Fortnite achieved an unsurpassed result with child friendly multiplayer action that can be enjoyed on most modern devices. Video game creator uses this popularity to challenge one of the most rooted business models in the mobile industry: the App Store.
Epic Games Inc. recently said that 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 weaknesses in its Android operating system, especially compared to Apple's offer, analysts said.
Outside China and some other Asian countries, most mobile game companies list their creations on app stores that come preinstalled on Android phones and iPhones. In return to provide a large potential audience and handle user identity and payment details, Alphabet Inc.'s Google and Apple takes 30 percent of revenue bets. They draw billions of dollars a year from the event.
Fortnite is already so popular on personal computers and other devices as Epic Games decided it did not need Google's help and chose to keep it 30 percent to itself. While Fortnite is a special case, some analysts believe that it is a concern for Google and shows how Android is potentially less lucrative than Apple's iOS operating system.
Fortnite's move "may be a precursor to a possible shake-up to today's model of Google Play brings together 30 percent tax on game developers," Ross Sandler, an analyst at Barclays, wrote in a note to investors on Monday . Google refused to comment, and Epic did not respond to a request for comments.
Google will hit around $ 1
Although the standard Fortnite game is free, it generates revenue from purchases in the app for more items such as outfits and "feelings" or evidence. The app version of the game, containing cartoon-like characters fighting death on a stormy island, earned $ 109 million in gross revenue on mobile in the second quarter, according to a Bloomberg Intelligence report citing SensorTower data. Apple will take around $ 30 million of it, based on its typical revenue share. That's $ 30 million Google will not see.
Josh Olson, an analyst at Edward Jones & Co., said that the impact of Fortnite's absence from the Play Store goes beyond the company's economy and puts Google behind Apple in its ability to capture a younger game audience. "You will win the game of content," said Olson.
Although Google could lure Fortnite in its Play Store, the Android fragment 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 many devices do not have software that is capable of running complex games like Fortnite. Fortnite is compatible with approximately 10 percent Android phones, or 250 million of the 2.2 billion users, believes Barclays Sandler. In contrast, most iPhones have the latest iOS version, which makes them more capable of handling demanding apps.
"The vast majority of Android's installed base is lower handsets with less functionality and in low income markets (thus, not as much as iOS users)," Sandler wrote.
The analyst has potentially greater concern, though. Most mobile game makers can not ignore the Play store, but in Korea and Japan, some app developers and messaging services, such as Line and Cocoa, refer to the traditional app store model, even on certified Android phones, Sandler said. These companies already have user identifiers and payment details, and they can distribute and market mobile games on their own. So they can take their own purchases of app purchases.
This approach does not exist in the West, but it can spread beyond Asia, "said Sandler. The European Union's recent anti-trust anti-smoothing against Google demanded that the company cease to force phone manufacturers to pre-install the search engine and Chrome browser with the Play Store.
"We may see loose restrictions on Android OEM contracts, see Facebook, Amazon, or many of the Chinese megapaps, try to get into the third party app distribution market, and take some of Google Play's economy." wrote Sandler. "This is a development we will follow closely over the coming months."
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Bloombergs Mark Bergen contributed.
Washington Post News Service (DC)
8/11/11 1:50:54 PM Central Daylight Time