Tim Sweeney stated in an interview with PocketGamer “On open platforms, 30 per cent is disproportionate to the cost of the services these stores perform.” As a large developer with capable resources, you want to minimise the cost of doing business and maximise the value you create from your investment (4 years of development creating the Tech and IP of Fortnite).  The 30% fee does capture more than simple services, it simplifies the process of installing apps for consumer and developer. Separating games on multiple stores, players are forced to subscribe to separate billing, subscription and authentication models. This has happened before on PC – Blizzard, Valve, EA, each created their own storefronts, each taking a substantial cut and moving their own content behind a walled garden. Fortnite also uses an “Epic” owned launcher on PC. The Fragmentation that happened on PC also exists on mobile but has been isolated to the Chinese mobile market.

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The state of Chinese App Store Fragmentation

When Google opted to leave China in 2010, it did so, mainly because of privacy and censorship issues. The way the Chinese government control and monitor organisations within China is at odds with how Google saw how they did business. China responded by blocking all of Google services including the Google Play Marketplace. This left a cavernous hole for Chinese mobile looking to download apps. This led to a proliferation of stores, mainly growing either through one core app (Tencent’s WeChat) or bundling App Stores as the default on device (Huawei or Xiaomi MIUI) fast-forward to 2018 and the largest, Tencent MyApp, still only has 13.49% of the market.

Because of this fragmentation, consumers and developers suffer. To have effective distribution in China, a game developer ends up having to work with a Chinese distribution agent. These agents serve no one but themselves skimming off the top of any IAP made from any store. Each store may also install their own bloatware or spyware and the potential errors with different payment processors can cause crashing or errors. This adds nothing but complexity for the developer and in the end most developers sacrifice more than 30% of their gross revenue. Although this scenario is highly unlikely in the West, it shows you what happens without a central standard such as the Google Play Store.

Large Content Owners

Fortnite is a phenomenon, but on mobile the largest games command huge loyal audiences. Depending on the results of this it would be quite easy for Supercell, King or Microsoft to move Clash Royale, Candy Crush and Minecraft onto their own store fronts or self hosted apk’s. This may not be as far fetched as possible because for a ROI point of view if you have a game that grossed 1 billion dollars in a year, 30% is a huge tax to pay. When you also compare this to the Hyper Casual business model where they avoid all store tax and monetize directly through Ad Revenue, you can see where the margins are being eroded.

Larger studios will be watching for consumers reactions and the general fallout in issues, and if Epic does well, you can expect EA, Activision and Ubisoft to be considering their options. Content is often King, but ease of use trumps all.  Unless these studios can bundle their app stores with devices they will face a similar issues to the Amazon App Store.

The Tencent in the room

Epic and their parent company Tencent (who owns a 40% stake in Epic) might have known this all along. Tencent already control the largest app store in China, MyApp. If they could leverage that single killer app, then could they effectively launch MyApp for the west? This certainly seems feasible, but in the short term unlikely. MyApp is very much geared towards the Chinese market with the majority of apps only available in Chinese or other Eastern languages.

Epic have likely made this play primarily “To avoid the 30% store tax” yet a prebuilt app store with billing, verification and apk management could save them time. Couple this with the fact that Epic also own the unreal engine and you might see that an Unreal App Store, kick started by the MyApp technology might only be a year away? This all might seem quite far fetched because we’re all used to Google being in the driving seat with Android, but unlike Apple, they don’t own the Devices, nor the operating system.

This all doesn’t look great for Google. It also can’t have a clean solution to the problem as any change of it’s business strategy reduce it’s profitability. Does it lose the largest mobile game of 2017, or does it reduce it’s cut for all developers? In the long run is store dominance worth maintaining at reduced profitability?

Remembering the consumer

Forgetting about the 30% store tax, it’s still the gamer that loses. More stores mean more options, more registration, more billing channels, more confusion. This isn’t as good as a single safe space, such as Google Play.  Gamers want to play Fortnite and most of them will jump through whatever hoops are positioned in their way. Along with the fact that the game is multi-channel, it means that Epic can educate people on all channels, in turn helping those with Android devices.

In the interviews with Tim Sweeney, links to Rogue APKs formed a large criticism of the move away from Play Store. The fact that bad actors will exist is not something Epic can prevent, but the issue seems overblown. Although a small number of consumers fall for bad software tricks every day, most don’t and most follow recommendations by friends. If Epic does a clear marketing campaign and uses the game on other operating systems to push the users the correct download link, this can easily be avoided.

What Epic is giving up, is the huge audience sat there with Google Play already installed. This along with any potential promotion that Google might provide is.  Whether this loss is worth the 30% extra is hard to say but one thing’s for sure, if any game could do it, Fortnite is large enough to try it, but will other developers follow? Is there a percentage that would make Epic stay, I doubt it. This may be one more headache for Google Play, but not necessarily it’s downfall.

The post Fortnite rejects Google Play Store, should Google be scared? appeared first on Mobile Free to Play, written by Tom Kinniburgh