What Does Epic Want?

Always predict the worst and you’ll be hailed as a prophet.

-Tom Lehrer, quoting a friend

The big news in the video game world this week was around Epic Games and Fortnite.

Epic pushed a revision that allowed players to bypass the Apple store and pay Epic directly through their own service, even offering players a financial incentive in the form of a discount to use the Epic payment service over Apple’s.

Apple then removed Fortnite from their store.  This was entirely expected.  Epic knew they were in violation of the terms of service they agreed to when they put Fortnite into the store.

Epic wanted that.  That was clearly part of their plan as they immediately filed a lawsuit against Apple seeking injunctive relief to allow Epic to use their own payment service.  They even had a cute video to post mocking the Apple 1984 ad and setting Apple up as the villain.

Epic claims that Apple Store is a monopoly and that the company is engaged in unfair business practices as defined by various state and federal statutes.

They did the same thing on the Android side of the house and got pulled from the Google Play store and filed a lawsuit against Google as well with the same set of claims.

Two monopolies selling the same thing is an interesting take, and all the more so since Google allows other storefronts, like the Samsung Galaxy Store.

Tim Sweeney has also been active on social media stirring up anger about the two tech giants that sounds remarkably like the stuff coming out of Washington lately.  He likes to play a PR game where he casts himself as the hero and whoever he is facing as a villain.  We have seen that tack against Steam in the past as he has defended buying out exclusives for games that were already up for pre-order there.

What Does Epic Say They Want?

The lawsuit itself asks for, as noted above, injunctive relief to allow Epic to use its own payment service.

This seems like a non-starter.  It is essentially a request that companies be allowed to offer their applications on the Apple Store, allow them to be downloaded for free, and keep all financial benefit for themselves.  No money for Apple.

This feels like the nuclear option.

Apple (and Google) will fight this tooth and nail for years and have an army of lawyers between them to keep that going with motions and appeals for at least five years before it goes to trial.  They let this go and Facebook, already pressing Apple as well, will be close behind.

There are also some outsiders who might have some interest in this, like Microsoft, Sony, and Nintendo.  The Epic lawsuit is an assault on the “walled gardens” of Apple and Google, but it ignores the console vendors who run similar locked store fronts for their own services.

Epic tries to split hairs, in my opinion, by saying that Apple and Google products are necessary for modern life while consoles are not, but I am not sure that fine distinction will fly.

There is also an air of hypocrisy in Epic’s complaint as they themselves run the Epic Store, which takes a percentage of the money from developers who wish their products to appear there.  Yes, they only take 12% as opposed to 30%, but as the punchline goes, we’ve determined what they are and we’re now just haggling over price.  But unless they allow their developers to use their own payment services and bypass sharing the take with Epic, their store might serve as an exhibit for Apple and Google.

I am also not sure the end result of Epic getting their injunctive relief would necessarily be a good thing.

Despite what people might think, running the Apple Store isn’t a low cost operation and Apple (and Google) are not going to carry on hosting things out of the goodness of their heart.  They will want compensation and will look for other avenues, like charging for being listed or amount of downloads, or some other direct method that would hurt more developers than it helps.

And the ability to use your own payment service itself is something likely to help only big companies like Epic in any case.  For all the posturing, Epic is doing this for themselves.

What Does Epic Really Want?

More money.

This is my opinion, but I think that Tim Sweeney is irked that he has to pay Apple and Google 30% of the cut.  He wants to pay less.  I am going to take a shot in the dark here and bet Tim would be happy with 12% which, coincidentally, happens to be the cut the Epic Store takes from its devs.  A reduction to that would probably make all of this go away.

Such an overall reduction would be good for developers big and small in a way the payment plan scheme likely would not.

Apple and Google will likely push back on such a universal percentage cut and we will have to see where things end up.  I would not be surprised to find the parties have arrived at an agreement over a Steam-like situation where apps that generate more than a given revenue threshold pay a reduced rate.  That will seal the deal on Epic’s motives.

As noted elsewhere, there is also a cost in lost sales to Epic by not being in the Apple and Google stores, so Epic has some incentive to make a deal sooner rather than drag this out to the bitter end.

A resolution like that will also save the consoles makers, Steam, and the Epic Store from a precedent that might come back to haunt them.  Imagine if you got a ruling that essentially says running an online store and requiring a cut of the sale price made you a monopoly?  The law is never static and some lawyer is always keep to stretch a ruling in order to make it fit a different situation, so long as there is some money in it for them.

Mobile is King

The other take away here is that mobile is king when it comes to gaming.  Consoles are still big in the US, and PC is big in the US and EU, but mobile titles bring in more money world wide and dominate in most of Asia.

Epic is suing Apple and Google, and not Microsoft, Sony, Nintendo, or Steam, because the money stream from your phone or tablet is the biggest hose… the biggest overall by far and seeing huge growth compared to the stagnant PC numbers and declining console numbers… and Tim Sweeney wants more of that money in his pocket.

The End Result

When this gets settled, and however it gets settled, the rich will get richer and I will be greatly surprised if there is any benefit for small, indie devs at all.

Addendum:  Apple plays hard ball, threatens to cut off Epic developer accounts.