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Google Play Proposes Third-Party Payments in the UK – But is it a Good Deal for Developers?

Google has proposed opening up the Google Play store to third-party payment systems in the UK in a move that would see it take a reduced revenue share. But all is not as it seems.

The proposal, if enacted, would enable developers who provide options for both Google Pay and alternative billing to have Google’s revenue cut reduced by 4% to a 26% share (or 11% on their first $1 million)—if users pay through a different payment service provider (PSP). However, if developers do not offer Google Pay as an option, they will be penalised and the standard platform fee would only be cut by 3% to 27% (or 12% on their first $1 million). 

Should users choose to pay with Google Pay, the revenue share will remain at a 70/30 split.

The changes would be rolled out for non-gaming apps first, before eventually allowing games developers to be eligible for the new billing rates and options “no later than October 2023”.

Google claims this would help ensure a “smooth transition for developers and to allow for the necessary changes to be made to our systems”. For context: In Q1 2023, data.ai estimates a large majority of worldwide consumer spending on Google Play came from the games category. It’s effectively a cash cow that is often treated differently by mobile platform holders than other categories.

The proposed changes would only impact in-app purchases in the UK, though similar actions have been taken in other countries.

Why Proposes Third-Party Payments Now?

Google’s announcement comes in response to an investigation by the UK’s Competition and Markets Authority (CMA), which began in June 2022, to look into “suspected anti-competitive conduct” by the tech giant. A particular focus of the ongoing investigation concerns Google Play’s rules which “oblige app developers offering digital content to use Google Play’s own billing system for in-app purchases”.

In response, on April 19, 2023, Google outlined the above changes to its rules and the CMA has now opened a call for feedback on the proposals. Public consultation on the new commitments will run until May 19, 2023. Following the end of the investigation and feedback from the public, the CMA will decide whether to accept or reject the changes.

At present, the CMA’s position is that it believes the new commitments from Google are “sufficient to address the competition concerns”. While no final decision has been made, pending consultation, the CMA has proposed to accept the changes.

What Do the Changes Really Mean?

Any climbdown from the standard 30% revenue share should be considered significant, as Apple and Google fight tooth and nail to retain the status quo. This latest proposal is another example of platform holders making as small a concession as possible to retain their lucrative cash cows.

But while it may seem like a concession, for developers, the reality is that it will not make a notable difference to their businesses on the current terms. A reduction of 3% to 4% will not cover the costs of using an alternative billing system, where the revenue share is often 5% or more (AppCharge takes a 5% cut per transaction).

PSPs charge such fees to cover the costs of billing, invoicing, fraud, chargeback cover, etc. Such a small reduction in Google’s share means that, should customers use another payment system, it would actually cost developers a greater share of their revenue, not reduce it.

Google has claimed that such a reduction is enough to cover developers’ “average payment processing costs” while also leaving a margin for customer support and other payment processing services. 

These terms mean that Google Pay keeps its position as the preferential payment method, while creating a challenging environment for alternative options. And of course, in any event, Google will continue to maintain its standard 30% share on all Google Pay transactions, thus effectively retaining the status quo. Of course, if you’d like to discuss potential alternative PSPs for an both in-app and out-of-app solution, you can speak to the AppCharge team.

Rick VanMeter, executive director of advocacy group The Coalition for App Fairness, which champions app store reform, told TechCrunch he believes the proposals would enable Google to “continue taking a massive cut on services they do not even provide”. He added: “This solution will not create meaningful competition and is a bad deal for developers and consumers.”

It remains to be seen whether the CMA will ultimately accept or reject Google’s proposals, and what the future of third-party payments will look like on the marketplace in the UK.

Regulatory Pressure

Apple and Google have both come under increasing pressure around the world over concerns about anti-competitive practices, namely over the exclusive use of their own payment systems in their app stores. 

Google was hit with a $162 million fine by the Competition Commission of India over anti-competitive practices in October 2022. Following this, as part of efforts to appease the regulator, Google announced in February 2023 that it would support third-party billing systems on Google Play in the country, reducing its fee by 4% for transactions made through alternative payment services.

It had previously introduced a similar measure in South Korea, following strong regulatory pressure and criticism. A smaller reduction of 3% in its fees for purchases made through other PSPs has also been enacted in the European Economic Area (EEA).

The UK proposal is now following suit with its previous successful negotiations with regulators.

Out-of-App Solutions

While it’s a positive step for Google to introduce alternative billing systems on its UK Play store, the current proposals aren’t a particularly attractive proposition. For developers really looking to take advantage of the $30 billion opportunity in the mobile games market – which is the amount of revenue the App Store and Google Play took last year from in-app purchases – the best solution still remains in utilising web stores.

