What Apple's new app store policies mean for game devs in US & EU

Archie Stonehill
Head of Product
Jan 29, 2024

2024’s definitely started out with a bang, with Apple responding to two major anti-competitive regulations within a few weeks of each other, in both the United States and European Union. These new policies are a mixed bag for game developers - on one hand, many of the new terms (for side loading, alternative payments, etc.) are predictably frustrating in their restrictions and fees, but on the other hand, we shouldn’t lose sight of the fact that, even as drafted, these policies open iOS up in ways that were unimaginable a few years ago. 

Here, we dive into what’s changed and what it means for game developers going forward: 

First, what actually happened? 

Let’s start with the US. On January 16th, 2024, the US Supreme Court decided not to hear appeals following the years-long Apple vs Epic court case, effectively ruling that Apple’s anti-steering policies - which banned apps from informing users about or linking to alternative payment methods like web stores - violated competition law. 

As a result, on January 17th, Apple issued updated App Store Review policies that replaced anti-steering with a new “link-out” policy. You can now include links to out-of-app payment options from within your app, but any items purchased from that direct link are subject to a 27% fee - only slightly down from the in-store 30% fee that started the whole Epic vs. Apple case in the first place. Alongside this fee, Apple requires that developers gain approval for link-out, follow guidelines on the way links are presented, and include a disclaimer screen that pops up before linking out to that alternative provider. You can read Apple’s rules for the US here

That’s the United States. Now for the European Union, where Apple has until March 6th, 2024 to comply with a new regulation called the Digital Markets Act (DMA). On January 25th, Apple issued revised policies intended to comply with the DMA, which only apply to EU users. The DMA is much broader than the US ruling, but Apple now gives you a choice between two sets of terms -  the one that’s better for you will depend on your specific game’s profile: 

  • Existing terms: Distribute apps exclusively via the App Store and pay a 30% fee on IAPs
  • Alternative terms: Distribute on alternative app stores (also known as sideloading), use alternative payment providers, and link out to web stores, with a reduced 10% or 17% fee on IAPs, and a “core technology fee” of €0.50 for each install that’s over 1M, each year, including updates and reinstalls. 

More explanation by Apple here

So, what’s the impact for game developers? 

It’s no surprise that Apple reacted the way it did - we knew they weren’t going to go down without a fight. There’s dozens of reasons why the new policies are frustrating for developers - but looking big picture, the gaming industry should take this as a win. At the end of the day, Apple is making major concessions to comply with these regulations, and developers have more freedom now than ever. These are the major takeaways for game developers: 

1. Removing anti-steering is helpful, even without the link out

The headlines have largely focused on in-app payments and side loading, while excluding Apple’s more subtle changes, like the elimination of anti-steering provisions. Now, you have more freedom to tell users about out-of-app sales channels - which is transformative for how much traffic you can generate to your web stores, previously a concern for many.

And, so long as you’re not linking out to your web store from the app, the purchases made there aren’t subject to any fees to Apple, which can save you more than 30% of that revenue. Just mentioning that there’s a web shop with cheaper items and discounts, even without linking to it, can convince your most engaged players to check it out. 

2. New fee options in Europe could save developers a lot of money, even without sideloading

The new terms in Europe have two parts to their cost: 

  1. First, a reduced commission of 20% on spend going through the app store (17% commission + 3% if using Apple’s payment processing services)
  2. Second, a flat €0.50 fee on App Store installs above 1 million each year and all installs through non-App Store channels

If your game’s revenue per install (RPI/LTV) is greater than €5, you can make more revenue with Apple’s alternative terms, even if you only distribute through the App Store. To dive deeper into the math, under the new terms, you pay 10% less than you would otherwise (30% vs. 20%) but have to pay an additional flat fee of €.50 per install. For the new terms to be cheaper, that 10% of your revenue-per-install needs to be greater than the €0.50, meaning RPI needs to be €5 (10% x 5 = 0.5).

So if your LTV is €5 or greater, you'll make more revenue under the new terms. And that doesn’t even include savings from downloads outside the App Store, which only cost €0.50 per install and have no spend-based commission to Apple.

