Gambling companies suffering from this 30% drop in sales on all in-app transactions. But the longer this takes, the less explicitly classy Epic looks. Attempts are made to turn its users against Apple, which it appears to have backfired. It turns out that someone who wants to play Fortnite is just using other platforms.
What matters now is how this affects everyone else, and I’m not talking about gamers or game companies.
Brands started seeing opportunity in apps a decade ago and have released their own IP. Now that the pandemic is hugely boosting mobile commerce (nearly $ 300 billion this year), there is a huge opportunity to gain not only attention and brand loyalty, but also US dollars.
But branded apps, just like games, live in the walled gardens of app stores. And the companies that run these businesses have their own rules – and Apple in particular is lenient.
Prepare for the 30% in-app purchase fee
When it comes to gaming, Apple will continue to put its foot down and charge its fee or set an extremely high logistical bar. However, when consumers use the Airbnb app to book a stay or Uber / Lyft to book a ride, Apple doesn’t take 30% of that payment. There is also no 30% additional charge for a Walmart, Amazon or take-out order. This is a big part of Epic’s reasoning about buying V-Bucks direct: apps like Nike SNKRS, Best Buy, and Fandango allow direct buying. So why can’t games?
Apple says it’s because these are (mostly) material goods and services that are used, i.e. not used, in the offline world im the app itself. But Basecamp had to resign with its HEY email app, and COVID-19 also forced several apps to pay tithing from Apple or have nothing to offer at all. If Apple scores a clear victory over Epic, it may be labeled a “processor fee” and attempt to leverage that in other situations that branded apps are more familiar with.
As a brand publisher or advertiser, both will be affected by the changes in iOS 14
The 30% cut for IAP is high – so high that many smaller developers who don’t have deep pockets like Epic Games are not making enough to survive without advertising as part of their revenue model. What used to be additive is now a central monetization practice.
Apple isn’t a fan of in-app ads. It believes this degrades the overall quality of the platform, and perhaps most importantly, it doesn’t make money from in-app ads. Enter the (delayed) changes to iOS 14 where removing a key ad revenue driver (IDFA) in the name of their value proposition “Privacy as a Feature” places app publishers and Advertisers in a bond.
You have to follow the rules of Apple and Google even if they change
Previously, Apple was the developer’s voice. Most of the app publishers were even Apple fanboys who thought the platform couldn’t go wrong. Those days are over, and many developers believe that Apple’s garden has grown beyond their ability to transparently manage it – and that it costs too much to play in that garden.
Jonathan is AdColony Senior Director, Global Marketing and Communications.
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