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Roblox pays 26% of its revenue to Apple/Google for payment processing
- bemmu 6y agoI make games on Roblox. When a user spends $1 in your game, you get to keep about $0.25 of it ($0.70 if you spend the funds to buy other stuff on Roblox). Basically 1/4 is the Apple/Google cut, 1/4 is Roblox profit, 1/4 is what they say is used to run servers etc. This is not a complaint. I’m a big fan of the platform and think they provide huge value to developers. Just thought some might find the economics of it interesting.
- crispyporkbites 6y agoHow much are your games making? How hard are they to create vs a web app? Are most of the games made by professionals or just kids looking for more robux?
- bryanrasmussen 6y agoFrom my perspective, as a programmer dad who looked a bit at the game making situation in roblox about a year ago, I definitely got the feeling that games were not made by professional programmers but my feeling is also that has started to change in the last year. My feeling was basically based on the tooling for the platform being awful, and some script I saw that was being passed around as boilerplate for new game development that was one of the biggest plates of spaghetti ever made! My feeling on it changing is stuff like this article https://medium.com/@OverHash/roblox-development-in-visual-studio-code-b3010c3d0181 https://medium.com/@OverHash/roblox-development-in-visual-st... and other people doing things about sharing workflows and tooling improvements that reminds me of when some professional programmers first started to write JavaScript a long time ago. But that's just a feeling I have for the situation, from the outside looking in.
- robocat 6y agoFantastic article from the inside looking out: https://zeux.io/2020/08/02/eight-years-at-roblox/ https://zeux.io/2020/08/02/eight-years-at-roblox/
- anonymoushn 6y agohttps://developer.roblox.com/en-us/articles/developer-economics https://developer.roblox.com/en-us/articles/developer-econom... Wow, that's crazy. If I understand correctly, someone can buy 10,000 Robux for $99.99 and spend it all in your game. You'll get 7,000 Robux and you can cash them out for $24.50
- maratc 6y agoSomeone can spin it as "A gaming platform that takes 50% platform fee complains about app platforms taking 25% platform fee".
- hayksaakian 6y agoThat's the power of monopolizing a distribution channel
- maratc 6y agoOne can say that it's the power of creating a distribution channel where none has existed before.
- imtringued 6y agoIt's not possible to create an alternative store for iOS or Roblox.
- lotsofpulp 6y agoTheoretically, one could spend the requisite money and years to develop a competing device and software, like Apple and Google did to RIM, Microsoft, and Nokia.
- jbverschoor 6y agoYou forget payment processing 3% Sales tax, ca 20%
- gamblor956 6y agoSales tax in CA is not 20%. Also, CA does not currently tax sales of digital goods (though most other states do). If you meant Canada, then Canada's HST is similarly less than 20%, though the exact rate depends on province.
- jbverschoor 6y agoca as in circa :-)
- timoth3y 6y agoFWIW, that is about the same amount the developer got to keep in the bad old days when games had to be packaged and shipped to retail stores. Of course, the publishers and distributors and retailers took a lot more risk than the AppStores and actually had to hold inventory. It's probably just a coincidence, but it's interesting we've come full circle.
- swebs 6y agoHow much goes to Uncle Sam?
- supernova87a 6y agoWhy not criticize the credit card companies too? They take a $0.25 cut for every $1 purchase.
- lanzelot 6y agoI think you are wrong here. Do you have any data to back up this claim? edit: I was misled by doing a "25% for everything" in my head, sorry.
- MattGaiser 6y agoStripe charges 2.9% + $0.30 per transaction. https://stripe.com/en-ca/pricing https://stripe.com/en-ca/pricing So for a dollar, it is a 32.9% charge. I assume that there are other higher and lower priced options and that Google/Apple would get a bulk discount.
- Dylan16807 6y agoFor small transactions you can easily get a rate of 5% + $0.05 If you're paying a 1/4 to 1/3 cut for $1 purchases, that's basically on you, not the credit card companies.