By bringing your community of players to a web store, developers can offer better deals to players, all while retaining a higher share of revenue. Regulators continue to chip away at the app store monopolies, but the industry is a long way off from a fairer deal for all.

The Mobile Game Web Store Designer’s Playbook

There’s a monumental shift happening in the mobile games industry. Since Epic Games’ lawsuit against Apple centering around a dispute over the right to use its own payment system in Fortnite on the App Store—rather than being forced to use Apple Pay—governments and regulators around the world have increased their scrutiny over potentially monopolistic app store practices.

Specifically, their concerns have focused on the 70/30 revenue split, whether it’s fair, and whether companies should be able to integrate their own or other third-party payment systems. There has been resistance from Apple and Google so far, but that hasn’t stopped publishers from opening their own web stores to skirt around the app store tax. The clock appears to be ticking on the established revenue share model and moving in favour of the creators, not the platform holders.

Web stores for mobile games represent a $30 billion+ opportunity for developers and publishers—the market generated an estimated $110 billion from global player spending in 2022, according to data.ai, with approximately 30% sucked up by platform fees.

But it’s not a simple case of ‘build it and they will come’. Creating a successful web store and getting players to use it requires a thoughtful strategy—but the Appcharge team has you covered. We’ve put together a list of top tips to help you build the best web store possible so you can unlock a new, potentially lucrative revenue stream that’s free of the 30% app store tax (in fact, Appcharge only takes about 5% for powering your transactions).

Price IAPs Differently

The global mobile games market may have generated $110 million in 2022, but a sizable chunk of that is sucked up by the business expenses of running a successful title. The chief among them is the 30% revenue share Apple and Google take from each in-app purchase (with the exception of titles that generate under $1 million in a year or repeating subscriptions).

As a consequence, in-game economies have to be built around this cut to ensure a title is profitable, which can lead to inflated prices compared to what they might be otherwise. On a web store, purchases such as currency, boosters, cosmetics, season passes—anything you have to sell—can be priced differently. Without having to worry about losing 30% of each in-app purchase off the bat, developers can give players better deals reflective of a transaction’s true value, which can lead to better engagement and a more enjoyable spending experience.

Developers can also price outside the parameters of the app stores. Previously the App Store capped in-app purchases at $1,000, though these rules have since been relaxed.

Leverage Personalization and Segmentation

Game stores shouldn’t just offer generic in-app purchases for sale (though web stores do offer plenty of opportunities for better deals, as our previous tip shows).

One of the best methods of making a shop successful—on mobile or in the browser—is to surface personalized deals to your players, segmenting them based on their playing habits, their progress and personal profile. Offering a starter pack after letting a new player progress through the early stages of the game, once you know they are engaged, is much more effective than notifying them of the deal as soon as they open the app for the first time. Similarly, other special deals can be presented to players that are adapted to their skill level, or perhaps surfaced when they are stuck on a particular level. 

These same practices can be brought to web stores. By segmenting users based on their customerID and linking this across from the mobile app to the browser, developers can surface special deals for anything from a season pass to in-game currency like gems can be tailored to individuals. Conversions can be challenging when creating the barrier of a web store to payments, but when successfully implemented, this strategy could improve the lifetime value (LTV) for the most engaged players who feel they are getting a better deal.

Promotions can even be set for specific dates and times, such as deals of the month or promotions that encourage not only player spending, but other free bonuses on top, again further encouraging engagement and retention in the long-term.

Ultimately, a web store can provide a key function in live ops, powered by personalization and segmentation. And with a service like Appcharge, much of this work can be set up for automation, meaning fewer resources need to be spent on managing the payment system and the offers it surfaces.

Integrate Gamification Mechanics

A mockup of a mobile game web store account interface demonstrating gamification elements. It features a user profile with accumulated 'Royalty points' and progress towards a 'sugar candy' reward. An 'Exclusive' tag is displayed next to a vibrant graphic of assorted candies, representing a special offer, the 'Candy Royalty bundle'. The 'Visit Store' call-to-action button suggests a seamless transition to shopping within the game's ecosystem, set against a dynamic purple background

One crucial step to creating a successful web store is to ‘gamify’ the design and experience.  Significant time, investment and testing goes into creating in-game shops and the entire in-game economy in mobile titles. That exact same mindset should be brought to the web experience. It’s easy to just create a simple, run-of-the-mill storefront in the browser with a few good deals and leave it at that.

But to really maximise their potential, web stores should provide a similar experience to what players have in-game. Making purchases should be part of the fun and welcoming, not just a bland experience for the simple purpose of making a transaction. Free-to-play mobile developers already excel at this, so why should bringing this to the web be any different? 

