Gamasutra: Adam Coster’s Blog-Apple’s 15% Reduction for Non-Millionaires: PR Movement or Sound Investment?

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Apple has announced the App Store Small Business Program. With this program, companies that make less than $ 1 million a year can maintain 85% of their revenue instead of 70% (the system is a bit simpler, but that’s the point).

The announcement generated many topics and many questions. One of the big questions is whether this is a “mere PR stunt” to help Apple’s various antitrust proceedings, especially those brought about by Epic Games.

I’m not going to guess why Apple made this move, but instead based on business outcomes (ignoring the proceedings). In particular, what does this cost Apple and what does Apple get in the long run?

What caught my eye was some data points (data from the sensor tower) in the article on this topic.

  • 97.5% of App Store companies meet this criteria.
  • They make up only 5% of App Store revenue.

If these numbers are correct, it means that Apple is saving about 2.5% of its revenue. This is an opt-in program and needs attention, so it could be much less.

While Apple loses Until Program developers are in a position to increase their revenue by 21 percent, with a few percent of their revenue. This is an important asymmetry. Developers can get much more than Apple loses.

But in the long run, I don’t think Apple will lose anything here.

Successful companies that make games and apps are very difficult. We’ve been doing that for seven years, and there were many points where our journey was almost over. Our future is still uncertain.Small businesses like us always At risk: Launch one game / app at a time.Each represents a huge relative investment over months or years, for that app alone Toasting flop. There is no average portfolio.

What we always see is the runway. How long does it take to run out of money?

The runway determines everything. Every day, releasing new apps and finding new business deals is a day near the end of the run, so you have to be careful every day. Are you investing in making your existing apps more successful? Or what if you’re creating an entirely new app? Or are you engaged in other business? Or do you strengthen your skills and technology foundations to make development faster and easier? Would you like to spend money on an advertising black hole?

Due to the extreme time limits faced by small businesses, we always have to put all our eggs in one basket.

An additional 21% of revenue is synonymous with an additional 21% of runways. This is an additional 2.5 months in addition to the 12 month runway.

What can SMEs do with that extra money / time? If you make a small app, you may be able to squeeze another one and roll the dice again. If you’re building a bigger app, you can pack in some features that can make all the difference between a flop and a blockbuster. Or have more money for advertising.

Alternatively, invest that time and money instead to increase the resilience of your company.Perhaps it will improve payments to employees to increase their chances of staying (the cost of small businesses with employee turnover) Huge). You may spend time training and building an improved development pipeline. Or we might hire a new person who turns out to be a catalyst for our future success.

The point is that in a small studio, 21% of revenue is very important.

In the long run, this is by allowing small, always-leading companies to afford More App of Higher quality. Not only will companies invest more time and money, but experienced companies will stay longer. New companies, on average, produce low-value products. By reducing the risks faced by existing companies, Apple can gain a more valuable portfolio in the long run.

Now you can have these same discussions for big companies. After all, wouldn’t they make more and better products if they had more money to spend on their products? On average, probably.But How much does it cost To apple?? Reducing small business churn is cheap for Apple and could further increase the small number of companies that generate all of the App Store revenue.Seems to cut Apple’s revenue from major players in half very I don’t think it’s cost-effective for Apple.

A more interesting argument is why it stops there. Would you like to completely remove the small business cuts? After all, today’s SMEs that survived are the source of tomorrow’s big companies.

The 30% reduction required for almost every app store didn’t make sense for us who are almost rubbing, as it’s more likely to accelerate our demise than to bring big revenue to the store. .. I hope everyone else follows (look at you, Google Play and Steam!). It’s a good public relations move, and more importantly (for profit-oriented institutions) it’s a healthy investment.

Listen to the studio podcast and follow me on Twitter for more information on my rambling story (@costerad).

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