- m00x 6y agoLet's stop using $1 as a bar since it's extremely misleading. The lowest purchase of Robux is $5 USD, which would make the charge $0.46, or less than 10%. This is also Stripe's added-on fee. Large players also get very little interchange fees charged onto them because they can negotiate. https://www.businessinsider.com/heres-how-much-walmart-pays-in-interchange-fees-2014-3 https://www.businessinsider.com/heres-how-much-walmart-pays-... Walmart pays very little interchange, I can also assume Google/Apple negotiated good rates.
- ZephyrBlu 6y agoReally weird how the example was $1. Micropayments is a common problem that is yet to be solved as far as I'm aware, so choosing the worst possible example to paint CC/payment processing companies in a bad light is extremely disingenuous.
- crispyporkbites 6y agoI own an e-commerce business. We offer PayPal and credit card checkout - 75% of users choose PayPal. When we buy a lot of our products to sell, we get lots of them from small businesses in lots of different locations, many of them also offer PayPal to us (even on wholesales transactions), because it gives some level of comfort with international transactions. Because we often have cash in our PayPal account and it’s cheaper than paying our bank to send internationally, we often pick PayPal. So PayPal get a cut of the wholesale price and a cut of the sales price, on literally the same goods. Some of our customers create their own products from our products and use PayPal to sell them on again, making it a 3x cut for PayPal. Being a payment processor and solving that last click purchase problem / apps store is incredibly lucrative.
- pbourke 6y agoI help out with my wife’s online shop and have noticed the same thing. Personally, if I don’t see an obvious co-branding for Stripe or another trusted service I will usually pick PayPal over a naked credit card field. Who knows what the heck is going on in the backend. People are still doing stupid shit like storing untokenized cards in 2020. Edit: talking about smaller merchants in case it wasn’t clear.
- lotsofpulp 6y agoI’ll choose the naked credit card field to give the merchant more money since I’m not responsible for any fraudulent charges either. I know it costs me time and money to have to dispute charges, but I’ve never had to in 15 years of card usage, and the couple times my card number was attempted, the bank’s system had already flagged the transaction for me and asked me to verify. Basically, I see no value in PayPal to be in a credit card transaction. However, I wouldn’t do the same for an ACH/debit card transaction.
- donmcronald 6y agoAren’t the fees for foreign exchange rates brutal with PayPal? Why not just get a couple prepaid credit cards and use those? The only way I can see the benefit of PayPal is if you have it linked to a credit card that you use like a short term 0% interest loan.
- m00x 6y agoIt seems crazy to me that they're allowed to do this. Imagine paying 30% more for software on your computer. It's pretty obvious that very few competitors could pierce the phone market, even less the phone app store market. At least on Google phones you're allowed to jailbreak it and install whatever you want if you're a power user, but you can't do this on Apple's phones. They should allow people to download and install APKs.
- bestnameever 6y ago> Imagine paying 30% more for software on your computer. That is not really hard to imagine. Most of what we purchase has markups.
- Skunkleton 6y agoI wonder how much major apps save in marketing cost by being on app stores? I’m always shocked at the cost of marketing.
- bestnameever 6y agoI think that is a difficult question to answer as so much has changed but there is value to being listed on the app store just as is there is value on having your product on a birck and motors shelf.
- michaelmrose 6y agoMerely being available on the app store doesn't meaningfully constitute marketing and there is absolutely no reason to suppose that they saved anything whatsoever. I know little about the apple store but there is a lot of content on the play store with most of it bring drek and the search is terrible.
- toyg 6y agoZero. Appstore gives no exposure whatsoever to 99.99% of the apps and games it contains. Say you are a book publisher and a library buys your book and stocks it on a shelf in their basement - do you think you’ve saved anything in marketing?
