He is attempting to get in front of the tsunami that is coming from developers who will be shipping apps with the Unreal Engine. Developers selling apps that use the Unreal Engine will be paid 40% of the cost of the app thanks to the App Store and Epic. Blaming Apple and others while excluding his company is wrong.
I still think he was making preemptive strike and cowardly redirected the storm which is coming to Apple.
Oh, I'm shedding a tear. The horror, before iOS Apple Store, you had no where near the reach. Since, how much have you made in revenues (at 70%)? I'm sure we won't hear that. Just another reason to avoid this developer going forward. You could have said, "Thank you Apple."
They could try making games with decent amounts of content and replay value. Then sell on monthly subscription to get greater revenue after the first year. If games are disposable with no on-going relationship with the customer why should the retailer give up any of the cut at the start and effective end of the transaction.
It's a level playing field: if people want more money they need to put up their prices - if consumers baulk at that then the optimum gains has already been established - anything else is just whining.
As another commenter noted, it's pretty incredulous to complain about this business model when they use the same one on their own online store. (But they do significantly less for the sellers on their store.)
I think it's funny how he says "but still suggests it is difficult to believe these extra costs to consume more than 5 percent to 6 percent of revenue for their operation. "So they're pocketing a huge amount of profit from your order" ... ahhh, yeah. Capitalism. Believe me, NIKE doesn't pay $149 to produce and sell your $150 shoes either. Probably less than 4 bucks per pair. Maybe a lot less.
I mean, I get his point, but as pointed out in that last paragraph - the market will bear what the market will bear.
Costs be damned, the real value of the App Store is the exposure, to people that actually BUY stuff, developers get. I'd like to see Epic's revenue without that exposure.
Sounds to me the real complaint is that Epic hasn't developed a game that gamers talk (best marketing method) about.
"That's strange because Mastercard, Visa, and other companies that handle transactions take 2 percent or three percent of the revenue."
Yes, because that’s an accurate comparison. It’s just like when you go to a store and buy something, the only money from the purchased that doesn’t go to original manufacturer is the 2-3 percent that visa or MasterCard takes. The store itself doesn’t take anything at all. That’s why Nordstrom, Walmart, Target and all the others are non profit charities just providing a place for us to purchase manufacturers goods...
Clearly this notion is ridiculous. All stores take a cut of the products they sale. I think it is important to question what it the proper amount to take for various aspects, but 5-6%. When Apple provides the store, financial aspects, development tools, syncing with CloudKit, a huge amount of storage for free (TBs if you have enough users), a secure environment where hacks to get free IAP are far less prevalent, and so much more. When you take into account all that Apple provides for developers and account for what the cost would be by finding third parties to do this, I think the 30% isn’t too bad.
Hey Sweeney, are you as stupid as you sound? It's called retail! And Apple is putting you in front of their HUGE user base, paying for the infrastructure and payment systems and you want to bitch, bitch! Tell you what, you think it's so unfair, then pull your products from the stores and handle all the marketing and sales all by yourself. Oops, bad idea! You would go out of business. Sorry, no cry towels available here you incompetent little man.
App developers are losing too much money from the cut of app revenues taken by app stores operated by Apple and other companies, according to Tim Sweeney, CEO of Epic Games, declaring the iOS App Store's high charge "a parasitic loss."
The easiest way around it is to charge more for the game, even if that means doing the same in other stores. If the developer wants $9.99, then they charge $13.99.
I don't think this is about typical mobile games as mobile games are free-to-play or very low price. This is most likely about games like the one Epic released last month, Fortnite, which they are distributing themselves. They showed it off at the Apple keynote but aren't using the Mac App Store:
Valve takes a royalty through Steam too and it doesn't seem like Epic wants to pay royalties at all as they aren't using Steam either. When you have prices as high as $150 for the game then I could see where taking 30% would sting a bit. Maybe there can be a variable royalty based on the item cost with a smooth transition between tiers so that people don't just price $1 above the cutoff or it can be capped e.g 30% up to maximum $5-10 per transaction. The number of high value transactions would be pretty small anyway.