There is clearly a challenge in pulling the player out of a mobile game and having them engage with the web store, but by gamifying this experience, developers can help this become more seamless and satisfying. The rewards for players are better deals, and for developers, better returns. Working in tandem with better online pricing and personalised deals, you can build a satisfying experience for your players.

Build a Community

A screenshot of an Instagram post from the official Pokémon GO account, featuring a 'Great Voyager Box' as a web store exclusive deal. The image includes an in-game explorer character with binoculars, a styled treasure box, and a jungle backdrop. The accompanying caption promotes a limited-time offer on Super Incubators and more. The post has received 16,324 likes and displays a date of June 1, 2023.

It’s important to note that, at present, App Store game developers cannot directly link to a store outside of the platform (‘Reader Apps’, such as magazines, newspapers, books, audio, music, or video apps, can link to external websites for account creation and management). So building your community outside of that ecosystem early on is critical in order to drive players to your web store.

Many of the world’s top publishers excel at building communities around their top games. Perhaps the best example is Niantic, whose Instagram page for Pokemon Go has 2.2 million followers, and whose in-person Pokemon Go events drew almost 300,000 players in 2023. Learn more about the Pokemon Go web store design here.

Few publishers will be able to reach this level of community, but every publisher can begin building en engaged community outside of theirs app, whether on Discord, social media, email newsletters, and/or dedicated websites.

Going direct-to-player with web stores is all about owning your audience. And having a thriving, owned community is an integral part of this. Bringing your most loyal players into a close-knit community outside of the game can not only improve their enjoyment of it, but it provides a chance for you to engage directly with them.

This could come in the form of getting feedback on the latest updates, or having the ability to direct them to special deals on your web store that could get them more bang for their buck thanks to the lack of store fees.

You Don’t Have to Build it Yourself

Following the best practices we’ve set out in this article can help you make your web store a success, and while it takes careful planning and a solid execution, you don’t have to do it all yourself.

A partner such as Appcharge provides an off-the-shelf solution to help you create a gamified, mobile-first web store. Taking just a 5% cut of each purchase, we take away the admin work of payment and billing, removing admin headaches, so you can focus on building your game and its community.

Appcharge’s Merchant of Record services offload operational burdens, managing anything from collecting sales tax, ensuring Payment Card Industry (PCI) compliance and dealing with refunds and chargebacks, effectively managing all payments and associated liabilities. The extra benefit of this model is that, given games are a global business, Appcharge simplifies the process of selling across borders so you don’t have to. You can learn more about these services in our guide to merchant of record services for mobile games publishers here.

Appcharge also offers a variety of templates developers can utilise to build out their web stores, supporting you with the best practices of building a storefront for the browser.

Ultimately, by working with a partner, developers can save money and resources on building these services from scratch and focus on development and publishing successful games. With Appcharge’s solution, there’s no SDK involved, and requires a minimal amount of integration – it just requires elements such as the customerID and balance report, while segmentation data can be utilised to personalise the web store experience.

Capitalize on the Shift to Web Stores

Web stores help you design your game economy differently, in a way that offers players better deals and puts more of the revenue generated to where it should go: you, the developer. By implementing the tips in this article—offering better deals, personalizing offers, gamifying the experience, and building a community—developers are well placed to take advantage of this shift in the mobile sector to new payment options.

The world’s biggest mobile games companies, including Clash of Clans developer Supercell, Star Trek: Fleet Command publisher Scopely, and RAID: Shadow Legends’ Plarium, are all doing it. Now’s your chance to join them.

Interested in finding out how Appcharge can help you build your own web store? Our team can provide you with a demo and further discuss the benefits of adopting privacy-compliant practices and leveraging new technologies. Don’t miss out on the opportunity to stay ahead of the curve and position yourself for success going direct-to-player in 2024 and beyond.

Beyond the App Store: The Future of IAP Monetization

The future of in-app monetization is, well, out-of-app.

With Apple’s deprecation of the IDFA and longstanding refusal to adjust their 30% tax on developers, in addition to an overall drop in game revenue across the board, the mobile gaming landscape has been feeling the strain. 

But the industry received a lifeline thanks to Tim Sweeney and Epic Games. As a result of their much publicized legal battle with Apple, it was ruled that app developers can, through communication with users outside of the app only, direct them to their own external web stores to purchase in-game items, bypassing Apple’s 30% commission. 

While industry giants have been quietly building out their web stores with in-house resources, the vast majority of studios don’t have the war chest to do the same. And so we launched Appcharge. Our mission? To revolutionize IAP monetization with a direct-to-player monetization platform that gives developers a headstart from the get-go, rather than a handicap. 

Keep reading to learn more about the rise of mobile game web stores and how you can use Appcharge to power your direct-to-player monetization strategy. 

