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Fortnite’s cash cow is Playstation, not iOS, court documents reveal
- Jyaif 6y ago> the game earned more than $700 million from iOS customers over the two years before it was pulled by Apple I'll save you the math, 30% of $700 million is $210 millions. $210 millions of pure profit (the bandwidth is essentially free). It's insanity!
- tedunangst 6y agoHow much profit did Epic make on their $490 million cut?
- croon 6y agoYou mean on their product over every other product on the appstore? Compared to the appstore over.... nothing else on that platform. One is profit from a product, one is profit from capture.
- teruakohatu 6y agoAt $100 million/year of almost pure profit it is almost a business unit of Apple in and of itself.
- ZephyrBlu 6y agoEh, I don't know. I think Apple's profit is in the tens of billions. On that scale, $100M/yr is peanuts.
- Retric 6y agoAt a minimum their paying over 2% in credit card fees so that’s another 14+ million in expenses. However, it’s also clear their fixed fees favor independent developers at the cost of major companies. So, finding their actual profit is more complicated than just a fixed percentage of revenue.
- cinntaile 6y agoDo companies the size of Apple really pay 2%? I'd be surprised if they don't have special, cheaper rates that they contractually agreed upon.
- dangrossman 6y agoThey probably pay some fixed markup over interchange, e.g. "cost plus" pricing, which means it'll be over 2% for some types of credit cards still. Even Apple is not going to get their processor to take a loss on charging cards. Top rewards cards pay out 2% or more as cash back, so the cost to charge that card is going to be over 2%. Charging a basic checking account debit card, on the other hand, can be as low as 0.05% plus $0.21. For an average card mix, their processing cost averaged over every transaction is probably under 2% however.
- Retric 6y agoEven 0.05% + $0.21 >= 2% on any transaction of 14$ or less. I am not sure of the mix of transactions their dealing with but sub 2% seems unlikely, when freemium games average transaction is ~14$.
- martin_bech 6y agoUS Creditcards are crazy... A completely normal creditcard fee in Denmark is $0.1 + 0.19% Taken from this official slide https://images.ctfassets.net/r8xjjnzwpfxs/3lLnB85SDDj5FTDmzYsgXF/bad07002e77d047a685b4a707923b96d/Dankort_Prisliste___vrig-handel_01-02-2018.pdf https://images.ctfassets.net/r8xjjnzwpfxs/3lLnB85SDDj5FTDmzY...
- cinntaile 6y agoI thought the main reason for this is because there are a lot of lucrative cashback regimes in the US? I assume Denmark doesn't have those.
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- ISL 6y agoSurely maintaining first-class hardware, software, and marketplace ecosystems has at least a little associated cost?
- emsy 6y agoFor $210 million (that's only Epic's contribution), they could've created a first-class marketplace ecosystem. In reality, it's neither first-class nor worth whatever they're paying to actually run that department.
- naikrovek 6y agopeople forget how terrible steam was for its first 5 years, when compared to today. now, people are comparing the epic games store of today with the steam we have today, and convincing themselves that it's a fair comparison.
- throwaways885 6y agoI think the big difference between is how Epic treats its customers and how Valve treats its customers. Epic could've gone the GOG Galaxy route ("use it, or not, your choice"), but they decided to force people into their watered down launcher before it was ready. Even Xbox is being more open lately. You can't just match your competition, you have to exceed it in some special way before people will switch.
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- high_priest 6y agoIf it wasn't for the predatoric practices with device obsolescence I would disagree. Apple created the platform that allows this service (Fortnite) to exist and earn it's share of revenue. The fee that is paid is not only for current maintenance and upkeep of the distribution platform (which is their store), but also research, development, security measures and most importantly, it is shared with other departments, giving us the Apple M1 chips in return! Much worse offender is Valve and Steam, where they don't really have many places to allocate revenue from not only store sales, but also the second-hand market.
- 8note 6y agoYou can say the same about TSMC though, yet they don't extort a tax for every transaction done on a chip they manufactured. Apple handles the second hand market by not allowing one, don't they? I can't give an app I've bought to my friend
- eganist 6y ago> The fee that is paid is [...] shared with other departments, giving us the Apple M1 chips in return! Do you have a source on the claim that profits from the app store explicitly funded development of the m1 chip? That's an interesting claim, and it implies that Apple's hardware division alone is in the red and can't sustain its own r&d.