Although Tim Sweeney mentions poor discoverability, at least the app would be in a store where hundreds of millions of people are visiting regularly unlike every company's own website. Their Fortnite game has 1 million players after a month in early access on Windows/Mac/PS4/XBO. A similar game Overwatch managed 7 million in its first week after launch and now has over 30 million players. Overwatch actually sells on Blizzard's own site too:
They have managed to sell ok without the 3rd party stores on PC, if the game is good enough then it will sell based on recommendations, especially multiplayer games.
A big part in the cost of the 3rd party stores is the data centers, they cost about $1b each to build. At this point in time, Apple will be making enough from the service to be in profit but that wouldn't have always been the case. There's another one being built in Denmark:
Apple has paid out $70b to developers in total so they have made $30b. That's enough to break even on building 30 data centers but there's running costs every year for each one too:
If they had only charged 5%, they'd have made $5b and would currently be making a loss on the App Store service. The amount has to be between 5-30% and it's best to be on the high side to begin with to make sure it's sustainable because it's harder to raise rates than to lower them. Once the data centers are established and they can work out long-term running costs then they can adjust the rates if necessary.
The whole business model of the App Store of being able to code up an app and instantly be able to market it to 1 billion people is well worth the price of admission considering how software used to be distributed and as I say, there are no set rates for what a developer charges, the fee can be absorbed completely into the price of the product.
While Sweeney's Devcom comments may resonate with developers trying to earn a living from the App Store, it is worth noting that Epic Games takes a similar revenue cut from merchants providing assets to the Unreal Engine Marketplace. According to the marketplace frequently asked questions page, for every item sold in the online store, developers "receive 70 percent of the base price," with Epic taking its own 30 percent cut.
This is pure freaking gold. "How dare Apple take 30% cut leaving us to take 30% of that 70% the developer gets". What a complete and total tool this peon is.
How much did box distributors take before the App Store? Bet it was heaps more than 30%.
I'm pretty sure most of the developers who have taken a share in the billions of dollars Apple has handed out aren't complaining too badly. I mean it's not like Apple had to build a datacenter or infrastructure or OS integration... oh wait... never mind.
I guess it could be argued that it made sense for Apple to initially take 30%, since they were just setting up everything then, but now they should reduce the percentage.
The thing is that Apple is not sitting on it's thumbs. They are scaling up constantly, releasing new dev tools and updated dev kits every year and this year they are also working on revamping the UI/ Ux.
I think it's a typical malaise. You agree to a certain amount and then you get something akin to buyer's remorse and think that what you are paying is too much.
Make your own store then, nobody is stopping you.
Then take 80% of all the profits.
More than one commenter has trotted this out. Next time someone excoriates Apple for its pricing structure or iPhone features, hardware construction, labor policies, CarPlay Karaoke, et al, just remember... tell them to build their own damn near trillion dollar company and implement all the stuff they scream at Apple about. If they're so smart and are business geniuses then have at it. Same goes for those always bitching about their mobile carrier and their data plans and screaming for the government to step in and regulate prices and plans, caterwauling about Net Neutrality (sniff, sniff, tear in the eye.)
WTF are you talking about buddy, you crapped false equivalency and you know it; A blatant load of desingenious turds.
Those companies are running MONOPOLIES built on GOVERNMENT PROPERTIES (the airwaves) and they're actively stopping people (through lobbying) from creating a parallel system that could counter that.
In this case, it's someone who has made build a mall sucking the goverment tit and using the gov from to prevent anyone from building any other mall.
The government allowed that "sucking" in exchange for regulations because it was an expensive public service and to speed up initial buildout and now try crying like babies because they don't want that oversight.
The one whining like baby is people like you who have no arguments at all then built those POS senseless non sequitur. as replies.
