The dream of a successful Epic Games Store on iOS sounds like an oasis: a vibrant alternative app store that exists outside of Apple's walled garden, where developers can use their preferred payment processor without having to pay Apple's much higher fees for in-app purchases.
Epic's store launched in the European Union last week thanks to new regulations opening up iOS, and it's now available to download for free for Epic and its long-running hits. FortniteBut it's unclear whether Epic will be able to grow the store beyond its own games.. While the company wants to welcome a vibrant ecosystem of third-party developers, the move to the Epic Games Store FortniteA size pile of cash.
“It seems like a lose-lose situation for Apple, for developers, and for consumers,” he said. Round Guard “It's not going to make things any better than people imagined, it's just going to make life more complicated and confusing,” said John Cole, CEO of indie game studio Wonderbelly Games.
While Epic's game store may offer better terms for developers, most developers, including Epic, are likely to be charged high fees by Apple even outside the confines of the App Store, and Apple's terms and fees for apps on alternative marketplaces are so onerous that it will be a big challenge for Epic to convince developers that it's worth the time and expense of listing their apps.
To sell their games outside of Apple's App Store, developers must essentially pay an installation fee of 50 euro cents per user per year once they reach a certain number of downloads, and then whatever fees the new marketplace operator charges. In Epic's case, it's 12 percent, a significant discount on its own, but it's yet another cost when you factor in Apple's installation fee.
In some circumstances, the fees can be even higher: If a developer still wants to maintain a presence on Apple's App Store and include links to purchases outside of the app, they must pay Apple a 10 percent commission on all sales of digital goods and services made on “any platform,” including third-party app stores and platforms other than iOS, plus an additional 5 percent for purchases made by new customers within a year of installing the app.
By comparison, if a developer followed the standard ruleset and went exclusive to the App Store, they would pay up to a 30% commission on all in-app purchases and up to a 25% commission on purchases made through external links. There are no per-user or per-year install fees, making free-to-play games less risky.
The ones hurting from this deal are developers other than Epic.
Apple spokesman Adam Dema said the app-install fee, known as the core technology fee, won't apply to most developers. The company makes exceptions for nonprofits, schools and government agencies, applying the fee only when they have a sufficient number of app installs and updates. “Under our alternative terms for EU apps, we estimate that less than 1% of developers will pay the core technology fee for their EU apps,” Dema said in an email after this article was first published. “iOS apps on the App Store will pay a discounted fee of 10% for subscriptions after the first year and 17% for transactions of digital goods and services for the vast majority of developers.”
For Epic, it's the Epic Games Store downloads and Fortnite Downloads would theoretically cost just €1 per person per year, and the company could take that risk for longer-term opportunities, especially if regulators make changes that relax some of the rules for Apple.
The losers in this arrangement are non-Epic developers. For starters, Apple's per-user fee applies to users of both third-party marketplaces and its own App Store. In a briefing last week, Epic's Epic Game Store GM Steve Allison gave the example of a game that has been downloaded a billion times. If that app is updated, the developer would have to pay 50 cents for every update every year, even if someone was passively displaying the app on their screen after getting it from the App Store. “This is intolerable,” Allison said.
For now, Apple's new terms seem to cater only to large companies like Epic and developers who don't make money from their apps, with little in between. Apple won't charge per-user fees to developers of unmonetized, free apps. Apple is also offering smaller developers a three-year grace period where it waives the fee, but only if their annual revenue during that period doesn't exceed €10 million. Apple also offers developers lower fees in its SME program.
Meanwhile, the rest of the developer community is expected to pay the same fees as giants like Epic Games: According to the company's calculations, an app with more than 1 million downloads and $150,000 in annual revenue would pay almost half that to Apple, on top of the 12% commission the Epic Games Store takes.
That's unfortunate, as developers want more options for distributing their apps. “Over the years, the App Store has become overcrowded with apps, many of which haven't been updated in a long time,” said app developer Raffaele D'Amato. Arcadia – View GamesD'Amato said that if there was a third-party store specifically for Apple Watch apps, he would have published his app there because of the increased visibility it could bring. “Alternative stores can certainly provide increased visibility for apps that really deserve it.”
And some of the biggest third-party developers don't seem to be publicly interested. In a briefing last week, Allison said Epic is in active discussions with “almost all” of the top 250 mobile developers about putting their apps on the Epic Games Store for mobile, but “almost all” of them have told him they can't run on iOS. EA ( The Sims Mobile), King (Candy Crush), Scopely (Monopoly GO!), Supercell (Clash of Clans), TiMi (Call of Duty: Mobile) did not respond to questions about whether it plans to put its apps on Epic's store.
It may be a while before the iOS Epic Games Store becomes profitable for Epic, if it ever does. The PC store isn't even profitable yet, at least according to Allison's testimony last year. But the company expects the store to start attracting games later this year, albeit with a small number at first. Allison said last week that Epic plans to offer a “selection” of third-party games on its mobile store in December. The mobile store is also available globally on Android. Allison said Epic is “very excited” about bringing those games to iOS, but it's a “very difficult conversation.”
For now, launching its own store on mobile would mean Epic gaining some control over its own destiny and ideally sharing that control with other developers. But Apple still wants to maintain tight control whether a developer is on the App Store or not. History has shown that Apple probably won't give up that control unless it's forced to.
Correction, August 23: This article originally misrepresented the details of Apple's external link fees: the fees only apply when the link is contained within Apple's App Store and only for digital purchases, not when the link appears only in third-party app stores, and do not apply to all sales.