- astrange 6y agoApple officially only has one P&L.
- donmcronald 6y ago> The fee that is paid is not only for current maintenance and upkeep of the distribution platform (which is their store), but also research, development, security measures There are lots of updaters for the PC that can run from a web server. You can put the update files on Cloudflare or AWS for redundant, highly scalable distribution. The infrastructure is worth basically $0 and there is nothing complex about an updater, especially for a company that already integrates payment processing on so many other platforms. Apple makes it sound complex and uses it to justify their toll taking.
- stock_toaster 6y agoAnd how does that compare to Sony or Microsoft in this case?
- guidedlight 6y agoExactly. Sony and Microsoft likely take similar 30% cuts. I suspect that contracts with those companies forbid disclosure of that information, which is why Apple is the scapegoat here.
- deleted 6y ago[deleted]
- yrral 6y agoIt's a bit more nuanced than that. Per transaction costs: They run 15% off sales on itunes gift cards, cc "swipe" charges, costs of credit card fraud (employee costs, management overhead). Platform costs: Infrastructure to deal with developers, distribution, tax compliance, refunds, policing local governmental policies, customer service, fraud monitoring, etc etc.
- realityking 6y agoThis is a good point t I hadn’t considered. The App Store neatly abstracts sales tax/VAT for all markets in which the App Store operates. For a small to mid sized developer that’s a huge boon - especially for those with operations in the EU. A large player like Epic obviously doesn’t care as they have to built that anyway for their PC store.
- azinman2 6y agoAnd how much do agents make representing talent? Or middle men make to distribute liquor? You’re ignoring the entire history of distribution companies for software (especially games!) and their historical charges. 30% (1st year only then drops to 15%) is way less than the historical price. The fact that the product experience is so good and seem less makes it SEEM like it should be free, but you’re ignoring the entire history and all the work done to get to this point.
- jbverschoor 6y agoFortnite is selling digital items. PURE PROFIT. How is that not insanity?
- selfhoster11 6y agoThat too, is insanity. Two negatives don't cancel out, they are both just as insane.
- jbverschoor 6y agoBoth insane, case closed ;-)
- Shadonototro 6y agoisn't it because it is not on the iOS store anymore?
- ascagnel_ 6y agoPer the article, the numbers cover March 2018 thru July 2020, when Fortnite was on the iOS store.
- Shadonototro 6y agoYeap, the title is trash as expected I play by the rule of the clickbait titles
- ascagnel_ 6y ago...no? Over the period discussed, Fortnite took in more on the Playstation than it did on iOS, so the title is accurate.
- FearlessNebula 6y agoI'll add you to the list of corporate babies whining about Apple along with Epic, Spotify, and Tile. My tiniest violin is reserved for the billion dollar companies
- Shadonototro 6y agoi'm playing mine right now, i enjoy the collapse of the USD and their en/sino civilization long live your stonks, gotta go up
- sam0x17 6y agoI'm sort of astonished anyone at the Verge found this surprising. No young person I know _wants_ to play Fortnite on iOS -- they all prefer consoles or PC. If they bothered to ask one, they'd know this.
- aroman 6y agoI think you missed the point. Many young people only have access to iOS devices for their gaming needs, so playing on iOS == playing Fortnite. Sure, if they had the option to play on a dedicated gaming device, many would prefer it, but many do not have access to the alternative.
- mikepurvis 6y agoI bet the phone players spend less in-game because their priority would be saving up for a console before buying a ton of v-bucks. So the role of the phone client may be less as a cash cow directly, but more as an on-ramp to get people into the game on a device they already have, but they don't become spenders until they've graduated off of it.
- sam0x17 6y agoRight but in that scenario their usage of Fortnite on iOS won't follow normal market behavior. e.g. a cash injection to the public (stimulus, etc) would result in a bunch of iOS players converting to PC/console. Similarly, more than 0.07% of the population of the U.S. is incarcerated. That doesn't mean they want to be there.