I own an app developing company and I have experienced that the 30% cut is no longer in line with the real business value Apple is offering to the developer. In 2016 I did a customer survey for one of my apps and I asked how they got in contact with my app. Answers: ads, Google search, from a friend, ... but via the App Store was not an answer. This is worrying. The poorly implemented search and ranking algorithm in the Apple App Store is definitely playing a negative role. My feeling is that the 95% of the profits are made by some blockbusters (Pokemon, ...), but that the majority of the apps is loss making for the developer
The consequence is that I changed my business strategy. All my apps are moving to a cloud based business model. The apps are now free, but the usage of the related cloud service is not, and Apple/Google is not getting a 30% cut there. A second change is that I am gradually moving to progressive web apps (PWA), already supported on Android since last year, and most probably on iOS in 2018. PWAs look and behave like native apps, but are actually web services and don't require an app store. I must make the remark that my company does not develop games, but focuses on cloud applications the ideal playing field for PWAs, A PWA might not be a solution for games.
While Sweeney's Devcom comments may resonate with developers trying to earn a living from the App Store, it is worth noting that Epic Games takes a similar revenue cut from merchants providing assets to the Unreal Engine Marketplace. According to the marketplace frequently asked questions page, for every item sold in the online store, developers "receive 70 percent of the base price," with Epic taking its own 30 percent cut.
This is pure freaking gold. "How dare Apple take 30% cut leaving us to take 30% of that 70% the developer gets". What a complete and total tool this peon is.
How much did box distributors take before the App Store? Bet it was heaps more than 30%.
I'm pretty sure most of the developers who have taken a share in the billions of dollars Apple has handed out aren't complaining too badly. I mean it's not like Apple had to build a datacenter or infrastructure or OS integration... oh wait... never mind.
Exactly. Before that you have Development Studio, the Publisher, the distributor, the Retailer before it reaches the consumer. I bet it was the other way around in the old days, where every $10 sold in Retailer only $3 gets to Developers
There is another side off the story which i haven't got time to dig deep into. Somewhere along the line, Apple Profits Margin isn't working in its flavour. And what the original App Store was ran at a breakeven point is now earning money to subsidize the lowered profit margin from iPhone because of its dis-economy of scale. And it seems there is an inflection point for component cost, contrary to what we are used to where electronics shrink and becomes much cheaper. Not to mention the patent prices keep getting higher.
I own an app developing company and I have experienced that the 30% cut is no longer in line with the real business value Apple is offering to the developer. In 2016 I did a customer survey for one of my apps and I asked how they got in contact with my app. Answers: ads, Google search, from a friend, ... but via the App Store was not an answer. This is worrying. The poorly implemented search and ranking algorithm in the Apple App Store is definitely playing a negative role. My feeling is that the 95% of the profits are made by some blockbusters (Pokemon, ...), but that the majority of the apps is loss making for the developer
That isn’t a problem, that’s how it should work — you are responsible for marketing and advertising, not your retailer. Do you think a Best Buy would market your software for you if you had a SKU in brick and mortar? Hint: no. And yet, if you were in traditional retail, this retailer would *still* ask for a cheaper whole sale price from you and mark it up at least 30%. In return, they would perform none of the value-add that Apple provides app developers on the app store (infrastructure, cloud sync, db storage space, etc etc). The retailer (and the distributor, dont forget about him) would do almost nothing except take your boxes and put them on the shelves.
Devs today don't know how good they have it compared to traditional retail.
Still on topic, but segueing from Sweeney and comments, I do wonder if it would be boohoo Apple to reduce their take from 30% to say, 25%.
I agree with you in that "I think" it would be a good business move by Apple to reduce their take over time to get down to 25%, and potentially even 20% (with subscriptions then ending up around 10%). It would help to prolong the "app model" (vs. say a resurgence in web apps), increase incentives to developers to sell goods through AppStore vs. more effort to signup outside, and when introduced over a few years should have minimal impact on Apple's total revenue (assuming the pie grows slightly bigger with more apps/downloads than otherwise). It would also help to take off any growing resentment & movement to try and resolve Apple's control over the AppStore in court.
