Fortnite and the battle against ‘app tax’
Want to join then 125 million-strong Fortnite player community? If you’re a PC player, no problem. If you’re an IOS user, no problem. If you’ve got yourself an Android, you might be surprised when you search for Fortnite on Google Play — it’s not there. Oh, there are plenty of results: fandom, guides and cheap knock-offs. But the game you’re looking for is mysteriously missing. You have to download it directly from Fortnite’s website. Why?
Fortnite is at the forefront of a fight that’s rocking the foundations of the app economy and this battle is affecting Fortnite and other mobile games in particular. To understand what’s going on, let’s consider a few points about the general nature of apps you might find on any app store:
· Many brands offer apps as a sort of convenient complimentary service to their online or physical presence. These types of apps are usually free through-and-through, aiming to support and boost revenue growth in other areas.
· Games (like Fortnite) often depend entirely on revenue from their apps to turn a profit. There is no other revenue stream to rely on or funnel users to.
· A huge slice of the app market these days comes from in-app purchases. Games in particular have found this to be a fantastic way to monetize the product. Players can get the game for free, but they can only get the full experience by purchasing upgrades or cosmetic improvements for their avatar.
So, what’s the problem? The basic framework described above is probably somewhat familiar to you. But what does this have to do with Fortnite parting ways with Google Play?
The real revolution at hand is much larger than just Fortnite. In fact, several big brand names have taken a similar route and decided to promote and offer their Android apps independently rather than going through Google Play to avoid what some have dubbed the “app tax”. Google, as it turns out, has been particularly greedy in this realm, collecting a whopping 30% of all app sales and in-app purchases through Google Play.
Fortnite is free to download and to play, but it has been a real innovator of in-app purchases. In fact, it’s economic success built largely on in-app purchases is far more shocking than its explosive growth in size. According to Bloomberg, Fortnite raked in a massive $1.2 billion between September 2017 and May 2018 alone. Sure, only a portion of that came through its Android app, but certainly tens if not hundreds of millions would have found their way in to Google’s hands were the app available there.
Fortnite and the other names that are ditching Google Play and the Apple App Store complain that the “app tax” is far too high and discourages innovation, creativity and hit new projects particularly hard. But new projects also have little choice but to make their apps available on Google Play and the App Store. These two dominate the market in somewhat of a duopoly and they are one of just three or four stores where users know they are buying a real product.
This dynamic means it’s up to already-successful giants like Fortnite, which enjoys huge revenue streams from other sources and massive popularity independent of Google Play, must lead the way in this fight. How will it all develop? Only time will tell. These important app suppliers will have to get a lot freer, or a lot emptier.