- azinman2 6y agoExcept neither are out and about with you, or are in your pocket while you’re scrolling insta in your bed. I find it surprising, but then again I don’t know much about fortnite specifically.
- ZephyrBlu 6y agoIf you're playing games you're not out and about or lying in bed.
- myko 6y agoNobody _wants_ to play games on mobile devices, not even kids
- aroman 6y agoI'm pretty sure you're being sarcastic, but if not, this is wrong. If you were swayed by the article's point that Fortnite made "only" $700M on iOS, consider that revenue from mobile gaming accounts for half of the revenue for the entire video game industry, across all platforms — console and PC combined. Source: https://www.statista.com/topics/1906/mobile-gaming/ https://www.statista.com/topics/1906/mobile-gaming/ edit: fixed source
- TenJack 6y agoJust to clarify, are you saying Fortnite made as much as half the total of the e tire gaming industry on iOS?
- aroman 6y agoNo. This is what I'm pointing out: the entire video game industry generated about $175 billion in revenue last year. Of that, about half (43%) came from mobile gaming. Here is a more direct quote from statistia: " In 2020, smartphone games generated approximately 74.9 billion U.S. dollars in annual revenue, accounting for 43 percent of the global gaming market during the measured period. Console games were ranked second with 51.2 billion U.S. dollars in global revenue."
- elefanten 6y agoOP is implying that people are playing on phones because they have them, not because it’s a good experience. This could be especially true of a core (not casual) game like a shooter.
- rightbyte 6y agoMaybe kids are doing purchases on the phone but playing on a computer, inflating the phone "market share"?
- noobermin 6y agoAs others have said, it would be good if game devs figure this out. When Nintendo announced it would be getting out of consoles I was distraught as I loved the switch, but Animal Crossing convinced them otherwise, thank god.
- staticman2 6y agoNintendo never said they were getting out of consoles.
- noobermin 6y agoRequired a little bit of googling, but here[0] is one article that expresses the attitude nintendo had at the end of 2019 and early 2020 pre-pandemic that coincided with the release of ACNH. They didn't say they were getting out of consoles but they were planning to pivot to mobile, which did poorly especially compared to ACNH and the switch in general which was a hit in the midst of lockdowns. [0] https://sea.mashable.com/tech/1799/the-switch-might-be-the-last-game-console-nintendo-develops https://sea.mashable.com/tech/1799/the-switch-might-be-the-l... Hard to find old news articles from back then as google highlights the most recent news ofc.
- resfirestar 6y agoThat article says: >Nintendo's new president Shuntaro Furukawa told Nikkei that they don't have a big focus on their consoles. And then attempts to illustrate this point with a quote saying the exact opposite thing: >At the moment we're offering the uniquely developed Nintendo Switch and its software--and that's what we're basing how we deliver the 'Nintendo experience' on. That being said, technology changes. We'll continue to think flexibly about how to deliver that experience as time goes on In other words, that Nintendo's primary focus for how it delivers its flagship experiences was on the Switch, and they had no concrete plans to change that! What was the author thinking?
- noobermin 6y ago
- tjbiddle 6y agoiOS was 7% of their revenue at $700 million in 2 years. Had no idea Fortnite was a $5B/year game. That's ludicrous.
- AdamJacobMuller 6y agoI did the math and came up with that figure and it was so ridiculous that I spent a hot minute trying to figure out how I did the math wrong.
- keraf 6y agoIt's huge but having worked in the industry, I'm not surprised :-) The landscape of video games in the past (+/-) 10 years changed quite a bit. Nowadays, it's the biggest type of money making entertainment product (by a magnitude more than movie) and the acquisitions of studios start a multi million figures, up to billions. Seeing suits in gamedev studios now became a common occurrence.
- coldpie 6y agoVideo games are the #1 entertainment choice for young people (born 1997-2007). TV and Movies are #5 on their list.[1] Avengers Infinity War is the most profitable movie and opened with a box office of $2B. So, $5B/yr for Fortnite doesn't seem wildly out of range to me for an ongoing entertainment property. [1] https://www.latimes.com/entertainment-arts/business/story/2021-04-18/what-entertainment-does-gen-z-prefer-the-answer-isnt-good-for-hollywood https://www.latimes.com/entertainment-arts/business/story/20...