Hopefully with the updated AppStore apps on iOS it will drive better discoverability for smaller app developers.
The biggest problem here isn't the 30%. It's choice and competition.
The 30% is arbitrary and wholly opaque.
It's hardly surprising that some developers resent the cost (and terms of entry).
On the face of it, it is Apple's garden and they decide who can play in it, for how long and at what price.
Apple is also seemingly listing the app store as part of its services revenue stream and therefore using it as an active source of profit as opposed to simply trying to cover operational costs and pocket any extra that may be left over.
Is it good for Apple to exercise absolute control over the App Store? No. Unless you are Apple.
Perhaps if they voluntarily broke down some of the operational costs it might help a little but the root problem is the utter lack of competion as a result of the absolute lack of choice.
What is clear is that if Apple wants to make money from the App Store revenues, it depends on developers. If there was a groundswell of protest, Apple would react.
Some say the app boom is over and the App Store model has peaked.
If I were this guy I would be trying to gauge interest (among developers) in a joint protest and seeing how much momentum I could generate.
The App Store has major issues for small and even large developers. The model is race to the bottom pricing and or nickel and dime the consumer. Both suck. The 30% cut apple takes is not bad, but since there model pushes prices down, maybe they should take a smaller cut.
No one wants to pay $15-40 for a game on an iPhone, iPad. AppleTV no matter how good it is. They have no problem paying that for 3DS, Switch, vita games Is this apple's fault? Possibly since there is 0 curation. There are millions of games on the app store all priced very cheap or "free to play" (with in app nickel and dime schemes) and its almost impossible to attract users to play your games if you charge more than $5 (hence enforcing the .99 or free to play models)
Not sure how apple get's around this. But Nintendo, Sony, Microsoft all work on pricing making sure games are priced with "value" in mind, not how cheap can they go and also try to curate they games so their stores are not full of 90% garbage.
I own an app developing company and I have experienced that the 30% cut is no longer in line with the real business value Apple is offering to the developer. In 2016 I did a customer survey for one of my apps and I asked how they got in contact with my app. Answers: ads, Google search, from a friend, ... but via the App Store was not an answer. This is worrying. The poorly implemented search and ranking algorithm in the Apple App Store is definitely playing a negative role. My feeling is that the 95% of the profits are made by some blockbusters (Pokemon, ...), but that the majority of the apps is loss making for the developer
The consequence is that I changed my business strategy. All my apps are moving to a cloud based business model. The apps are now free, but the usage of the related cloud service is not, and Apple/Google is not getting a 30% cut there. A second change is that I am gradually moving to progressive web apps (PWA), already supported on Android since last year, and most probably on iOS in 2018. PWAs look and behave like native apps, but are actually web services and don't require an app store. I must make the remark that my company does not develop games, but focuses on cloud applications the ideal playing field for PWAs, A PWA might not be a solution for games.
The "real business value" offered is the infrastructure to host and deliver apps securely to the user and payment to the developer. Advertising your app is still up to you. This is like complaining that a brick and mortar store doesn't provide you with free advertising for your product.
Right now you're leeching from the App Store infrastructure with free apps and paid cloud infrastructure. That's fine until Apple and Google decides its no longer in its business interests to let you do so.
I own an app developing company and I have experienced that the 30% cut is no longer in line with the real business value Apple is offering to the developer. In 2016 I did a customer survey for one of my apps and I asked how they got in contact with my app. Answers: ads, Google search, from a friend, ... but via the App Store was not an answer. This is worrying. The poorly implemented search and ranking algorithm in the Apple App Store is definitely playing a negative role. My feeling is that the 95% of the profits are made by some blockbusters (Pokemon, ...), but that the majority of the apps is loss making for the developer
The consequence is that I changed my business strategy. All my apps are moving to a cloud based business model. The apps are now free, but the usage of the related cloud service is not, and Apple/Google is not getting a 30% cut there. A second change is that I am gradually moving to progressive web apps (PWA), already supported on Android since last year, and most probably on iOS in 2018. PWAs look and behave like native apps, but are actually web services and don't require an app store. I must make the remark that my company does not develop games, but focuses on cloud applications the ideal playing field for PWAs, A PWA might not be a solution for games.
