Emergency Episode: Apple Court Ruling Impact

🚨 EMERGENCY EPISODE🚨 Game over, Apple? What you need to know & do NOW!

Estimated read time: 1:20

Summary

In this emergency podcast episode by Two & a Half Gamers, hosts Matej Lancaric and Felix Bromberg, alongside guest Chip Thurston from FastSpring, dive into the implications of a recent U.S. court ruling against Apple. The decision, part of the Epic Games versus Apple case, deems Apple's anti-steering policies anti-competitive, allowing game developers to now directly guide players to web stores from mobile games without hindrance. This could significantly shift revenue models for developers, as they might effectively bypass Apple's 30% App Store commission, potentially transforming profitability and innovation in mobile gaming.

Highlights

Apple’s anti-steering policies are now considered anti-competitive in the U.S., opening new revenue pathways for game developers 🎮.
The court ruling enables direct promotion of web stores, allowing developers to retain a larger share of profits 🤝.
This legal change could be a game-changer, offering more profitability and encouraging innovation in game design 🆕.
Developers must watch for further developments as Apple plans to appeal the decision 🚨.
Game over for app store dominance? This could herald a new era of mobile gaming economics 📱.

Key Takeaways

A major U.S. court ruling allows developers to bypass Apple's app store fees by linking directly to web stores 🤑.
Apple's anti-steering policies deemed anti-competitive; developers can now promote their web stores in games 🚀.
Future gaming revenue models may shift significantly, offering potentially greater profits for developers 💰.
The ruling is specific to the U.S., but similar changes are anticipated globally 🌎.
Developers are urged to act swiftly but cautiously, keeping an eye on any further legal pushback from Apple ⚖️.

Overview

The latest court ruling against Apple marks a pivotal change in mobile gaming economics. With anti-steering policies ruled as anti-competitive, developers can now navigate customers directly from mobile games to web stores. This development is poised to disrupt the traditional 30% app store fee, potentially allowing developers more profit and driving new innovation in gaming.

The conversation in the podcast highlights various industry tactics that were previously employed to indirectly guide users to web stores, circumventing app store restrictions. With the new ruling, these practices may change drastically as developers seize the opportunity to more freely and directly promote alternative revenue channels.

While the decision currently applies only to the United States, similar legislative changes are expected worldwide. Developers are encouraged to strategically plan their next moves, considering potential appeals by Apple and learning from early adopters in the U.S. market. This ruling has set the stage for substantial shifts in the gaming revenue landscape and presents exciting prospects for developers worldwide.

Chapters

00:00 - 00:30: Introduction: Impact of iOS Ruling on Mobile Gaming The introduction discusses a new ruling on iOS in the United States which is expected to influence the mobile gaming industry. The speaker is optimistic that with proper promotion, messaging, and value propositions, mobile games can transition about 50% of their player base to web platforms. This significant shift can alter the revenue and profit profiles for these games by providing a more direct and frictionless experience to players.
00:30 - 01:30: Introduction of Hosts and Guest The chapter titled 'Introduction of Hosts and Guest' briefly covers the initial interaction at the beginning of the session, setting the stage for the event.
01:30 - 02:30: Guest Introduction: Chip Thurston from FastSpring The chapter introduces the guest Chip Thurston from FastSpring. The hosts Matej Lancaric and Felix Bromberg start the episode by welcoming the audience, indicating that this is an emergency episode.
02:30 - 03:00: Discussion on Apple's Court Loss This chapter introduces Chip from FastSpring as a special guest on the podcast. It hints at an intriguing topic related to Apple's court loss, which, although widely covered in the news, lacks deep discourse elsewhere. The chapter sets the stage for an engaging discussion.
03:00 - 03:30: Event: Yacht Party Announcement In this chapter, Chip Thurston, the Head of Gaming at FastSpring, discusses his role and the company's mission. FastSpring serves as a merchant of record, providing web store solutions for gaming developers and other industries. With 20 years of experience and over 3,000 customers worldwide, FastSpring helps its clients market and monetize directly to consumers, while staying up-to-date with the changing direct-to-consumer landscape. Before joining FastSpring, Chip Thurston worked at Scopely.
03:30 - 07:00: Discussion on Court Ruling Impact and Apple's Policies This chapter begins with the introduction of a speaker who recently left Scopely, highlighting her roles in product and marketing leadership, with a focus on direct-to-consumer strategies. The speaker reflects upon their recent experiences, referencing their time in a 'tycoon club,' and makes a mention of Jakub's surprised reaction related to knowledge of astrology. The main focus of the chapter shifts to discuss Apple’s recent legal challenge and the implications it carries for mobile game developers. The dialogue points to Apple's court defeat being perceived as a victory within the mobile gaming industry due to potential policy changes that could favor developers.
07:00 - 09:00: Analysis of New Ruling and its Immediate Effects The chapter titled 'Analysis of New Ruling and its Immediate Effects' includes a transcript mentioning an upcoming yacht party hosted by the entire company, Keyword Studio, in Los Angeles. This event is scheduled for the 19th of May at 7 p.m. at Marina Bay, following the Games Beat Conference. The chapter highlights the exciting nature of the event, encouraging company-wide attendance.
09:00 - 11:30: Impact on FastSpring and Strategy Moving Forward The chapter titled 'Impact on FastSpring and Strategy Moving Forward' begins with a light-hearted discussion about a laser yacht party mentioned in the show notes. This segues into the main focus, which is an invitation to attend a yacht party in LA. Attendees there will have the opportunity to meet people from FastSpring and engage in conversations about a court ruling relevant to FastSpring's strategy going forward.
11:30 - 16:30: Implications for Game Developers and Revenue Shifts This chapter delves into a casual conversation that touches upon the personal motivations behind professional interactions, specifically within the context of game developers and industry events such as the GDC party. The narrative unfolds with a light-hearted confession of wanting to connect socially, using industry gatherings as a means. It then hints at a deeper discussion expected to center around Apple's impact, potentially related to game developers, setting the stage for an insightful Q&A session.
16:30 - 21:30: Legal and Market Dynamics Post-Ruling The chapter begins with a focus on a significant legal ruling in the Epic Games versus Apple case in the United States, dated April 30th, 2025. Before delving into the ruling's impact, the chapter sets the stage with context about the mobile gaming industry's revenue model. For the first 15 years, Apple and Google traditionally took a 30% cut of the revenue.
21:30 - 26:30: Future Scenarios and Strategic Advice for Developers The chapter discusses the evolution of business practices in mobile gaming, particularly focusing on payment methods. It highlights a significant legal ruling in 2021, Epic Games vs. Apple, which allowed alternative payment methods and stores, notably web stores, to emerge. In response, Apple and Google implemented 'anti-skiering' policies to manage this new landscape.
26:30 - 39:00: Conclusion and Global Implications for Mobile Gaming The chapter discusses the restrictions imposed by major platforms like Apple and Google on mobile games, specifically prohibiting direct links or mentions of a game's web store within the mobile app. Despite these limitations, some companies have managed to thrive in the mobile gaming space – with notable examples including Scopely and Playtica.

