Home / News / A third of developers already taking advantage of the Digital Markets Act | Pocket Gamer.biz

A third of developers already taking advantage of the Digital Markets Act | Pocket Gamer.biz

245
A third of developers implementing new payment options in face of Digital Markets Act’s $18 billion opportunity

A third of developers are implementing new payment options into their mobile games following the introduction of the Digital Markets Act, according to a new survey.

Mobile games fintech company Aghanim, in partnership with Atomik Research, surveyed 300 mobile game developers across the US, UK and Germany in the weeks leading up to the introduction of the DMA in March this year.

The DMA aims to create and enforce a framework for ‘gatekeepers’ – large online platforms, of which Apple is one – that ensures a “fairer business environment” for developers. As part of that, Apple must allow for alternative payment methods and not engage in anti-steering practices.

In response, Apple announced new optional business terms for publishers operating games in the European Union. This included lowering its revenue to 17% – or 10% for some developers – rising by a further 3% if publishers use Apple Pay. Apple also introduced a core technology fee, which charges €0.50 for each first annual install per year over one million downloads.

A back and forth between Apple and the European Commission is underway over how to apply the DMA’s rules. The EC has also opened a non-compliance investigation into Apple, Google and others over their adherence to the law.

DMA awareness

According to Aghanim’s survey, which looked into DMA awareness and its potential impact on direct-to-consumer distribution, 62% of developers said they were aware of the act. Breaking the data down by country, 70% of developers in Germany and 68% in the UK said they were aware of the DMA, while 47% in the US had knowledge of the legislation.

The report notes that while the DMA is a European framework – it still applies to US developers operating in the EU.

82% of respondents said they had at least some understanding of how it will impact their business, while a fifth felt they had a complete understanding.

31% of developers said they thought the DMA would provide them with more freedom. However, only 9% said they were confident they’d be able to keep more of their revenue.

13% of developers surveyed have ruled out making changes to their payment processes, while 33% have already begun implementing changes.

Developers surveyed also let their feelings known about Apple’s business practices. Surveyed prior to the introduction of the core technology fee, 40% said Apple was a positive force for the games industry, while 39% gave a neutral response. A fifth of developers said Apple had a negative impact.

Regulatory battleground

Speaking to PocketGamer.biz about the survey, Aghanim co-founder and co-CEO Constantin Andry said he was surprised with how many developers felt they had a full understanding of the DMA’s impact, given its practical implementation “continues to be a battleground”.

“For the huge majority of studios who won’t benefit from switching to the new business terms as it stands, it’s a game of wait and see in terms of what on-platform benefits will emerge,” said Andry.

“Again, I think the biggest impact currently is the greater confidence with which developers and publishers can approach direct-to-consumer due to the DMA legislating against anti-steering. “

. With the removal of anti-steering rules, developers can now inform their users about direct-to-consumer options with more confidence.

Constantin Andry

Andry added that, with Apple’s core technology fee, the real-term benefits of the DMA are currently limited for most developers. He called the legislation a “step in the right direction”, however, reflecting an overall trend “towards greater fairness for game developers and users”.

“More powerful, I think, is that it has got developers and publishers thinking more about their options,” stated Andy.

“82% of those in our survey said they had at least some understanding of the DMA, which means they’re spending time looking into what they can do with it. With the removal of anti-steering rules, developers can now inform their users about direct-to-consumer options with more confidence.”

The direct-to-consumer trend

Prior to the DMA’s introduction, the world’s top mobile games publishers had already begun launching their own web shops and implementing direct-to-consumer strategies. Social casino and casual games publisher Playtika now generates approximately 25% of its revenue from DTC. Andry believes companies can still do better, however.

“We interviewed dozens of companies which run web stores and they reported that they have moved just 2% to 4% of revenue off-platform, and dream of the 15% to 20% mark,” he said.

“However, because of Aghanim’s unique solution, we set the bar on hitting 25% as just a bottom line of successful DTC expansion. Our advisors – who inspired many of Aghanim’s features – report numbers as high as 55%.”

Asked how relevant the DMA is globally in light of this trend of publishers already moving to their own DTC platforms, Andry said it still matters because it applies to any publishers reaching gamers in the EU, and it could act as a blueprint for patchwork legislation around the world.

“While some publishers have been generating significant revenue outside the app stores for years, there are probably one or two companies on Earth that can operate entirely independently of Apple and Google,” he explained.

“It is mission critical for mobile game publishers to gradually increase DTC presence thus increasing the leverage against the first party platforms.”

An $18 billion opportunity

Andy claimed that in the current market, developers only see 10% of revenue from what is a $92 billion industry.

This $18bn represents a roughly 200% increase in net revenue … This surplus should end all these industry layoffs at a very minimum.

Constantin Andry

For every $100, $30 goes to platform holders like Apple and Google, $10 goes on taxes, and $50 is spend on user acquisition – an area Apple also disrupted with the introduction of App Tracking Transparency, making it more difficult for campaigns to find players.

“So it’s just $10 left for the game publishers to take home – and pay salaries, reinvest into new games, and pay dividends,” stated Andry.

“Just three to four years ago, this number was three-times bigger, but platforms decided to double down on user acquisition, which became a complete red ocean, and so net revenues of game publishers shrank accordingly.

“This wouldn’t be sustainable for any industry to absorb and we have calculated that developers and publishers can retain at least a further $18bn of the revenue they generate through direct-to-consumer strategies.

“This will enable them to do more of what they do best – push the boundaries to make fun, enjoyable and successful mobile games. This $18bn represents a roughly 200% increase in net revenue and could help the games industry launch 36 Red Dead Redemptions every single year, to put it into perspective.

“This surplus should end all these industry layoffs at a very minimum.”

Comments

Arrow down up lock solid icon : edit at icomaker.