TLDR; Apple’s EU updates are a bummer. Build a Webshop to monetize without paying fees to Apple & Google.

If you’re in the gaming industry then you probably know all about the recent updates Apple announced in the EU in response to the Digital Markets Act. And you probably at the very least dislike them, much like the European Games Developer Federation, and pretty much every game developer we’ve come across. Even the champion of game developers everywhere, Tim Sweeney, went as far as calling Apple’s latest EU policies "hot garbage".

This probably isn’t the end of the Apple versus the games industry feud. It’s possible, and even likely, that Apple will be forced to roll-back or alter their EU policies. But in the meantime, this is how things will work for the near future.

That being said, we think some great things will grow from the ashes of Apple’s latest “hot garbage,” and many game developers will see this as a catalyst to launch their own webshops. Keep reading to learn why and how.

A quick recap of Apple’s latest announcements related to mobile gaming

We of course have to do a recap, no article on this topic is complete without one. So, if you’ve already studied Apple’s updates, then skip to the next section. But for folks who need a refresh, here is a great one. These policy changes from Apple are related to the EU only, and will happen with the coming release of iOS 17.4:

👉 Developers can opt in to all of these new policies and terms, or simply keep chugging along with the status quo.

👉  Apple introduced a new fee structure, decreasing their IAP commission from 30% to 17%, or down to 10% for those who qualify as a small business. If you use Apple’s native payment processing (the one they forced everyone to use up until now) then you pay an additional 3% fee. So if you opt in to the new terms and keep using Apple’s payment processing, you’ll pay either 20% or 13%.

👉  Developers can now choose to use alternative payment processors in their games instead of Apple’s, which will save them the 3% fee that Apple charges for payment processing. But those alternative payment processors will come with their own fees.

👉 Developers will now pay a new Core Technology Fee of €0.50 per annual app install after a million annual installs in the EU. Everyone is upset about this one. Apple defines first annual install as “the first time an app is installed by an account in the EU in a 12-month period. After each first annual install, the app may be installed any number of times by the same account for the next 12 months with no additional charge.”

👉  Users in the EU will be able to download games from alternative app marketplaces, breaking the monopoly of the Apple App Store. Those alternative marketplaces can only be downloaded via the developer’s website, they won’t be available in Apple App Store.

👉  Not just anyone can launch an alternative app store, they need to go through an Apple approval process and need a €1,000,000 letter of credit from an A-rated financial institution.

👉 Developers can distribute their games both through the Apple App Store and multiple alternative marketplaces at the same time, but have to maintain the same app build across all of them.

👉  Developers are now permitted to drive users to a website to make purchases via direct links in their game; however, apple will still take their 17% commission from purchases made on any website accessible via a direct in-app link.

👉 Alternative marketplace apps have to pay the €0.50 Core Technology Fee for each install, including the first million. So any marketplace that get’s 100,000 downloads will owe Apple €50,000.

So now what?

Phew, there’s a lot to digest there and by now many folks in the gaming industry have wrapped their head around all of those changes. So what now? What should game developers actually do about this? Let’s explore some immediate and tangible steps that we think every mobile game creator should consider.

Consider opting in for the discount from 30% to 20%

Apple reducing their commission from 30% to 20% (if you use their native payment processing) or 17% (if you use alternate payment processing) is good news for some game businesses out there. Yes, there is the additional Core Technology Fee of €0.50 per annual app install after a million annual installs in the EU. But in some cases, especially for smaller games or games with high ARPU, this commission discount could be a net gain in revenue and profits.

Every game developer is probably already deep in Excel sheets to figure out if any of their games will benefit. But if you haven’t already, start calculating your revenue in the current 30% world versus the new terms to see if there is a nice chunk of money to gain. Apple even provided a simple calculator tool for a quick analysis.

Launch a webshop, all the cool kids are doing it

Apple’s reaction to the EU’s Digital Markets Act made it clear that they aren’t giving up their precious commissions without a fight. Heck, mobile game developers may never get better terms, who knows? So now more than ever, it’s important to try direct-to-consumer methods to sell your IAPs where you won’t be beholden to Apple commission (if you do things the right way, keep reading to learn more).

Webshops provide a great solution, which is why Supercell, Scopely, EA, FunPlus, Zynga, NetEase, and many others are already using them to some degree. For example, about 26% of Playtika’s Q3 2023 revenue came through direct-to-consumer (DTC) webshops.

Webshops have massive benefits:

👉  If you don’t link to your webshop directly from your game, then you can avoid any commissions from Apple and Google - saving 15% - 30%!

👉  Owning a direct relationship with your players, without Apple and Google in the way. Plus, the ability to collect players’ emails and phone numbers for direct marketing. This is extremely valuable data that can be used to power a CRM strategy that improves LTV. Having a good CRM tool and strategy will help here.

👉  Better conversion by customizing your webshops UX and deploying different types of merchandising tactics and personalized offers.

👉  Potential to increase ARPU/LTV through discounts and exclusives compared to what is available directly in-app, plus better monetization methods like loyalty/reward programs.

👉  Better advertising and attribution as the web offers solutions that have pretty much gone extinct with the deprecation of IDFA (e.g. retargeting, look-a-like audiences, automated conversion optimization, etc.).

There’s no better time than now to get going with webshops.

Promote your webshop the right way, and you won’t pay Apple/Google a thing

Like we mentioned above, linking directly from your game to a webshop will trigger Apple’s and Google’s grubby commissions. But there’s several ways to get the word out about your webshop without running up a commission bill with the duopoly. Like most things in gaming, the devil’s in the details. Here are a few tips, free of charge:

👉  In the EU, you can now promote your webshop directly in your game and tout things like exclusives, discounts, and rewards. The only thing that will trigger a commission on webshops sales is if you include a direct link. So don’t link it. Make players aware and they’ll find it. So make sure your SEO is on point to catch all those Google searches. WARNING: This is for the EU only starting March 2024. If you do this anywhere else in the world, then your app will most likely get rejected before it makes it way onto the store or Apple and Google will charge you a commission on all webshop purchases even if you don’t directly link to your store from the game.

👉  Shout about your webshops from every mountain top, aka all of your social media and other owned channels. We all know the importance of community and social media in gaming, so now it’s time to flex all those followers and community members that you’ve built up. Post about your webshop and all of it’s amazing, discounted, exclusive stuff as much as possible, and direct link your heart out from social media and communities. Apple and Google can’t do anything here, so no need to limit this to the EU, go worldwide.

👉  We have a lot more ideas, tips and tricks to share; so make sure to follow us on LinkedIn and join our waitlist to receive all of our updates.

Game developers are agile and optimistic

If there’s one thing we’ve learned during our past lives building games, and our current journey building Sanlo, it’s that the games industry is full of creative, resilient, fun-loving people who always find a way to follow their dream of making video games. Apple and Google don’t always make mobile game development easy, but that never stopped any of us. So keep going and keep us posted on your wins as they come, we’re your biggest fans.

Love, The Sanlo Team