The "real business value" offered is the infrastructure to host and deliver apps securely to the user and payment to the developer. Advertising your app is still up to you. This is like complaining that a brick and mortar store doesn't provide you with free advertising for your product.
Right now you're leeching from the App Store infrastructure with free apps and paid cloud infrastructure. That's fine until Apple and Google decides its no longer in its business interests to let you do so.
While a Brick-n-mortar isn't responsible for advertising your product if one single store was the permitted as the sole outlet for your premium crackers but stuck them next to the floor cleaner on the bottom shelf of the darkest aisle where no one would think to look the seller would be right to complain about it IMO. I think that's the point he's making.
Comments
If games are disposable with no on-going relationship with the customer why should the retailer give up any of the cut at the start and effective end of the transaction.
Sounds to me the real complaint is that Epic hasn't developed a game that gamers talk (best marketing method) about.
Yes, because that’s an accurate comparison. It’s just like when you go to a store and buy something, the only money from the purchased that doesn’t go to original manufacturer is the 2-3 percent that visa or MasterCard takes. The store itself doesn’t take anything at all. That’s why Nordstrom, Walmart, Target and all the others are non profit charities just providing a place for us to purchase manufacturers goods...
Clearly this notion is ridiculous. All stores take a cut of the products they sale. I think it is important to question what it the proper amount to take for various aspects, but 5-6%. When Apple provides the store, financial aspects, development tools, syncing with CloudKit, a huge amount of storage for free (TBs if you have enough users), a secure environment where hacks to get free IAP are far less prevalent, and so much more. When you take into account all that Apple provides for developers and account for what the cost would be by finding third parties to do this, I think the 30% isn’t too bad.
I don't think this is about typical mobile games as mobile games are free-to-play or very low price. This is most likely about games like the one Epic released last month, Fortnite, which they are distributing themselves. They showed it off at the Apple keynote but aren't using the Mac App Store:
https://www.epicgames.com/fortnite/en-US/buy-now/deluxe
Valve takes a royalty through Steam too and it doesn't seem like Epic wants to pay royalties at all as they aren't using Steam either. When you have prices as high as $150 for the game then I could see where taking 30% would sting a bit. Maybe there can be a variable royalty based on the item cost with a smooth transition between tiers so that people don't just price $1 above the cutoff or it can be capped e.g 30% up to maximum $5-10 per transaction. The number of high value transactions would be pretty small anyway.
Although Tim Sweeney mentions poor discoverability, at least the app would be in a store where hundreds of millions of people are visiting regularly unlike every company's own website. Their Fortnite game has 1 million players after a month in early access on Windows/Mac/PS4/XBO. A similar game Overwatch managed 7 million in its first week after launch and now has over 30 million players. Overwatch actually sells on Blizzard's own site too:
https://us.battle.net/shop/en/product/overwatch
They have managed to sell ok without the 3rd party stores on PC, if the game is good enough then it will sell based on recommendations, especially multiplayer games.
A big part in the cost of the 3rd party stores is the data centers, they cost about $1b each to build. At this point in time, Apple will be making enough from the service to be in profit but that wouldn't have always been the case. There's another one being built in Denmark:
http://appleinsider.com/articles/17/07/10/apple-announces-location-of-new-921-million-icloud-data-center-in-denmark
Apple has paid out $70b to developers in total so they have made $30b. That's enough to break even on building 30 data centers but there's running costs every year for each one too:
http://www.datacenterknowledge.com/the-apple-data-center-faq/
If they had only charged 5%, they'd have made $5b and would currently be making a loss on the App Store service. The amount has to be between 5-30% and it's best to be on the high side to begin with to make sure it's sustainable because it's harder to raise rates than to lower them. Once the data centers are established and they can work out long-term running costs then they can adjust the rates if necessary.