🚨 EMERGENCY EPISODE🚨 Game over, Apple? What you need to know & do NOW! Transcription

00:00 - 00:30 But this new ruling on iOS in the United States, I think it won't be that difficult to get about 50 % for any game. I think any game, if they have the proper promotion, messaging, store, and value in place, can shift those players from mobile to web. they'll have that in their store. They'll talk about that value with their players and they'll get them directly in there and have them logged in and a pretty frictionless experience. And so why wouldn't we be able to shift the revenue profile and the profit profile that significantly?
00:30 - 01:00 That's definitely happening at the very beginning.
01:00 - 01:30 hello everybody. This is an emergency episode. My name is Matej Lancaric I'm Felix Bromberg and we are your hosts.
01:30 - 02:00 We haven't timed it yet. yeah, I know, know, know. Well, and we have a very special guest Chip from FastSpring. Welcome Chip to the podcast. Great. So can you give us a little bit of intro about you company? And then, I mean, that's going to be very interesting intro into the topic that we're talking about today because it's all over the news, but nobody's talking about it. Really.
02:00 - 02:30 Yeah, yeah, absolutely. I'm Chip Thurston. I'm the head of gaming here at FastSpring. So FastSpring is a merchant of record. We power web stores for gaming developers and really beyond gaming as well. We have 20 years of experience here, over 3,000 customers globally, and work with some of the biggest names in gaming. And so my role here is to help our customers market and monetize direct-to-consumer, and really to stay on top of all the evolving landscape of direct-to-consumer. Also briefly before Bass Spring, was at Scopely.
02:30 - 03:00 actually just left Scopely back in October where was in some product and marketing leadership roles there. Also largely involved in direct to consumer. So a lot, I've lived in this world for the last few years. Jakub's eyes almost fell off his head like, was a scorpio. Wow. Yeah, I know. I knew that. just thinking Monopoly got icon club. The director Kazumer thing. Yeah. All right. that's a whirlwind. That tycoon club is really exciting. Okay, so we're talking about Apple's court loss and how that's a win for mobile game developers.
03:00 - 03:30 But before that, actually, there's an interesting thing happening in LA. We're doing with Chip and the whole company, Keyword Studio. So there's going to be a yacht party, 19th of May, 7 p.m. in the Marina Bay. So everybody should come. It's after the Games Beat Conference and it's going to be a lot of fun.
03:30 - 04:00 my God. Link in the show notes. I saw, I saw there was lasers as well. It was a laser y'all party, right? What is that? being the only thing better than a yacht party is a laser yacht party. oh yes, obviously, but yeah. Okay. Well, don't worry, I will post a lot of photos and videos from that. oh conversation interesting from today, definitely come to the Yacht Party in LA because that's where you can meet people from Fast Spring. You can talk more about this court ruling that we're going to talk about today.
04:00 - 04:30 What actually happened? Yeah, I have to be honest with you, I'll probably have to say it's really just an elaborate excuse to get to hang out with you. think after being turned away from your GDC party, I had to get things in motion to try to get the opportunity. That's true. That's true. That's true. Okay. So what happened? What happened with Apple? Chip walk us through everything and we are going to ask questions because we have a lot of them.
04:30 - 05:00 And yeah, let's start. Let's start with the, with the ruling. Yeah, yeah. So very specifically, we'll be talking about this ruling that came through on April 30th, 2025. And it's in the United States applying to Apple in the course of Epic Games versus Apple. But I think before we get there, it's important to start with some context on why this ruling is so significant, kind of how we got here to then talk about the impact that it has. For the first 15 years or so of mobile gaming, the model was that Apple and Google took 30 % of revenue.
05:00 - 05:30 That was just the fee for doing business in mobile gaming. And we all accepted that and moved forward with that. And then in 2021, there was a ruling that came through and said these alternative payment methods, these alternative stores like web stores could exist. And so that was very significant. That was also in Epic Games versus Apple. And so after that, we started seeing these web stores pop up. But also in response to that, Apple and Google implemented what came to be known as these anti-skiering policies.
05:30 - 06:00 Basically that you as a mobile app, as a mobile game, could not navigate players directly from that game to your web store. You couldn't directly link into it. You couldn't even really talk about its existence inside of your mobile game. And if you did, that would be in violation of your agreement with Apple or Google. And so that's been the landscape for the last four years. And despite that, some companies are still really succeeding in this space. You have leaders like Scopely, Playtica,
06:00 - 06:30 who have found success in getting players to web stores in indirect means and living within these anti-steering policies and still benefiting from that because they get significantly much more gross margin through a web store purchase than a mobile purchase. Yeah. I heard a rumor that what Playtiga does is if you spend over 5k, they send you an iPad with their web store installed. That's how they get around it. That's how they, they have a VIP like concierge service, right? So when you spend X amount of money, they message you. And then if you spend X amount of money, they send you an iPad because it's cheaper than just paying the 30 % fee.