- RestlessMind 6y agoFrom Roblox's own website (https://developer.roblox.com/en-us/articles/developer-economics https://developer.roblox.com/en-us/articles/developer-econom...), the game owner's share after all of the other costs is only 24.5% and Roblox also takes a cut of 24.5%, compared to an App store portion of 25%. So essentially, Roblox charges as much as Apple/Google for their "platform fee". Who decides what is a right amount of "platform fee" in either case?
- bestnameever 6y agoThe platform gets to decide what the right fee is.
- eruleman 6y agoThe market should decide what the correct fee is. Unfortunately, there isn't a free market in payment processors for phone apps as there is no choice, and therefore no competition.
- deleted 6y ago[deleted]
- soulofmischief 6y agoIf I could play Roblox on Android with a direct APK and bypass Google Play, and another 25% of my money went directly to the Roblox developer I'd do it in a heartbeat. But with Apple I don't even get that choice.
- imtringued 6y agoWhy would you care? You will still spend the same amount of money.
- PaulRobinson 6y agoIf cost were the only factor in a purchase decision, 90% of the economy would cease to function.
- bird_monster 6y agoI worked for a mobile games publisher in my last job. 30% platform fee, followed by a 30/70 split on revenue (70 to the dev, 30 to the publisher). It's a tough market. Combined with less profitable ad monetization and paid installs being less predictable - it was not always a phenomenal business model. You had to really hit to make money.
- forest_dweller 6y agoHow much revenue wouldn't they have if they weren't using those services? It is really easy to say "that's extortion" but I personally would take the extra revenue over not having it at all.
- slezyr 6y agoYou can do so for Android and that's a valid question. However, you can't side-load apps on Apple devices.
- donmcronald 6y agoAndroid isn’t even really a fair comparison because Google really, REALLY strongly recommends you don’t toggle that setting which might cause you’re phone to explode in your hands. You’ve been warned. Are you really sure you want to roll the dice and sideload? Wait! Did we tell you how dangerous this is? Are you absolutely positive? Oh no! This is your last chance to save yourself. Do you want to? Yes/no?
- forest_dweller 6y agoI don't agree. It is a fair question to ask how much value do both stores contribute to their business. If Apple and Google provide more value to the business than they take away then a lot of the arguments about how fair these charges are, melt away. When people pretend they are arbiters of what is and isn't valid because they don't consider it fair it stops any avenue of investigation because they consider it forbidden. As much as I don't like Apple or their store, if they are going to provide value I am going to work with them. Pretend that for a minute that apple gave me a 10 fold increase on revenue. 70% of a 1000 is still more than 100% of 100. Also number of people sideloading an app on Android I would wager is negligible compared to store purchases and could be considered to be irrelevant. So again the question is how much of their revenue came from those stores and how much value does that add to the business?
- tinus_hn 6y agoThey better not start recording music
- stewbrew 6y agoInteresting that Apple/Google don't get sued for this. (I assume other stores like Amazon demand a similar amount.) It obviously is a result of a monopoly and the lack of competition of software stores. I'd assume the price to go down if there were a real competition. On Android, you can at least use other stores if you want to take the risk. But on iOS?
- thekyle 6y agoBoth Apple and Google are currently being sued for this by Epic.
- simonh 6y ago>It obviously is a result of a monopoly That contention simply isn't reasonable. Apple was charging exactly the same right form the start of the store, when a lot of pundits and industry analysts were still saying the iPhone was a dead end. You can't accuse them of abusing their power as an industry whale to charge more, when they are charging exactly the same as they were when they were a minnow, and are still charging pretty much the same as every other comparable business. That just makes no sense at all.
- CPLX 6y agoThe contention is absolutely reasonable. It’s in fact currently the subject of major litigation from Epic Games, and there was also a notable US House report on the same subject. That doesn’t mean it’s settled, or that the opposite argument isn’t also reasonable, but it’s certainly a valid controversy.