The whole business model of the App Store of being able to code up an app and instantly be able to market it to 1 billion people is well worth the price of admission considering how software used to be distributed and as I say, there are no set rates for what a developer charges, the fee can be absorbed completely into the price of the product.
How much did box distributors take before the App Store? Bet it was heaps more than 30%.
I'm pretty sure most of the developers who have taken a share in the billions of dollars Apple has handed out aren't complaining too badly. I mean it's not like Apple had to build a datacenter or infrastructure or OS integration... oh wait... never mind.
I guess it could be argued that it made sense for Apple to initially take 30%, since they were just setting up everything then, but now they should reduce the percentage.
The thing is that Apple is not sitting on it's thumbs. They are scaling up constantly, releasing new dev tools and updated dev kits every year and this year they are also working on revamping the UI/ Ux.
I think it's a typical malaise. You agree to a certain amount and then you get something akin to buyer's remorse and think that what you are paying is too much.
The consequence is that I changed my business strategy. All my apps are moving to a cloud based business model. The apps are now free, but the usage of the related cloud service is not, and Apple/Google is not getting a 30% cut there. A second change is that I am gradually moving to progressive web apps (PWA), already supported on Android since last year, and most probably on iOS in 2018. PWAs look and behave like native apps, but are actually web services and don't require an app store. I must make the remark that my company does not develop games, but focuses on cloud applications the ideal playing field for PWAs, A PWA might not be a solution for games.
There is another side off the story which i haven't got time to dig deep into. Somewhere along the line, Apple Profits Margin isn't working in its flavour. And what the original App Store was ran at a breakeven point is now earning money to subsidize the lowered profit margin from iPhone because of its dis-economy of scale. And it seems there is an inflection point for component cost, contrary to what we are used to where electronics shrink and becomes much cheaper. Not to mention the patent prices keep getting higher.
Devs today don't know how good they have it compared to traditional retail.
Hopefully with the updated AppStore apps on iOS it will drive better discoverability for smaller app developers.
The 30% is arbitrary and wholly opaque.
It's hardly surprising that some developers resent the cost (and terms of entry).
On the face of it, it is Apple's garden and they decide who can play in it, for how long and at what price.
Apple is also seemingly listing the app store as part of its services revenue stream and therefore using it as an active source of profit as opposed to simply trying to cover operational costs and pocket any extra that may be left over.
Is it good for Apple to exercise absolute control over the App Store? No. Unless you are Apple.
Perhaps if they voluntarily broke down some of the operational costs it might help a little but the root problem is the utter lack of competion as a result of the absolute lack of choice.
What is clear is that if Apple wants to make money from the App Store revenues, it depends on developers. If there was a groundswell of protest, Apple would react.
Some say the app boom is over and the App Store model has peaked.
If I were this guy I would be trying to gauge interest (among developers) in a joint protest and seeing how much momentum I could generate.
The 30% cut apple takes is not bad, but since there model pushes prices down, maybe they should take a smaller cut.
No one wants to pay $15-40 for a game on an iPhone, iPad. AppleTV no matter how good it is. They have no problem paying that for 3DS, Switch, vita games
Is this apple's fault? Possibly since there is 0 curation. There are millions of games on the app store all priced very cheap or "free to play" (with in app nickel and dime schemes) and its almost impossible to attract users to play your games if you charge more than $5 (hence enforcing the .99 or free to play models)
Not sure how apple get's around this. But Nintendo, Sony, Microsoft all work on pricing making sure games are priced with "value" in mind, not how cheap can they go and also try to curate they games so their stores are not full of 90% garbage.
Right now you're leeching from the App Store infrastructure with free apps and paid cloud infrastructure. That's fine until Apple and Google decides its no longer in its business interests to let you do so.