06:30 - 07:00 Wow, well that's, so that's, I have no idea. I can't speak to that, but I will say a story like that is indicative of like the creativity that these developers needed to have, right? Because you need to, yeah, you couldn't link directly from the game. You could do all these creative ways, which, mean, everybody can get really creative if it's about money and 30%. Come on.
07:00 - 07:30 What I heard, and I'm sure you, Chip can't speak to this, right? But what I'm hearing with the clients that I worked with that were doing web stores, how they were directing users to like the pay, like the online stores was two ways. Mainly it was retargeting. So they were using like DSPs, like re-merge, additives to retarget the users for their offline payments. And some of the savvy ones were doing a pop-up screen interstitials that they launched server side after the game passed the review. So basically you show the interstitial really far in the game, but only after the review got passed and that's when you pushed it.
07:30 - 08:00 Yeah, that's how, two ways. Yeah, that's the two ways that I heard were the most popular, right? Yeah. interesting. that those are sneaky ways to go about it for sure. There are also more genuine ways too. For example, linking into a news page on a website. And then that news page doesn't have anywhere to monetize. So it's not violating the anti-steering policies. And then once they're on that news page, oh yeah, there's this flashing store button up in the side that we're we're trying to navigate players over.
08:00 - 08:30 Go Tycoon Club right there. Yeah, there you go. that's been where companies have operated, right? And even some companies have seen that success, but it required a lot of investment to get there. Companies like Scopely, Platica, investing not just in ideas and in the time and effort to generate those ideas, but then actually developing a website to facilitate that beyond just a store. And so it did prohibit a lot of adoption from driving players to web stores.
08:30 - 09:00 Over that time, we've seen rulings like the DMA come through, but that hasn't really changed the landscape. And I can talk more about that too, but what I want to get to is this ruling just this week. So this ruling came through on April 30th. And what it said was that the anti-steering policies currently in place are anti-competitive and therefore unenforceable. And the reason this ruling is particularly significant is because of the specificity and timing of it.
09:00 - 09:30 It really goes in depth. on what Apple can and cannot do to prevent steering or to not prevent steering in this case. And it says these rules are effective immediately, and there's no opportunity to stay this decision. When the DMA came down, for example, it had a lot of similar language, like games need to be able to steer players from mobile to web. It would be anti-competitive not to do so. And so some compliance we saw was Apple or Google saying, OK, we'll do that.
09:30 - 10:00 But as a game pops up a screen to say, hey, you're going off platform, it'll include a lot of scary language. It'll say things like, hey, we can't guarantee you can trust this website. You'll be sharing your payment information there. Make sure it's safe and ways to really add friction to the process. And in this new ruling, they say, you can't do that. It has to be a very neutral screen that says you can use a third party site. The ruling also says you can directly link. into your web store from a mobile game.
10:00 - 10:30 So you can have a button that just says web store and you click there, you go directly into the store. It says you can promote the store in your game. You can say the web store exists and we want you to go there. And even the web store has 10 % more value, 20 % more value. Like, please go over there. And in the most extreme example. there, make us more money, please. 0 % added value like we saw sometimes. Yeah, yeah. And the most extreme example is just Spotify this week came out where they removed Apple processing entirely from their payments in their app in the United States.
10:30 - 11:00 All of their payment buttons link to a web store. And so there's no obligation to use this. Now we'll see. There's a lot of reasons to keep your guard up, which I'm sure we'll get into, but that is why this rolling is so significant right now this week. Everybody's talking about, oh, this is a great success. But then there's also the other side of the equation. mean, now you need to process the payment. You need to take care of the taxes. I guess different states have different taxes, like different processes.
11:00 - 11:30 mean, it's not. I mean, yeah. Yeah. one thing again that I want to confirm. So Apple will appeal this, but appealing this doesn't mean stopping this to work. Do I understand that right? So this works from 1st May and Apple can appeal it and drag it on because the whole argument about this like, yeah, this is great and everything, but Apple will throw giant army of lawyers at this and prolong for 30 years.
11:30 - 12:00 So They still can do it, but it's already in force. Therefore, do I get it right that they can still use their army button of lawyers, but it will be whatever somewhere there in the future? Yeah, yeah, absolutely. think that's why you're seeing some studios operate with such urgency right now, because we don't know how long this window will stay open. It could be open indefinitely. It could be open like... my question. If appeal happens, so now it's actually the time is playing against Apple, not for Apple, like you always have.
12:00 - 12:30 Because it was always playing for Apple, like we dragged this on, blah, blah, blah. So now they need to be super fast because people are getting users out of the platform. they're losing money basically. Yes. Yeah, yeah. so Apple has said, we'll comply, but we'll appeal. Yes. And so I think it would be naive to say, these are the rules. This is like the landscape moving forward, right? Like we don't know that for sure. We know it's the landscape today though. We know that Spotify submitted an app where they shifted all their payments off platform. It got approved by Apple and it's live today. And again, this only applies to the United States.