- deleted 6y ago[deleted]
- simonh 6y agoJust because it’s a controversy doesn’t necessarily mean it’s a valid or reasonable one. People make controversies on ludicrous grounds all the time, especially in the fake news era. If a local restaurant charges $5 for a milk shake which is very popular, grows to become a National chain and still charges $5 for their shakes, it is not reasonable to claim that they are only able to charge $5 due to their market power. I don’t care how many people disagree with me, I will continue to claim they are clearly full of it. That doesn’t mean the now National chain isn’t doing other things that are anti-competitive, or that their other business practices must be ok, but clearly the market has decided the shake is worth $5.
- 627467 6y agoImagine if the mall where you rent your store takes 30% of your revenue (plus a negligible fee). Now think of visa and mastercard that you use to charge your customers: imagine them also taking another 30% cut. That's basically what is happing here. Many here pretend that Apple, Google, MS - first layer platform hegemons - and Roblox, unity, Uber etc - second layer platforms - charging 30% is fair because it's result of competitive market dynamics. But there's no true competition between these platforms. Specially when you consider that the longer a user is in a ecosystem, the costlier it is to move away from it.
- maratc 6y agoThis depends on one's definition of "true competition". Specifically, what Judge YGR said on Apple/Epic case seems very relevant: > “Well plaintiffs always want me to define relevant markets as narrowly as possible. It helps their case. And defendants always want me to define markets as broad as possible, because it helps their case”
- deleted 6y ago[deleted]
- andruby 6y agoIf that 30% includes the rent and maintenance of your store, as well as the checkout employees. And imagine that you are selling goods with almost zero marginal cost. Does it still sound that bad? Anyway, metaphors fail to help understand this situation in my opinion.
- nirui 6y agoProblem is, the maintenance was for the entire mall with only very little done to your store, and the checkout employee that you mentioned can only do the one job with probably of taking your money as hostage. Also, in a real word mall, the rent and maintenance fee will not increase as you makes more money. Yes, they can try to sell you a better location for a higher price, but it's a mutually beneficial sell (You get a better location from the sell). My point: 30% was too much for what Google/Apple is providing. Let me also add: > And imagine that you are selling goods with almost zero marginal cost First of all, developing a product costs money, you need to pay everybody including yourself. After all that, advertising, user support etc all costs money. So even if Google/Apple wants other people to treat this service as a mall, it's not a mall, they don't even provide lighting, long bench, air conditioning and free toilet (all of these are inescapably expensive to maintain). Instead, it's more like a searchable list + content delivery service where people can search the item and then download it. They should design their fees more close to that. Now, imagine saying this to your user: "Hey dear user, yes, that 30% increase in price won't give you any advantage compare to those who directly purchased it from our website. Yes, it's expensive just because you brought it from Google/Apple, nothing else, because we end up receive the same amount of money.... yes, 30% every month for your subscription, and this is the only approved way for Google/Apple to allow us to provide our service to you."
- kingludite 6y agoIt seems we've been here before with fees for (national) bank transactions.
- vemv 6y agoCan one simply charge more, to compensate totally or partially for a perceivedly unfair "tax"? "Charge more" is somewhat common advice. A high-quality business that played its cards well might get away with it. One generally doesn't want to play a race to the bottom anyway.
- lotsofpulp 6y agoIf a seller has the ability to sell at a higher price, they will, regardless of their expenses. If the maximum possible sale prices do not result in revenue exceeding expenses, then the seller will go out of business.
- drexlspivey 6y agoYes it can. Youtube Premium is 16 euro through apple store and 12 euro if you bypass it.
- delegate 6y agoIt's not just payment processing. A app store offers reliable hosting of the game binaries and provides a versioning and upgrade mechanism on a platform with billions of user accounts. Keeps the user's OS and device drivers up to date, maintains the OS and develops the hardware that it runs on. Maintains the developer tools, compilers, documentation, so that your binary can run on the device's OS. These things are expensive. I don't know how much exactly it would cost a company like Roblox to develop and maintain all the necessary tools and services provided by the app stores in order to run on all those devices. Probably a lot. In fact, if they could do it, they would be Apple or Google :). Whether it's a lot more than it should be, I don't know, but it helps to keep in mind that the app store cut is for a lot more than just payment processing.
