IDFA and Apple legal battles actually mean 60% larger audience for game developers

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During the panel “The Apple Ecosystem Challenges”, presented by Xsolla at GamesBeat Summit Next, panelists discussed how changes to the Apple App Store ecosystem offer challenges, but also potential opportunities. , from the depreciation of the IDFA to the various legal battles of Apple.

How a class action lawsuit opens up the market for developers

It all started when Apple and Google decided to remove Epic from their stores after Epic added a link in Fortnite asking players to pay for them directly, rather than paying through in-app processing. Epic was set to file a federal lawsuit, accusing the two of antitrust violations under the Sherman Antitrust Act. The court ruled in favor of Apple, explained panelist Rick Hoeg, host and founder of Virtual Legality on YouTube, and in favor of section 3.1.1 of Apple’s guidelines for app developers, which prohibit metadata, links and developer calls to action. And therefore, the 30% fee that goes to Apple is still relevant. But developers have options, says Chris Hewish, president of Xsolla.

“What a lot of developers and publishers are doing now is creating online stores that are essentially stores for their games, or a version of their games on the web that links to the app itself, in the App Store, in the background, ”he explained. “They drive people to that online store and monetize them there. By doing it this way, at least from our point of view, they are paying between 7-10% versus a 30% fee. “

Developers like Supercell have also implemented reload pages, and companies like Nexters and Scopely have created online store versions of their games. This is a strategy that has been around for some time, where large companies reach out to their players through Discord or other online ways to direct them to these owner stores.

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That has changed since Epic’s ruling against Apple and subsequent changes to the App Store guidelines last Friday. In response to a class action lawsuit brought by another developer, Apple removed Guideline 3.1.3, which prohibited developers from using information or contacting players based on information they obtained in the app, and Directive 5.1.1, which limited how developers used data. Now, mobile developers can collect player information in the app and then use it to contact players and direct them to these alternative stores.

Small publishers and mobile developers have now seized the opportunity, which saves them an aggregate saving of about 20 cents on the dollar, Hewish said.

“What we’re not seeing yet are people actually putting new payment systems in an app or creating in-app ads that drive users out of the App Store,” Hewish said. “It remains, from our point of view, a no-go zone.”

“But one thing that has been largely misunderstood are these calls to action – if they implement a 3.1.1 change right in the app, push a button and spend the money, [that] is probably still accumulating some amount of fees for Apple, ”noted Hoeg. “The court was quite adamant that Apple has the right to obtain a certain amount of money for the use of its IP.”

But regardless of a developer’s choice, whether in store or going on their own, customer support, tax handling, VAT compliance, chargebacks, server and platform fees – shape, etc., always come at a significant cost, Hewitt said. Somewhere along the way these have to be paid for.

“The immediate opportunity is for people to realize that there is a bigger world in which to do business,” he said. “Putting your game on the web and driving business there through Google Ads or whatever, through more personal relationships with your players, gives you access to an audience that is up to 60% larger when you start out. to look at many other territories. around the world.”

Why IDFA is making creativity the new king

“It has nothing to do with privacy,” said Brian Bowman, CEO of ConsumerAcquisition.com, of Apple’s IDFA changes. “It has to do with Apple’s loss of control over App Store merchandising.”

If privacy was really their concern, he claimed, they would have put app tracking transparency on their own apps when they launched 14.6, and added the pop-up asking if the consumer was okay with it. to be followed by its Apple products, instead of calling it ‘personalization’.

“It’s Apple that’s exercising monopoly capabilities because they can,” he said. “They are clearly on their way to trying to launch another ad network. They failed twice. I strongly assume that they will fail a third time unless they are willing to build something stylish and allowing people to target with efficiency that has been lost.

Overall, IDFA had an impact on both targeting and measurement, which had a pretty big impact on the effectiveness of e-commerce and user acquisition. The third quarter is the first quarter where companies have seen the full impact of the measure. The more an advertiser focuses on direct response advertising, the greater the financial losses seem to their business. Most businesses expect the fourth quarter to be just as chaotic, with less efficient spending: more money on ads to get the same number of sales, without enough data to effectively measure sales as it does. they get.

“Over the past decade we’ve all built our models, our lifetime value models, the way we analyze and work on things, to accommodate that kind of deterministic certainty,” Bowman said. “When that is taken away, very quickly the whole industry has to turn up and figure out how to capitalize on it.”

The answer will be contextual advertising, Bowman says.

“Unity and AppLovin have a good chance of growing because of this for two reasons,” he says. “First, they’ve been contextual for years, and second, everyone’s scrambling to try and reclaim the lost effectiveness from some of the other channels, so they’re exploring these new guys in a way they can’t. “Not before. Now they’re very focused on that.”

For Bowen, the way out for developers is clear.

“Creation is king now,” he said. “Since algorithms have fundamentally changed, the last lever you have control over is to make better creation. It is obviously very difficult to do.

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