12:30 - 13:00 So please bear that in mind. yeah, yeah. for sure. And do I get it right that now it goes where? Like Supreme Court or like the last instance of judiciary or where this is heading currently for the appeal? That is beyond my legal understanding. I don't know the next step of worry I'm like just what I wanted to say with this is like how many of these appeal hoops do we need to go under this is like this is the deal and the end of sentence no more appeals Yeah, I think it's important for sure to understand that, but I think the more important piece is to keep an eye on the overall regulations and Apple's overall reaction, because I
13:00 - 13:30 think the reaction will extend far beyond this appeal, in that the appeal is one way they will approach this, because the appeal will specifically be about these anti-experience policies and how players navigate between mobile and web. And Apple will absolutely continue to fight this. This 30 % is very valuable revenue stream for them. um be paid.
13:30 - 14:00 12 % of Apple's revenues is from the App Store, right? So remember that. m huge. so beyond the appeal, if I try to advocate for Apple here, which I want to be clear, I'm with BassBring. uh I have a bias against them here. uh But if I think about Apple, they could do things to add value to payments that are, to games that process payments through their ecosystem, right? Like they control the ecosystem. will stop you there. They hate games.
14:00 - 14:30 Period. Well, they do, they do, but they like the revenue from games, right? So uh they could find ways to incentivize that for game developers. That's not in violation of this ruling today. They could, one thing we saw in the EU in response to the DMA, they implemented these per install fees. That seemed like a bit of an experiment, right? As a way to try to monetize installs in a different way. And so we could see them go more down that road. We could even see them maybe look at that 30%. That's something they obviously haven't wanted to change because it's been such a valuable revenue stream for them.
14:30 - 15:00 But it's possible they lower that 30 % and say, you know what, we add value to games, but maybe it's not on the scale of 30%. So it comes down a little bit and becomes more compelling for game developers. hear what value they can add on a level of 30%. So. not. card credit card fee is what like 0.8, like 1 % maybe, right? So 30 % outrageous. especially with the zero organic discovery that the stores now employ. you open the store and then you have Supercell, Palerix, Dream Games, Monopoly Go, whatever, like all these big games as featured on the top of the store.
15:00 - 15:30 Everybody else is basically dead. That's it. Like there's your 30%. Makes sense. They make most money out of these games. Sure. Fair enough. That's true. That's true. think there are some things we take for granted in this game development. I feel weird defending Apple this much. uh I do think there's a high degree of trust and scalability and safety and convenience of payments.
15:30 - 16:00 All of that is tied to payments. And so an effective merchant of record like a fast spring will help you get a similar level of convenience and minimizing friction and have that payment coverage and confidence scalability. But that's something that needs to be considered as you shift your payments off platform. You're changing your merchant of record. Apple and Google have been the ones handling all this for you. And so you need to make sure that you have a confident merchant of record in place so that you're equipped to be able to shift this to reap more of those profits.
16:00 - 16:30 Yeah, but then how do you actually choose merchant of record and how are you sure that the one you chose, it's the right one and the one that you trust. That's the thing. Yeah, I think it'll be different depending on different games, different criteria. At the end of the day, I think the most important thing is just trust and confidence because you're trusting this partner with revenue, like with revenue for your game. They are the ones handling that and then providing it to you.
16:30 - 17:00 And that's so that you can transact on a global basis through your own store. And so you need to have someone you know can be there, you know, can scale with your game. Like bear in mind, like with this rolling, Games are shifting a lot more revenue to Web Store if they have not already. And if you, as a game, shift your revenue to your Web Store through your merchant of record, and all the other games they manage shift their revenue to this Web Store through this merchant of record, we do have capacity limits. If all the games do that, our limits can be stretched to capacity.
17:00 - 17:30 That's why we're at FastRank. We're definitely talking to all of our customers and help us understand how much traffic you're bringing in so we can make sure we have the capacity in place to handle that. And we're hoping we do, but I say this to say like, you need to think of it in terms of how your merchant is reacting to this landscape and that they have the infrastructure to be able to support like the traffic that's coming from this rolling. Do I understand this like it's gonna be so big that like Visa enters the game at some point or what? I don't know. m really need that like so much capacity.
17:30 - 18:00 wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, wait, Yeah. Yeah.
18:00 - 18:30 It's a huge, huge, huge market. It is, and honestly, it's similar to the conversations that we have going into like Black Friday, for example. Like Black Friday represents this extreme spike in demand in both traffic and conversion. And it's across all sellers at the exact same time. And so going into a holiday like that, we have to proactively communicate with our customers to say like, all right, how much traffic do you expect? And we're going to plan beyond that capacity because we know we're not great always at estimating that kind of thing.