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- jbverschoor 6y agoWhich is the reason why they were willing to get banned from the App Store. They'd never risk that otherwise. I wouldn't be surprised if there was a collaboration between companies to to this.
- notsureaboutpg 6y agoSo what? Obviously a company entirely reliant on mobile users wouldn't be able to stand up to the mobile duopoly. That's entirely why opinion is split about the issue
- jbverschoor 6y agoFrom a user's perspective for example. I pay extra to install office through the app store. I'd happily pay extra to have the app store manage adobe and zoom.
- notsureaboutpg 6y agoI honestly don't believe a statistically significant portion of users behaves and thinks like you do, so I wouldn't consider this a very valuable "user's perspective"
- eqtn 6y agoI wish I had an option to cancel or renew netflix from the app store subscription page or play store subscription page. They can charge me the extra 15%. Now if i need netflix for a month, I have to open netflix from browser. Click restart membership, select the plan, enter the cvv, then it opens an embedded frame for the bank's website to enter the OneTimePassword from bank(sometimes I get session error here and have to repeat the whole process) to subscribe.
- chronogram 6y ago> They can charge me the extra 15%. They can’t, that’s why Epic was banned in the first place.
- periheli0n 6y agoMaybe Epic going up against the App Store is just warming up for going up against Sony's and Microsoft's stores, who ask for the same 30% cut like Apple does.
- ziml77 6y agoI doubt it. If you read the case they're making against Apple they actually do say why the iPhone and consoles are different. Their reasoning is that consoles are sold at a loss and the manufacturer needs to take those fees to support that sales model. If Epic tried to take on Microsoft or Sony, their own assertion in the Apple case would be used against them.
- AlexandrB 6y agoTo me, this is a really weird argument. Why is Sony's business model Epic's problem? They're still taking a 30% cut. If Apple started selling phones at a loss would they now be in the clear in Epic's mind? Is there a minimum "loss" required? Like is losing $0.01 per iPhone enough to make taking a 30% ok? Finally, what about Nintendo? They famously usually sell consoles at break-even or a small profit. Why isn't Epic suing them?
- SmallDeadGuy 6y agoBy selling consoles at a loss, more people can afford to buy them bringing in a larger audience. And even the people who could afford a more expensive console will simply have more money for games.
- gillesjacobs 6y agoAudience capture is indeed the answer, and is probably why Epic doesn't mind.
- zwily 6y agoBut there are way more iPhones out there than consoles.
- bongobingo 6y agoI am suing Epic because I am unable to sell cosmetic items in the Fortnite store. Epic has a monopoly on it, and doesn’t allow third parties to sell within their store. This needs to change.
- meheleventyone 6y agoYou joke but I 100% expect Epic to start allowing this sort of thing particularly with all the Creative stuff being jammed into Fortnite. In the same manner that they have Itch.io on the Epic Store.
- bongobingo 6y agoThey need to allow me to operate my own store, or I’m suing.
- meheleventyone 6y agoYou need to tell them that...
- rmac 6y agoThis comment is important and timely, as Australia and other countries start to crack down on "app stores" like google's and apple's. I smell gov intervention: https://www.accc.gov.au/media-release/dominance-of-apple-and-google%E2%80%99s-app-stores-impacting-competition-and-consumers https://www.accc.gov.au/media-release/dominance-of-apple-and...
- eqtn 6y agoAre there any Indian iOS devs here? I have a query. Does the 30% cut apple takes include the 18% tax to the government? Also, Apple takes only 15% cut from subscriptions after 1st year, then who pays the 18% tax(apple or the developer)?
- brian_herman 6y agohttps://www.exportgenius.in/india-import-duty/apple-iphone https://www.exportgenius.in/india-import-duty/apple-iphone
- philliphaydon 6y agoI might be the only person who doesn’t want epic to win.
