Apple has announced plans to reduce its revenue share on the App Store from 30% to 15% for developers making less than $1m US per year.
App development is a highly competitive marketplace, with reports from industry analyst Gartner in 2018 concluding that only one in a thousand released apps will actually be profitable. Top games such as Pokemon Go that use in-app purchases to generate money, and top social media or shopping apps and apps, make millions of dollars per year, but the vast majority of apps make almost nothing.
From January 1st 2021, any app developer making less than $1m US per year on the Apple Store can apply to a new scheme that will reduce Apple's revenue share from 30% to 15%. This change could benefit over 97% of iOS app publishers, with less than 3% of developers actually making $1 million a year in in-app purchases.
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The cut comes after years of criticism from the global game and app development industry over the high revenue cut taken be platform holders. Platforms such as Steam (the world's largest distributor of games) also takes a 30% revenue share in exchange for access to its platform, and Google also uses 30% revenue share split on subscriptions.
A handful of platforms currently hold the vast majority of market share in both the gaming and mobile app space, and their costs are a tiny fraction of the 30% revenue share they take. Critics of this business model include Epic Games, which launched its own Epic Launcher digital game distribution platform that takes only 12%.
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App store developers also have to pay for a digital certificate to distribute apps on Apple's app store, and are locked into using Apple's payment system that takes a 15% of all in-app transactions. This has been the focus of a recent lawsuit between Apple and Epic Games in which Epic's massively successful game Fortnite was blocked from the store when it implemented a different payment processor.