18:30 - 19:00 And so. We're taking a very similar approach right now. Different games might be adopting it at different times. And also, it expands beyond games. It's mobile apps, like I mentioned Spotify earlier. And so it's making sure that we're moving in lockstep with our customers to be able to support that. I think the other part to consider is risk management. We haven't even touched on that yet. But as the merchant of record, we handle risk management. And that encompasses fraudulent purchases, chargebacks, being able to detect that.
19:00 - 19:30 And we're the ones accountable for a lot of that as the merchant. And when it comes to scaling up like this, we need to make sure we're aware of what changes might come from our customers too. Do you expect more frequent purchases? Do you expect a different demographic of purchases to shift to your web store? For example, The people normally shifting to web stores under the current policies have been whales, right? It's your bigger spenders purchasing on a very regular basis. Well, with this new ruling, if you're just dumping all of your traffic into the web store now, it's going to really augment that player profile.
19:30 - 20:00 And if our risk model isn't attuned to that, it could identify things that are fraudulent that are not actually fraudulent. And so that's again, where we have to make sure we communicate with our customers and make sure that we understand what they expect so that we can expect it too. So what's the magic number that Felix was asking for? If I understand correctly, the number was like, this is the market and after the ruling, the expectation is this much flow will now be done through web stores.
20:00 - 20:30 That was what Felix was asking. 55 billion, guess, like, what would that be fees? Like 15 of that would be going to Google and Apple, which no longer will go. So that means, yeah. How are you guys thinking about it? Yeah. I think about it on a game by game basis. I don't think of the bigger percentage of revenue for Apple. think about it within Fastbring's Impact on Apple, within the games that we manage. If you had asked me a week ago about how much revenue a game could drive through a web store, I would have said a best in class number for a mid-core game would be like 40%,
20:30 - 21:00 50%, somewhere in that range. And that's after significant investment and months, if not years of effort. In a casual game, it's maybe 20, 25%. Again, different demographic, different purchase behavior, and after significant investment. But this new ruling on iOS in the United States, I think it won't be that difficult to get about 50 % for any game. I think any game, if they have the proper promotion, messaging, store, and value in place, can shift those players from mobile to web.
21:00 - 21:30 they'll have that in their store. They'll talk about that value with their players and they'll get them directly in there and have them logged in and a pretty frictionless experience. And so why wouldn't we be able to shift the revenue profile and the profit profile that significantly? Another question in that case. So what's the percentage increase between the last seven days of how much money you actually process now versus what you did like a week ago?
21:30 - 22:00 I will take longer than that to build out, right? Like, let's hear, let's hear. Yeah. Yeah, the honest answer is it hasn't shifted much yet because it's been four days since this rolling. so I think customers are getting their ducks in a row and saying, let's get our interpretation of this and let's see how quickly we can act on that because there is that urgency, but that urgency won't come at the expense of due diligence. Let's not put ourselves in a precarious position just to reap a few more extra days of profit.
22:00 - 22:30 So let's make sure we understand this, that we're doing things in the right way. And even though we're doing it in a technically sound way, making sure this only applies to the United States, because things haven't changed in Europe, things haven't changed in Asia. These other regions are unchanged right now. So then. that means for people that have web stores can just advertise them much more radically and people that didn't have web stores started building them from last week. Well, basically, first of May. But then, OK, so you said they're getting the DAX in general.
22:30 - 23:00 What does that even mean for the developers? Actually, process wise. Yeah, I think it's saying, how will we promote this in our game? What are our means of promotion with that? Do we have a, like, what's our go-to-market plan look like essentially? Is there a new section in the game? we actually have the infrastructure to put this in our store? Can we put a banner in our store that says, web store, can we put a side-by-side with pricing to then link out to the store? Like, what are all the tools in the toolbox that I, as a game developer, have?
23:00 - 23:30 And then I'll put together this go-to-market plan now that I know I can communicate much more freely. Okay. So another question I was thinking about, because there's already some heavy hitters that have thrown their hat in the ring. I'm thinking about Epic, right? They announced, what was it, two days ago that anyone earning below a million will be able to process it for free through their web store, and anyone earning over a million will be processing at 12%. In my experience, working with some large clients that process probably close to hundreds of millions or billions that have web stores, they're not paying 12%, right?
23:30 - 24:00 I guess the big battle, because there's so many gaming companies, like it's 70-30 split, right? Or 30 % of the gaming companies are driving 70 % of the revenue. So I guess we're gearing up for an epic battle for the large customers. So is that a race to the bottom, or what's your thinking on that? When you say epic battle, was that capital E