- coldcode 6y agoYou are not. If Epic wins kiss free App Store apps goodbye as Apple will surely charge everyone to put things in their store. After all neither Walmart nor Amazon allows you to sell your products there and give them 0%. I see no economic difference, a store is a store; storekeepers are allowed to make money with your products. Just because it's a pile of bits makes no difference. If I want to sell art in a gallery, the gallery probably takes 50%; sure I could sell it online, but no one will see it, whereas the gallery brings customers to the art. Epic wants profit without cost at Apple's expense, and if Apple if forced to accept this, then everyone else will suffer, except Epic. You could make an argument that 30% is too high, but it's not a binary choice, 30% vs 0%. Epic thinks that it is.
- iudqnolq 6y agoNeither app store is free to publish
- stevehawk 6y agoI think you're sort of wrong here. Epic would likely be just fine with sideloading Fortnite and handling the distribution themselves (like they did with Android). What they're contesting is that only Apple is allowed to sell software on the phone, and in doing so also collects 30% of the cost. Apple could just get out of the way but chooses not to.
- Spivak 6y agoOkay but here's the thing. Such a change is good for the app publisher at the expense of the customer except in some vague second order effect about improbable price improvement. Right now you have no choice but to buy Fortnite on the App Store. In the future you will have no choice but to buy Fortnite on the Epic Games Store. Customers don't really gain anything here. I'm sympathetic to the whole software freedom angle and that end-users should be able to run whatever they want on their devices unrestricted but I could care less about publishers wanting to get around Apple's platform fees and store rules which for all their flaws genuinely benefit me as a user. Like it sucks that it took total control, thousands of human reviewers and an iron fist to keep companies from getting away from bright line screwing over their customers but here we are.
- habibur 6y agoSo does this information help Epic's case in court or pushes them a bit back? Answer I was looking for but didn't find in the article.
- johnnyanmac 6y agoIt was subpoena'd for a reason, but since court documents are public record (eventually) it just makes for an easy news piece. So the answer is: we don't know. Neither does Verge, I wager.
- knodi 6y agoI think Epic is right, 30% is too much. Apps market is competitive and margins are already slim with cost of marking, advertising, development, and maintenance. I get Apple offers a great experience and no cost of making apps accessible. None of this would be an issue if iPhone/iPad was open to non-apple app stores. Apple is being greedy here, can't install your own apps (non app stores) and can't have an alternative to app store so what are people left to do.
- nxc18 6y ago30% is not too much considering that iOS apps generate far more $$$ than android apps. https://insights.dice.com/2020/02/06/android-vs-ios-earns-developers-more/ https://insights.dice.com/2020/02/06/android-vs-ios-earns-de... Why do iOS apps make more? Possibly because iOS is marketed as the premium experience, explicitly including “limitations” like not having to deal with other app stores or be told to install apk from the web. Of course this ignores that Epic IS ALSO SUING GOOGLE. All caps because people are completely blind to this because it doesn’t fit their preferred narrative. Note that Apple is leading Google in terms of fees on their App Store. https://gizmodo.com/google-is-taking-less-of-a-cut-from-its-app-store-1846489835 https://gizmodo.com/google-is-taking-less-of-a-cut-from-its-... If Google is also being sued, is it not clear that additional app stores _is not_ what Epic is looking for?
- infinityplus1 6y agoAndroid allows alternative app stores. But Google blocked Epic from pre-installing the Epic Store on OnePlus and LG phones. https://www.theverge.com/2020/8/13/21368395/fortnite-epic-games-oneplus-deal-google-play-store-lawsuit-lg https://www.theverge.com/2020/8/13/21368395/fortnite-epic-ga...
- johnnyanmac 6y ago>Of course this ignores that Epic IS ALSO SUING GOOGLE. All caps because people are completely blind to this because it doesn’t fit their preferred narrative. please research what the actual lawsuit with Google is about because casting accusations on others. Another response was kind enough to give a link (that was the first one on Google).
- you_know_the_ 6y agoMy nephew spends about $500 dollars a year on fortnite PlayStation.
- raydev 6y agoThis shouldn't be surprising. That Epic was willing to risk iOS distribution for all this should've made it obvious iOS was not the primary source of revenue. They know the risks.