The growing importance of out-of-app monetization 

Looked at solely through the lens of bypassing Apple’s 30% tax, web stores are a no brainer for games. But the need for web stores is made increasingly urgent when you consider three trends that are making monetization of game items all the more crucial in our industry. 

The emergence of games-as-a-service model

Gamers have increasingly high expectations of what a game should be; games are expected to constantly evolve, add new features and experiences. On one side of the coin, this puts a strain on the budgets of studios, who need to hire liveops teams. 

On the other side of the coin, a natural product of a liveops strategy is greater room for IAP monetization. New battle passes, in-game items, and special offers are hallmarks of liveops strategies – it’s just when you cut 30% off from all transactions, there isn’t much room for error in order for the investment on those liveops salaries to pay dividends. 

Webstores represent a major boost to liveops-focused games. Not only do they provide studios with more breathing space and better return on their liveops investment by bypassing Apple’s 30% cut, but they actually facilitate more robust and engaging offers for users. From highly personalized offers to new loyalty programs, webstores serve as the backbone of a profitable and sustainable liveops strategy.

From hypercasual to hybrid casual

The second trend that highlights the growing importance of IAP monetization is hypercasual’s shift to hybrid casual in recent years. Apple’s deprecation of the IDFA essentially killed the hypercasual industry, which relied on hyper-efficient, targeted user acquisition, and quick ad monetization from users with low LTVs. 

This model has been jeopardized as a result of Apple’s changes: revenue generated by hypercasual games dropped 10% in 2022 compared to 2021, down to $12.3bn from $13.7bn.

As a result, hypercasual developers are being forced to find ways to add deeper layers to their games, in order to increase user retention and LTV, and add IAP monetization to the previously ad-focused model. 

Overall reduction in ad monetization 

It’s not just the hypercasual category that’s feeling the heat. Following the IDFA apocalypse, games across the board are spending less aggressively on UA. 

Consequently, 2022 saw a reduction in eCPMs compared to the previous year, causing games to earn less money from ads. And it’s unclear if the industry will recover to its pre-IDFA levels of ad monetization in the near future.

In order to survive, games must build out their IAP monetization strategies.

Direct to player: A new era in gaming

A perfect storm

All of these forces, and the Apple-Epic legal case, combined to create a perfect storm for the rise of D2C web stores in mobile gaming. 

Industry leaders like Supercell, Niantic, Moon Active, Playtika and Scopely, all of whom monetize heavily from IAPs, already launched web stores for their hit games. Numerous others have followed suit.   

The benefits to game developers of D2P web stores are obvious: a significant uplift to their profit from sales of game items. Instead of losing 30% of all revenue to Apple, developers who build their own online stores pocket all of the fee. 

Challenges of web stores

However, there are challenges posed by web stores. Firstly, Apple forbids games from advertising their external stores inside their apps – meaning developers need to find alternative ways to inform users. For large, legacy publishers with strong followings on social media, this isn’t such a big issue. For smaller outfits who are still building their brand, it requires some thinking – like partnering with influencers and building a strong community.

It’s also much more convenient for a user to make an IAP within the game, rather than going to an external web store. Because of this, developers will need to find a way to incentivize this change in user behavior. However, given the large boost to their margins afforded by web store transactions, discounts and incentives like loyalty programs can be offered to get the ball rolling and begin changing user habits. 

Lastly, using in-house tech to build and maintain a web store, in addition to supporting global payments and compliance, requires time and significant investment. Appcharge’s co-founder actually led the development of Moon Active’s web store and knows first-hand how time consuming and expensive it can be. Giant companies like Moon Active can afford to do this, but most others need a third-party tool that makes it easy to launch a web store. 

Enter: Appcharge.

Appcharge: Powering the D2C mobile gaming economy 

Appcharge offers a white-label web store platform for mobile game developers. Taking just a 5% cut from purchases, our platform allows for total customization, with developers able to design every aspect of their store, use gamification elements to boost engagement and encourage repeat purchases, set up segmentation to provide the most relevant offers for all users, and seamlessly handle payments and billing. 

The best part?

After the initial integration to update the balance in customer accounts, the entire D2P monetization strategy can be managed by live ops and monetization managers – no technical development needed. 

Compared to building your own web store, this saves significant resources and allows teams to focus on building out a winning D2P strategy that improves user engagement, strengthens retention, and increases repeat purchases. 

The future of IAP monetization is here, and we’re proud to be leading the way. 

Unlock Your Game’s True Revenue Potential with Appcharge

Ready to transform your game’s monetization strategy and reap the rewards of out-of-app web stores? Get started with Appcharge today and watch your revenue skyrocket while creating a more engaging and personalized experience for your players.

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