3. Distributing apps outside of the App Store makes high LTVs even more attractive

Despite their best efforts to undermine and increase the cost of sideloading, Apple has been forced to make concessions that transform the distribution options for developers: for the first time, iOS apps can be downloaded directly and for a lot of IAP-monetizing games, the new terms are actually really exciting. 

How much you can save depends on a lot of factors, including your specific game metrics and volume you can drive to new distribution channels. But many developers stand to benefit if their games monetize with IAPs. 

To illustrate, if your game makes €25M on iOS per year off 5M installs, and you shift 50% of your installs to alternative distribution channels, you will halve the fee you pay to Apple! That’s because you’re paying a reduced commission on App Store revenue (20% not 30%, like we mentioned) but no commission on non-App Store revenue, just the €0.50 fee on installs.

Essentially, the new Core Technology Fee in the EU emphasizes a trend already on the rise - focusing more on maximizing the LTV of existing players rather than high install campaigns. If you choose the new terms, focusing on high spenders, or whales, will be a key part of your monetization strategy. This is where alternative channels and web shops that have high retention, engagement, and loyalty mechanics become important. 

4. Reaping the UA and monetization benefits of direct-to-consumer

Beyond higher margins and reduced fees, there are many more benefits to direct-to-consumer web shops, which are often overlooked but now easier to reap. The new Apple policies are a huge boon for direct-to-consumer strategies and can help developers improve every part of their game, from user acquisition to monetization. 

In terms of user acquisition, going direct-to-consumer means collecting email addresses to better retarget users and build lookalike audiences, saving UA spend by diverting budget to web (which can be cheaper than mobile), and boosting ROAS by growing LTV. 

You can also increase their user’s LTV by building new engagement features and using sophisticated sales strategies that aren’t possible in native apps. In web environments, you can increase retention through membership-based loyalty and rewards programs and increase monetization with dynamic prices and bundling, advanced personalization, volume-based discounts (ie, spend 50% get 10% back), and buy-one-get-one discounts. Operating a D2C channel opens up countless new ways to engage with your players and improve your overall game experience.

5. There are new opportunities to compete and innovate

It’s important to remind ourselves that, compared to the last 20 years of competition in digital markets, even these concessions represent a watershed moment in our industry - with Apple being forced to open up sideloading and eliminate anti-steering provisions. Developers now have fewer restrictions on how they design their apps outside of iOS’ strict review guidelines. This degree of freedom was previously unimaginable, and invites innovation from potential competitors to find the gaps and opportunities in alternative payments and app stores. 

This is just the beginning

This is just the beginning of Apple’s compliance - EU regulators may well push for more changes and other efforts are ongoing - as the DMA’s enforcement mechanism is an ongoing approach that places significant weight on the perspectives of developers. It remains to be seen whether Apple’s new policy that includes a proposed 27% fee on linked-out web stores will survive government review in either America or Europe. 

Google’s own sideloading UX, which is far ahead of Apple’s proposal, was ruled to be too much of a burden by the jury in Epic vs. Google. Similarly, Google’s settlement with the State Attorneys General includes sideloading improvements as a major term. If developers are allowed to operate frictionless direct distribution of their apps, then they don’t have to worry about the 26 or 27% fees that Google and Apple have demanded so far.

It is highly likely Apple will be forced to make further concessions and that iOS will continue to open up, driven by both innovative competitors or additional regulatory actions. 

The Stash approach

The new policies also mean it’s all the more important for alternative payments channels - like Stash - to make it as simple as possible for you to navigate the situation and stay compliant, while taking advantage of the biggest opportunities that are emerging in real time. Largely, that will come down to web stores offering a better commerce experience than you can operate in native apps: the best possible user experience, new loyalty programs and discount strategies, and easy-to-integrate solutions that plug into the IAP config systems you currently operate. 

That’s exactly what we intend to do at Stash. Get in touch to learn more here.

About the Author

Archie Stonehill

Head of Product
Archie Stonehill is the Head of Product at Stash, collaborating with top game studios to build a first of its kind direct-to-consumer platform for games. Previously, he was Engagement Manager and Senior Expert Advisor in Games at McKinsey, and following that, was a Principal at Makers Fund, working closely with founders and investing in the next big studios. As a hardcore gamer himself, Archie is deeply passionate about the impact D2C will have on player experiences and industry innovation.
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