24:00 - 24:30 Yeah, epic. No, the epic battle to the death. Yeah, no, battle with epic. But yeah. like finally we have some competition after all these anti-competitive practices? I mean, yeah, OK, let's say hypothetically Play2Git comes to Fast Spring, right? They're not going to pay 12%. They're probably going to go lower, and then they can, yeah. How does that? Yeah, I think it's important to recognize when there is a race to the bottom versus when there is value from other merchants of record and going back to picking the right merchant
24:30 - 25:00 of record for your business. If you want to pick just the lowest rate out there and it's a startup who has a couple of customers and you don't have that much confidence in their business model and where they're going to be in a few years, they'll have a lot of learnings to do along the way. So you get a lower rate, but there's a risk that's being associated with that. as opposed to a customer who's a fast spring and will give you a very competitive low rate. And then you'll also have these other benefits of not having to worry about things like that. And so that's not to say we're the right answer for everybody. There'll be customers that work with fast spring, customers that don't.
25:00 - 25:30 It's important to think about which one is the right one for you. And actually, this is a really important point that I think should be considered and isn't being considered enough today, which is having multiple merchants of record. Doing that... uh there's two benefits to that. One is it mitigates risk for you as a game developer. And the second is that you can optimize performance. So the risk mitigation piece, I think, is pretty obvious, right? You don't have all your eggs in one basket. Let's say you start driving half of your revenue through this alternative store.
25:30 - 26:00 Well, if something were to happen with that partner, then you have no means of redirecting that revenue. So you either have to take down your shop until you get another merchant in place. or immediately spin up another merchant as urgently as possible. How do you even split it? How? It's a waterfall. They're mediating the payment providers. Yeah, the most common way is just mediating it geographically. So you might say, OK, in the United States, we'll get fast springing our traffic.
26:00 - 26:30 In another region, it goes to a different merchant of record. And you just operate with that model. And then if you need to shift things between one or the other, it's a very turnkey solution. That actually goes into the performance optimization piece, too. Different merchants have different payment method coverage and maybe different approval rates and even different effective rates for the profitability in different regions. So what you can do, you're actually empowered then as a game developer. to look at the United States and say, okay, Fast Spring is performing this well, another merchant is performing this well, which one do I want to get my traffic there?
26:30 - 27:00 And then you can mediate and do what's best for your business too. You use Epic for the first million and then you have the other two? Well, I'm not an expert on the Epic one, but I think to use that you have to go through the Epic Games Store. Is that right? oh there's another. like 15 minutes ago, we were talking about creative ways of, you know, sending people from game without getting banned from Apple. I'm pretty sure we're going to get into very creative ways how to mediate all of this.
27:00 - 27:30 So I'm pretty sure it's going to be fine. okay. So, but as a fast spring, like why should people pick you? Are you doing anything else or like what's the value that you are bringing actually to the table? think there's a few reasons FastSpring is exceptionally well-suited, well situated for this moment. One is that we're a 20 year old company. We've learned a lot along that way. We've evolved our processes, our risk model to be best in class. And so we're in a very sophisticated spot for that.
27:30 - 28:00 Another is we have over 3000 customers globally. We have that flexible capacity to scale up and to handle more demand. Bringing on one more customer. inside of gaming or even outside of gaming isn't going to be that transformative to our overall capacity. So we have that ability to bring that on and handle that. Another is that we're private equity backed. We're not relying on a venture capital or some other day-to-day funding stream. We have private equity backed and we're very stable and profitable. And so we're very confident that we're here to stay.
28:00 - 28:30 And the last is that we really value partnership. With us, you're not just paying for a service and getting that return. It's really recognizing that when our customers drive more revenue through their web store or through any fast spring checkout, that's good for them. Like that makes it more profitable for them, but it's also good for us. And so anything we can do to help our customers do that we're going to do. And that extends to rulings like these where it's having someone in-house who can understand and digest these and go out and say, Hey, here's what it means for you. Here's what you need to do.
28:30 - 29:00 And let's make sure you're capitalizing on it so you can grow your business too. So what was your advice to your customers now after the ruling? Like, hey guys, like now you can do so much more. Let's work on this. Like how does that work? Yeah, I think of it from two angles. I'll approach that. One is for customers already doing direct-to-consumer. So that's the more traditional fast-bring customer. Another is maybe game developers we're talking to who aren't quite invested in direct-to-consumer yet, and how they can get started with that.
29:00 - 29:30 For those already doing direct-to-consumer, it's to ramp up. It's to accelerate, push the pedal to the floor, start steering players more into your stores. And that goes back to saying, what tools do you have in the toolbox? Leverage those tools. And let's work together to make sure you can increase your direct to consumer revenue percentage with one big caveat. Like let's keep a very close eye on how Apple reacts to this because they have not reacted yet. They've, mean, they've said they've complied, which they have. They've updated their terms of service.
