The world's largest gaming companies deploy Swrve in their mobile games. Swrve powers billions of tests, interactions, and conversions annually, and boasts a rich heritage of gaming expertise. In conjunction with our customers, we’ve been contemplating the recent legal and legislative developments to Apple's App Store rules in conjunction with our gaming customers. Here is our perspective on the opportunity available to game publishers and how to tap it.
Backdrop: Legal and Legislative Rulings On The App Store
The recent Apple versus Epic court decision caps several related lawsuits and legislation, including:
- The JFTC settlement (reader apps can add external payment/subscription links to their website).
- The South Korean anti-Google law (allowing third-party app stores and sideloading).
- And the pending European Union opinion on Apple versus Spotify (which has already ruled in Spotify's favor, but is presently contemplating remedies).
Backdrop: Apple Versus Epic
Epic lost on the main points of their case—sideloading of games/apps, third-party app stores in games/apps—but won an anti-steering injunction concerning payments; excerpt below:
[Apple] are hereby permanently restrained and enjoined from prohibiting developers from (i) including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing and (ii) communicating with customers through points of contact obtained voluntarily from customers through account registration within the app.
This anti-steering injunction only allows for a purchase to happen inside a game/app that uses Apple’s IAP system (and hence Apple's 30% commission). This prohibits building native non-Apple payment experiences inside the app, or even non-native webview again inside the app. Without guidelines from Apple, game publishers are left with links that open Safari to complete a purchase externally and thereby avoid Apple's 30% commission.
In the wake of this permanent injunction (which is for the US only), and the Korean and EU legal/legislative rulings above, let’s look closer at the impact and opportunities for mobile game publishers.
The $45 Billion (App) Game Store
The App Store is a phenomenal success, with an estimated $55 billion in gross sales annually. However, the name ‘The App Store’ is a misnomer: it should be called ‘The Game Store’.
According to Sensor Tower, consumers spent a total of $45 billion on mobile games through the App Store in fiscal 2020. 31% of that was in China, while 26% was in the U.S. To give a sense of scale, Apple raked in more operating profits from games than Xbox maker Microsoft Corp. Nintendo Co., Activision Blizzard Inc, and PlayStation combined in its fiscal year 2019, according to a Wall Street Journal analysis.
Apple earns a 30% commission on all App Store purchases, so their gaming commission is an estimated $13.5 billion, or about 5% of Apple’s overall sales that year of $275 billion. This $13.5 billion is pure profit.
So this ruling opens up an immediate $45 billion opportunity for the mobile gaming industry: one that requires no growth, just the delicate conversion of users from in-app purchase (IAP) to external payment methods.
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