Apple vs Epic: The Challenge of Alternative App Stores on iOS

The dream of a successful Epic Games Store on iOS sounds like an oasis: a thriving alternative app store that exists outside Apple’s walled gardens, where developers won’t have to pay Apple’s much steeper commission for in-app purchases, and where they can use whatever payment processor they want. Epic’s store launched last week in the European Union — thanks to new regulations opening up iOS — and it’s likely to be a boon for Epic and its perennial hit, Fortnite.

Challenges Ahead for the Epic Games Store

However, it’s uncertain whether Epic will be able to expand the store beyond its own successful titles. The company aims to foster a vibrant ecosystem of third-party developers, but enticing any revenue-sensitive developers to shift to the Epic Games Store could be an uphill battle.

Bob Roberts, the developer of Roundguard at the indie game studio Wonderbelly Games, reflects on the predicament, stating, “It just seems like a lose-lose-lose for Apple, developers, and consumers. It just makes life more complex and confusing without really improving the situation the way folks imagined it would.”

Understanding the Costs

While Epic’s game store may offer better terms in some respects, developers—including Epic itself—still face substantial fees from Apple. To legally sell a game outside Apple’s App Store, developers must pay a 50 euro cent per user per year installation fee upon reaching a designated number of downloads. Additionally, developers wishing to link users to purchases made outside the app will incur a 10 percent commission on all sales, including sales conducted on other platforms. Moreover, developers are saddled with a 5 percent commission for any purchases made within one year of installation.

Along with these charges, they must account for the fees incurred by the operator of the corresponding marketplace. For Epic, this translates to a 12 percent fee—a significant discount but a formidable burden when combined with Apple’s costs.

Comparative Fee Structures

On comparing the costs associated with operating through the App Store vs. Epic Games Store, the differences emerge starkly. Developers sticking with Apple pay up to 30 percent commission on all in-app purchases along with a fee of up to 25 percent on purchases made through external links, albeit with no per-user annual installation fee, which is beneficial particularly for free-to-play games.

Who Stands to Lose?

The burden appears heavier on developers that don’t possess a mega-hit franchise like Fortnite. Epic's GM of the Epic Game Store, Steve Allison, elaborates that under Apple’s recent regulations, a developer could incur costs for every single update to an app, regardless of the origin of the downloads. For example, if a game reaches a billion downloads, each update would trigger the installation fee, making it ‘untenable.’

Currently, Apple’s conditions seem manageable for larger companies like Epic, as well as developers who do not generate revenue. Developers of free apps that are not monetized escape the per-user fee, and smaller developers benefit from a three-year grace period without fees as long as they remain below €10 million in annual revenue. However, this strategic layout appears unfavorable towards smaller developers who are expected to bear the same burdens as behemoths like Epic.

The Call for Alternative Distribution Channels

Amidst this challenging landscape, the idea of alternative app distribution channels holds a sense of promise for many developers. Raffaele D’Amato, the creator of Arcadia - Watch Games, expresses disappointment at the current state of the App Store, which he believes is flooded with outdated applications. “Alternative stores could certainly offer greater visibility to apps that truly deserve it,” he remarked.

Epic's Struggles in Developer Interest

While Epic actively engages with the top 250 mobile developers regarding app placement on the Epic Games Store, the reception has been predominantly lukewarm. Major developers such as EA, King, Scopely, Supercell, and TiMi have remained largely non-committal about participation in Epic’s initiative.

Looking Towards the Future

Although the profitability of the iOS Epic Games Store may be far from realization, with the PC store yet to reach breakeven, the company remains optimistic about launching a curated selection of third-party games within its mobile domain by December. This effort is in addition to maintaining a presence on Android, which currently provides a more welcoming environment.

Ultimately, while launching its own store could allow Epic to control its future and open doors for other developers, Apple’s continued oversight and stringent regulations still pose significant challenges. The battle for control over app distribution on mobile platforms seems far from over.

Conclusion

With considerable uncertainty surrounding the future of the Epic Games Store on iOS, developers face daunting obstacles. While the desire for alternative app distribution methods is strong, practical implementations remain fraught with complications. As the situation develops, one can only watch to see how Epic negotiates the intricate web woven by Apple’s regulatory landscape.