29:30 - 30:00 They've approved apps that are implementing these new policies. They have to, yes, legally they are obligated to, but they have this appeal incoming and they will, get creative in how they respond in other ways. Yeah, yeah, there's so much money online. And so whether that's in the coming weeks, in the coming months, like we need to make sure that we keep an eye on this and we react to how they react. And we know exactly what we need to do and how to operate within the system.
30:00 - 30:30 So it's operating with urgency, but also it's keeping our guard up and it's recognizing the safeguard. The way that looks in practice is saying, let's not implement anything that we cannot easily revert. Let's make sure that it's not some complete architecture rewrite to have all of our revenue directed off platform. And then a ruling comes down that we can't do that anymore. And so now we have to rewrite everything again, like you're creating this headache in the future. And so you need to plan for these future scenarios in a way that you're not creating this headache for yourself in the future.
30:30 - 31:00 And you're expecting that that could happen, that some kind of injunction or whatever happens and then like suddenly we stopping this for the time? US mate, like there's 15 billion being lost every year potentially for this. Like, yeah. Because like how I see it now is like, okay, so this whole web store thing is gonna, I guess, arrive. I told you, I will be the voice of uninformed people. So let's assume that like, it's gonna be big and investing in it, Apple or no Apple doesn't matter because it's pretty much the future and you want to do it.
31:00 - 31:30 So you let's say do the safe way. which is the one, like let's say Monopoly Go is doing, the Diacon Club way, which is like, as you said in the beginning. And you have that as default, and then you do the aggressive way now because of the ruling. So like go full on and like advertise everything, get as much users there as possible, which by the way, the user will stay there even if the ruling reverts it, if I understand correctly. So you still have the users, even though you can't pump any new users, but hopefully you have put there, I don't know, like 80 % of your paying user, DAO.
31:30 - 32:00 Yeah, exactly. usually. So I guess it's great even though Apple can get it there. But then they revert back to the sneaky way, let's say, the creative way, and you still leave it there because it's still better than nothing. So this is the outcome, if I understand. So you have this two-way street of being more or less sneaky. are you talking about? Yeah, it was a question. where's the question? The question is this is what they should do, like they should build anything now, even though like expecting that this gets reverted.
32:00 - 32:30 I would say that's a possible outcome, but I wouldn't expect that to be the outcome. I think there's like a broad spectrum of outcomes of where we go from here. So one is exactly what you just outlined, Jochub, which is like, this is a temporary world that we're living in and those who act in this temporary world benefit the most. And then it gets reverted down the line and Apple's appeal is successful and that happens. Maybe their appeal is not. Like, I don't know the likelihood of that, but maybe this does become the new normal.
32:30 - 33:00 And maybe even this is like the mild version of the interpretation of these roles. Maybe there's a more extreme future where we just say native payments are game where you don't need to process any payments through Apple and their ecosystem. And instead of a mobile store, you have a store that just pops up and you're still in your game, but it's partied by an outside merchant or powered by an outside merchant of record. Right. And so you just get a pop-up, you do your purchase, you're still in your game. You're just reaping more profit. Right. theoretically that could be within these terms of engagement as lined up today.
33:00 - 33:30 And so those are the kind of things I'm looking out for. It's like, what are the best practices that come about? How does Apple respond to each of these things? And let's just make sure that we as games are equipped to drive forward whichever outcome ends up becoming reality. But I do think there's one also one point there you mentioned, Jakob, which is really important to emphasize, which is that Players that shift over to the web portal, like getting over that initial hurdle is the most difficult part in making them aware of this portal, web store and trusting this web
33:30 - 34:00 store and making that initial purchase on this web store. And if you can get them to do that in this time, even if it does end up becoming a temporary period, there's a lot of value in that because they come more sticky to your web store and that revenue should carry forward. Like this is the store that I need to go there and then make a purchase. That's it. Yeah. eh
34:00 - 34:30 what? Yeah, yeah. think, and so that gets to the question of like, what about someone who doesn't have a web store today? Like how can they act on this? How can they get up and running? And that's where I'd say, yes, like there is urgency to do this, but again, it shouldn't come at the expense of due diligence. Like don't just pick a merchant of record, jump in, build this shop, because you could be introducing an unnecessarily level of business risk by having this merchant that's handling a lot of your revenue in that case. So.
