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Epic Games App Store Account Termination Spells Monthly Revenue Loss of $26.7M

Epic Games App store could blow out of proportion if the company doesn’t restore or upgrade to Apple’s policies.

Epic Games could lose up to $26.7 million American dollars in monthly revenue due to App Store termination. The revenue loss is a direct impact of Apple’s decision to terminate Epic Games App Store account following the ongoing tussle on Fortnite. Epic Games is removed from the App Store, which means it is longer available for access or download from any iPad or iPhone devices.

Everything was hunky-dory for mobile gaming publishers till Apple dropped the IDFA bomb. And, it has panned the business continuity plans of many egaming / mobile gaming companies unwilling to relinquish control to the App Store. The result, they are staring at the risk of getting their accounts terminated with immediate effect.

Online trading and financial education platform  Buy Shares has made this startling revelation on the recent Epic Games App Store violation announcement.

Earlier, Epic Games’ founder and CEO took to Twitter to explain his company’s position in the ongoing Apple-Fortnite issue.

This is what he posted on his official Twitter handle:

Before termination, App Store accounted for Epic’s highest revenue.

Recently, Jonathan Harrop (Senior Director of Global Marketing & Communications) of AdColony spoke to me about the ways Apple’s policies could impact game publishers and hamper their monetization strategies.

Jon said –

“What started as a public flaunting of Apple’s rules and the swift removal of Fortnite has quickly expanded into a legal complaint and a 1984 homage in-Fortnite movie asking gamers to resist Apple’s policies.

This has potentially painted Apple with an anti-consumer brush for many dedicated gamers, exposing a lot of the behind-the-scenes of the App Store business to consumers who have so far been mostly ignorant.

Apple’s safety and control value proposition for the App Store is combined with their recent hard stance on privacy for mobile developers and advertisers under iOS 14, reinforcing a level of control over the App Store ecosystem that has so far been implied more than enforced.”​

Buy Shares found out between January and August this year, Epic Games’ highest revenue was from the App Store at an estimated $191.42 million compared to $101.48 million from Google Play.

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Mike Woosley, COO at Lotame, explains the bigger picture in a very philosophical manner.

Mike said, “I’m not at all surprised Apple delayed the user certification process for IDFA. This change will do a lot of harm to the app developer space and to independent publishers. Because Facebook was able to frame the issue in terms of the harm to its media network partners, and not itself, that put a lot of pressure on Apple.

Clearly there has been a lot of anti-trust pressure bearing down on the “walled gardens” anyway – on multiple continents – forcing the big guys to be on their very best behavior. Apple’s very public feud against Fortnite is also starting to put a lot of pressure on Apple. It’s being framed as a David vs. Goliath story. This was turning into too much negative attention for Apple.”

Activision Blizzard had the highest capitalization of $61.99 billion

Based on Sensor Tower data Buy Shares has determined that the App Store accounts for 65.46% of all in-app purchases globally in H1, 2020. Buy Share’s estimation, therefore, filtered the cumulative revenue for Fortnite on Google Play and Apple App Store by using the finding of 65.46% when comparing Google Play and App Store revenue.

The projections reveal that Epic Games will potentially lose an average of $26.7 million monthly in revenue after being booted from the App Store (by average revenue data from January 2020 to August 2020).

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The research also overviewed the market capitalization of the leading game companies. From the data, Activision Blizzard had the highest capitalization of $61.99 billion which is at least three times more compared to Epic Games’ $17.3 billion.

The Buy Shares report also highlights contributors to Epic Games’ recent surge in market valuation. According to the report:

“Epic Games is among companies that spearheaded the boom in the gaming industry during the coronavirus pandemic quarantine. Consumers turned to interactive entertainment like games to pass time. The spike in Epic game valuation was also due to the impact of the coronavirus pandemic.”

With the deletion of Epic Games’ App Store account, the company has warned that its future is at stake.

IDFA is a stroke of Genius

Mike added, “The irony here is that Apple actually invented the “IDFA”, and it was a stroke of genius. It paved a path for phones that was much cleaner than the web-based cookie. The cookie is horrendously inefficient, triggers billions of expensive sync-ing transactions, and doesn’t work very well on its best day. IDFA provided a clean, inexpensive, static, unitary ID for phones that could be used by the industry.

A greater irony: IDFA is a great tool for privacy already. The holder of the phone can either universally block the ID, or reset it: the consumer has all the power. The only thing Apple has not done is to enable the user to block IDFA per app (something you can already do with alerts and other communications related to apps).

It’s a very easy fix. If Apple would make that small change, consumers would achieve comprehensive control, and nobody anywhere would even be talking about it.

The issue is that Apple knows that nearly all consumers would ignore an app-specific IDFA blocking tool as they do the tool it already provides. It goes to that great conundrum that the consumers really just don’t care that much, so Apple has to care for them. Forcing the app providers to collect this specific permission achieves that effect. Ultimately, the more that Apple can constrain the ability of third parties to make money advertising on its platform, the easier it is for Apple to extract it’s own economic rent from the gaming ecosystem. At its core, that’s what this is really all about.”

Meanwhile, Apple announced its massive role in the US mobile app DevOps job market. As per its latest official announcement, the App Store economy directly supports over 2.1 million jobs across the United States, even during the ongoing pandemic crisis and Fortnite tussle.

Since April 2019, the iOS app economy has created nearly 300,000 new jobs. App Store is not only creating stable work opportunities for Americans of all ages even as COVID-19 but also continues to support non-business initiatives for the underprivileged communities in the country. Developers nationwide — including companies such as Caribu, H‑E‑B, and Shine — have adapted their businesses to make sure they can keep supporting their customers during a challenging time.

App Store is heavily investing in apps for the various target audiences, including those demanding healthcare and lifestyle, online food delivery, e-commerce, educational programs and so on. The app economy in the US is expected to create more revenue and jobs for app developers and publishers in the future.

US map indicating distribution of iOS app economy jobs across 50 states.
US map indicating the distribution of iOS app economy jobs across 50 states. [source Apple Newsroom]
Apple stated in its official press release:

“Apple employs over 90,000 employees across all 50 states. The company is on track to fulfill its commitment to contribute $350 billion in the US over a five-year period. Apple also supports 450,000 manufacturing and supply chain jobs through its work with 9,000 American suppliers.”

Do you think Epic Games App Store account termination will deter global app developers and publishers from leveraging Apple in future? To share your insights, please write to us at news@martechseries.com

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