Games developers go it alone to challenge Apple and Google’s dominance
The world’s biggest app stores are facing increasing push-back by developers over the high costs they charge for connecting their games with users – and new gaming platforms are looking to swoop in.
In Tallinn, Estonia, Ultra will take 15 per cent from sales it generates through its digital store in a bid to challenge companies such as Alphabet’s Google, Apple and Steam, the industry-leading platform owned by Valve, which takes a 30 per cent cut.
The launch, planned for PCs as soon as November, comes amid rising push-back from games makers and publishers against platforms that distribute games.
Epic Games, which created the hit game Fortnite, recently decided it didn’t need Google’s app store – which takes a 30 per cent cut of sales, including in-app payments. Epic chose to distribute the game itself and keep 100 per cent of the money it generates, although it still offers the game through Apple’s app store, which also takes a similar cut.
Global revenue for mobile, PC and console games is increasingly lucrative, and expected to reach a combined $137.9 billion this year according to data compiled by market research firm Newzoo, increasing to $180.1bn by 2021.
In a survey of 4,000 games developers recently, Statista found most were creating or planning new content for PC platforms.
Once dominated by brickand-mortar stores, the industry is now led by online platforms that allow gamers to download from thousands of titles. Steam – launched almost exactly 15 years ago – generates about $4.3bn in revenue, not including in-app payments or additional content, according to data compiled by independent monitoring tool Steam Spy.
Game studios have long been competing with Steam. In 2011, Electronic Arts introduced its Origin platform and made it a required installation to play many of its biggest new PC releases.
Microsoft lets customers access some of its first-party titles early if they purchase from the Microsoft Store, including its next Forza Horizon release.
Ultra is among a clutch of start-ups hoping to win market share by cutting costs and using new technology.
Founded last year and staffed by former gaming executives, Ultra plans to use blockchain technology to process payments and offer tokens to gamers who use its platform. Ultra’s board includes Ritche Corpus of US graphics card maker Advanced Micro Devices, and Allen Foo, a veteran of both Microsoft and videogame development software company Unity Technologies.
Ultra plans to initially offer between 150 and 200 games. The company is in the process of raising funds and has already collected about $10 million from private investors, according to a source.
Part of Ultra’s business model still mirrors its larger rivals, and may suffer from negative feedback of its own. Studios often roll out downloadable content to existing titles to keep consumers hooked. Google and Apple, as well as Ultra, take a cut of any of these add-ons purchased on their platforms. Frank Sagnier, chief executive of videogame developer Codemasters, said this ability for retailers to keep taking a slice of every transaction made within a game is a larger concern than the specific cut taken on an upfront sale.
“If you sell a game during its launch period, there’s a cost to doing that, so maybe 30 per cent is justified,” he said.
“But once you bought my game and start downloading content, that’s my customer. I think that’s where the big distributors may find there could be some pressure.”