Understanding the Impact of Apple and Google's Direct-to-Consumer Changes on Game Developers

The landscape of direct-to-consumer payments for mobile game developers is undergoing rapid transformation. Regulatory bodies in the EU and US have challenged the app store dominance of Google and Apple, potentially ending the mandatory 30% revenue share on in-game purchases. Historically, Apple and Google have allowed game developers to sell in-game items or virtual currency through external webshops without additional fees, provided they did not embed payments within the game or direct players to external webshops. However, recent regulatory pressure has led Apple and Google to reconsider embedded payments, albeit with high fees that diminish the financial benefits of direct-to-consumer sales. This has prompted lawsuits from publishers like Epic and Spotify, increasing pressure on the tech giants. Other publishers are adopting a wait-and-see approach as these lawsuits unfold. Despite these challenges, direct-to-consumer sales remain a viable growth strategy for mobile game publishers, with successful examples including Warner Bros' Game of Thrones Conquest and Scopely’s Marvel Strikeforce. To monetize mobile games through direct-to-consumer sales, developers must navigate complex global payment methods, currency localization, and sales tax/VAT compliance. This is where specialized payment providers like FastSpring can help, offering a convenient and cost-effective solution that saves time and money while ensuring compliance with regulations. According to David Nachman, CEO of FastSpring, the company's Merchant of Record (MoR) payment model provides a trusted and comprehensive payment solution for game developers, handling payment processing, sales tax compliance, and fraud prevention. FastSpring's platform seamlessly integrates payments within games or on webshops, offering a wide range of payment methods, optimal approval rates, and automatic sales tax and VAT compliance. The company has nearly two decades of experience in providing payment solutions to game developers and publishers. Nachman emphasizes that while there has been progress in lawsuits like Epic v. Google, there is still much for developers and publishers to consider, even without the looming app store rule changes. FastSpring's expertise in local payment methods, video game-specific fraud prevention, and tax compliance has enabled game developers and publishers to expand into new markets. The company's MoR model offers the benefits of a marketplace, including payment processing and tax compliance, but at a lower cost and with greater flexibility. For game publishers already selling directly to players, FastSpring can still provide support, enabling studios to expand into new markets or leverage the company's high approval rates and failover options. FastSpring remains committed to advocating for open commerce in mobile, with embedded payments and steering allowed without additional fees. The company believes in consumer choice and developer freedom, supporting open computing and the ability of game developers to choose their own payment solutions. In response to recent app store term changes, Nachman notes that the updates have resulted in minimal benefits for players and game developers, with "mind-bending gotchas" that negate any material advantages. He expects game companies to push the boundaries of direct-to-consumer strategies, with further lawsuits protesting the recent app store term changes. In the long term, Nachman predicts that ongoing lawsuits will force Apple and Google to make further changes to their app store terms and conditions, ultimately leading to greater choice and flexibility for game developers and consumers.