- dwild 6y ago> Keeps the user's OS and device drivers up to date, maintains the OS and develops the hardware that it runs on. That's a license fee that you pay once you buy the device. It shouldn't be buying applications for it that fund it. In fact considering how little older phones get supported, it's pretty meaningless to say that it's to keep devices drivers up to date as they aren't ;). > Maintains the developer tools, compilers, documentation, so that your binary can run on the device's OS. Again, it's the customer that pay for it once he buy the device. > A app store offers reliable hosting of the game binaries and provides a versioning and upgrade mechanism on a platform with billions of user accounts. It doesn't cost 25% to host game binaries. I'm pretty sure Roblox host it all on Windows for example... By the way, on Android, the license fee isn't for the Android system, it's for the Google Play services specifically. So that 40$ you paid, it's going toward the shop already.
- ryanlol 6y ago> In fact considering how little older phones get supported True for android devices, not for iOS.
- cblconfederate 6y agoHas this cost not gone down a single percent in 15 years?
- rickyc091 6y agoAs a seller on eBay, this is my seller's fees for YTD. 24.8% of your total sales. I'm not a fan of it, but I do admit they give me the reach and ease to customers.
- munawwar 6y agoMore importantly, Apple doesn't allow using any other payment processor other that their own. Even if the product/service you are selling is mostly outside of apple ecosystem (like email or cloud storage or something like that, where web users pay only 2-3% payment processor fee), Apple won't allow you to use your existing payment processor via a link to your website. If that's not anti competitive behaviour then what is? Hope EU legislators take action soon.
- bigbubba 6y agoIsn't Roblox basically Second Life, but specifically for kids? It's pretty messed up for it to have in-game payments at all.
- PoignardAzur 6y agoYeah, every time I look at Roblox I get a bad taste in my mouth. The game's business model is basically "like these Korean whale-milking RPGs, except we're outsourcing the development to 12-yo kids". The games themselves are usually ports of popular games (Counter Strike, Day Z, Minecraft, etc) where the quality is... well, frequently amateurish, for obvious reasons. I suspect the reason these ports are so popular is that a huge portion of the audience is made of kids who can't convince their parents to buy them eg Call of Duty, so they play the Roblox version instead. Which is all fine and good when we're talking about Little Big Planet levels or Minecraft maps, but becomes kind of exploitative when you see that their creators systematically use classic free-to-play tactics to get other players to fork over money. Money which, of course, is wrapped in an in-game currency designed to make players not realize the true value of what they're spending. And since there's very little curation, almost no dev involvment whatsoever, and the creators are 12-yo kids who are amateur game designers at best, the idea that players get their money's worth is really dubious. Honestly the whole thing feels like a pyramid scheme of sorts, where kids will be lured by the promise of making money by selling in-game items to other kids, and therefore will try to spread the game to as many people as possible in the hope of making more sales. (The Unity Asset Store feels similar)
- floatingatoll 6y agoThis title is silently reframing the issue to change the discussion in a way that favors the viewpoint of the poster. “for payment processing and worldwide store distribution” is a more accurate headline, and specifically highlights that they’re not just paying a payment processor. This is, however, more complicated and no longer permits the easy comparison with card processing fees, and so I see many headlines show up that try to dodge this. It’s fine to disagree with app store fee structures, it’s fine to disagree with how they manage their distribution models or handle approvals or whatever — but it’s totally uncool to lie-by-omission that it’s about credit card processing fees alone.
- jzl 6y agoI thought Robux could only be purchased outside of iOS, cutting Apple out of the loop. Can you buy Robux with IAP these days? Hmm, maybe I'm thinking of the fact that you can't redeem a gift card on iOS, you have to go to a desktop to do that.