34:30 - 35:00 do that, but also make sure you're equipped to capitalize on this rolling, which means basic things like region detection. Again, this rolling is in the United States, so you need to be able to funnel that traffic appropriately. And then if you want to promote it, like siphon off and segment those users and promote specifically to your United States users so that you're operating within these regulations. So there are these different facets that need to be considered. So then, yeah, like how does attribution actually work on the web store? You said region and then what else?
35:00 - 35:30 mean, how can I be sure that I'm actually sending players from the UA campaigns to the web store so I can earn more money? Hmm. The UA piece is an interesting one. And that part, I think we'll need to see how it shakes out with more of this, this traffic and these rulings, because up until now paid UA to go to the store has been considered, but I haven't actually heard of it used that much in practice because of the cost relative to like the minor incremental benefit, right? Like you might be squeezing a few more percentage points of revenue going to your web store through UA, but obviously UA is expensive.
35:30 - 36:00 so. This is more how you get users. they're retargeting to tell your existing players like, hey, there's a web store. Go there and you could steer them directly there. But that's an expensive way to do that and something I haven't seen much of yet. But maybe with this rolling, we do see more of that. Yeah. So then the question is like, who is actually going to benefit? it game developers finally or merchants of record or yeah, or app, mean, because yeah, it's like, honestly, this is more LTV or more revenue, which then unlocks more UA budgets,
36:00 - 36:30 which again, they like breaks my heart because it's going to be more work for me on the UA side. it really breaks my heart. I'm so sorry for you, let me if you're okay later, man. Yeah, that's what this ruling is really about, is how it affects Matej.
36:30 - 37:00 The beneficiary. So let's, at the highest level, take this ruling as making mobile games more profitable. That's what this does. It shifts the profit portfolio of games and increases the gross margin percentage. And so when that happens, there's a number of beneficiaries to that. Like, yes, the merchants of record powering that traffic will benefit. Yes, the game companies themselves are benefiting by having more profit to do with as they want. And so that has a number of downstream effects, like UA, as you mentioned. UA budgets should increase theoretically as games become more profitable.
37:00 - 37:30 But I think beyond that, innovation should increase because if this does carry forward and this becomes the new state of play, then we'll see the threshold for what a successful game is get lowered a little bit because games are just inherently more profitable than they were before. And so you'll see more innovative games. Yeah, yeah. And so you'll see the green light being given to maybe different concepts that weren't before.
37:30 - 38:00 And I think the other beneficiary here will ultimately be the players because they'll start to see more of these games. They'll start to see more innovation. They'll start to see more sophistication. And even the game developers themselves, I mean, I don't know exactly how much of this will trickle out and come down and result in maybe more roles or anything, but at the end of the day, when games become more profitable, it benefits the entire industry. Yeah, let's hope it's going to be actually beneficial for everybody in the gaming industry. Yeah, yeah, except Apple.
38:00 - 38:30 Should we close out there Chip? Do you want to do any last plugs before we wrap this up? I do, and let me also say some things to look out for, I think is a kind of a look forward with this. One is with the DMA. So the DMA had very similar language, but it ended up in this place where Apple complied, but had those different stipulations and scare screens, and pre-install fees. And so they were fined just a couple of weeks ago, 500 million euros by the EU for not complying with the DMA. And so...
38:30 - 39:00 They have 60 days to respond to that. And so we're in this kind of back and forth with the DMA. There's a possibility it looks very similar to what this ruling had in the US. So keep an eye on that, and we'll see in Europe if the terms change there as well. In the US, let's look and see how Apple responds. Like, what are their policy changes that they implement? Because I do not think this will be the last shoe to drop on this. Globally, there's a ruling called the Smartphone Act in Japan, which has very similar rules. similar phrasing to the DMA and this ruling in the US in terms of opening and allowing steering to these web stores.
39:00 - 39:30 And that's to go into effect by the end of this year. And so we are seeing this pop up very much, but it's on a piecemeal geographic basis. And so it's important to make sure that you're aware of this so that you can shift and reap the profit whenever those happen. So a lot more to come just at the beginning here, but it is an exciting point. So it's gonna happen also in Japan, that's interesting. But I guess it also just applies to Japanese gaming studios because only Japanese gaming studios came successful there. Yes, yeah, absolutely. So I guess in closing, I would just say we're at a new balance of power in the mobile ecosystem.
39:30 - 40:00 Things have really changed significantly in the last week. It's empowering game developers more than ever before. But this is also a very quickly evolving landscape, and we're going to learn a lot more in the next few months. So it's an exciting time. Awesome. Thanks Chip for coming. It was pretty cool. ah Very good, yes. Numbers as well, how much money you can actually earn on the web shops and how much money people are making on the web shops.
40:00 - 40:30 So it's always good to hear numbers, what you should do. And thanks a lot for listeners. They're around LA, May 19. Definitely come to the party, link in the show note. If you want to reach out to Chip, I'm gonna include his details as well in the show notes and then see you next time. Thank you very much. Cheers. Bye bye. Ciao.