A lot of questionable assumptions are being used to craft what is probably a wrong guess that more than $4 billion a year in revenue will shift from Apple to game developers as a result of the antisteering rulings and laws around the world.
Apple was forced to allow developers to link to external payment platforms or shops for in-app purchases after a long battle with Epic. It means customers now have a choice between Apple’s in-app payment platform and a third-party.
This will certainly lead to some lost commission. Some.
However, a report from Bloomberg based on an analyst’s seemingly random guesswork posted to Substack suggests game developers could siphon off $4.1 billion in revenue or more.
The value comes from assuming what might happen if Apple reduced its commission from 30% to 20% and assuming that 70% of the top 25 mobile game makers’ income is from the App Store.
We’re not sure why the analyst chose these seemingly random numbers. We’re also not sure why the report framed it as if these savings were a result of purchases made outside of the App Store.
Instead the analyst seems to believe that the unrelated Epic ruling would incentivize Apple to reduce its commissions by 10% for some reason. That 10% reduction, when applied to 70% of the 2024 incomes generated by the top 25 gaming companies, is how the analyst arrived at $4.1 billion in revenue transfer.
The Substack post cited is mostly fantasy derived from some real-world numbers, stacked on top of guesswork about how many developers will shift to its own payment services and customer support. The scaffolding on the guesswork is so flimsy, it shouldn’t have been used by a publication known to pay its writers for content that moves the stock market as a foundation to suggest companies like Tencent are in for a $1 billion increase in earnings.
The Substack source
There are three predictions shared in this Substack post, which range from grounded to pure speculation. First, Apple could reduce its commission by 10%.
Second, developers could try incentivizing users to buy outside of the App Store. Third, Apple could acquire Unity.
The first one is just speculation based on nothing. There are no indications that Apple is thinking of changing its commission, and in fact, courts have upheld that Apple is entitled to that commission.
The second prediction is actually more realistic, if not already happening. Developers will need to find ways to lure users away from the protective cocoon of the App Store so they can make more money on transactions.
There’s merit to the idea that Apple should buy Unity, but discussion of that goes far beyond the scope of this article. Regardless, Unity does not appear to be for sale.
It’s not a terrible idea, but doesn’t seem to affect anything to do with the discussion around commissions or gaming income.
All that said, there is some merit to the analyst’s overall suggestion that Apple will take a hit to its revenue and developers will benefit. There is absolutely nothing suggesting that it will happen at the scale the report says it will.
Apple will lose some revenue
Apple has millions of active customers across the United States, and a good portion of its App Store profits come from games. There’s a good chance big earners like Fortnite and Roblox will be able to drive customers to their external stores and away from Apple’s commission.
Some users will buy outside of the App Store, many won’t
That said, not everyone is going to jump ship. In-app purchases aren’t going anywhere. Many users will likely not want to exit their game to share credit card details.
There’s a reason why Apple’s in-app purchase system is so lucrative — it’s simple and secure. Customers looking to buy in-app currency or downloadable content are met with a familiar modal, double-press a button, smile for the camera, and make a purchase.
Leaving an app, opening a web interface, logging in, sharing credit card details, and making a purchase that way isn’t ideal or convenient. If we’re going to make assumptions, it’s that most users likely won’t bother with that external purchase flow unless heavy incentives are offered.
Fortnite doesn’t even offer discounts on V-Bucks purchased externally. Instead, users are given bonus Epic credits that can be used across Epic’s gaming storefronts. That might work, some.
Needless to say, there will likely be some impact to Apple’s services revenue, but not much. Apple could try to rethink commissions and how it makes money to appease developers and regulators in the future, but let’s not get ahead of ourselves with assumptions and guesswork.
Especially not ones this grandiose, based on fiction.
This story originally appeared on Appleinsider
