Fortnite has created an unsurpassed fan base with kid-friendly multiplayer action that can be played on most modern devices. The developer of the video game uses this popularity to challenge one of the most prevalent business models in the mobile industry: the App Store.
Epic Games Inc. recently said it will not distribute Fortnite through the Google Play App Store. Instead, Android users must visit Fortnite's website and disable some security features on their phones to complete the download. The move threatens Google and highlights the weaknesses of its Android operating system, especially compared to Apple's offer, analysts said.
Outside of China and some other Asian countries, most mobile-related companies are listing their creations in pre-installed app stores on Android phones and iPhones. In return for providing a huge potential audience and handling user identity and payment details, Alphabet Inc. Google and Apple are taking 30 percent of generating revenue games. They're pulling billions of dollars a year out of the package.
Fortnite is already so popular on PCs and other devices that Epic Games decided it did not need the help of Google and decided to keep that 30 percent to themselves. While Fortnite is a special case, some analysts believe that it represents a worrying precedent for Google and shows that Android may be less lucrative than Apple's iOS operating system.
Fortnite's move may well be a harbinger of a possible shock to the current situation of Google Play, which charges 30 percent in taxes on game developers, "said Barclays analyst Ross Sandler, Monday in a statement to investors Commenting and Epic did not respond to a request for comment.
Google will invest around $ 1
While the standard Fortnite game is free, it generates revenue through in-app purchases for additional items such as outfits and "emotes" or character gestures. The app version of the game, in which cartoon-like characters on a stormy island struggle to the death, generated gross revenue of $ 109 million on mobile devices in the second quarter. This is from a Bloomberg Intelligence report citing SensorTower data. Apple would take about $ 30 million of it based on its typical revenue share deal. That's $ 30 million that Google will not see.
Josh Olson, an analyst at Edward Jones & Co., says that the absence of Fortnite from the Play Store goes beyond the company's finances and Google is behind Apple's younger gaming audience. "They want to win the content struggle," Olson said.
Even if Google could lure Fortnite into its Play Store, the fragmented nature of Android would limit the Internet company's revenue from the game. A fraction of Android phones have the latest version of the operating system, which means that many devices do not have software that can run complex games like Fortnite. Fortnite is compatible with about 10 percent of Android phones or 250 million of the 2.2 billion users, Barclays & # 39; Sandler estimates. In contrast, most iPhones have the latest iOS version, making them better equipped for demanding applications.
"The vast majority of installed Android devices are low functionality mobile phones and in markets with low per capita income (hence not spend as much as iOS users)," Sandler wrote.
However, the analyst may be more concerned. Most mobile game manufacturers can not ignore the Play Store, but in Korea and Japan, some app developers and messaging services like Line and Cocoa bypass the traditional app store model, even on certified Android phones, Sandler said. These companies already have the identities and payment details of the users and can even distribute and promote mobile games. So you can make your own in-app purchases.
This approach does not exist in the West, but it could spread beyond Asia, Sandler said. Following the European Union's recent anti-Google antitrust case, the company had to stop making phone manufacturers preinstall their search engine and the Chrome web browser on the Play Store.
"It's possible that we've seen Facebook because of Android OEM contract restrictions, and Amazon or many of the Chinese megacaps are trying to get into the market for distributing third-party apps, and they're picking on the economics of Google Play back, "Sandler wrote. "This is a development that we will be watching closely over the coming months."
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Bloomberg's Mark Bergen contributed.
Washington Post News Service (DC)
8 / 11/2018 1:50:54 PM Central Summer Time