Apple says it made over $100 million in commission from Fortnite

midian182

Posts: 6,901   +62
Staff member
What just happened? The Epic Games vs. Apple trial keeps revealing industry secrets. After we found out how much Fortnite's iOS version made for Epic during its 30-month run on the store—$700 million—we now know how much Apple generated in commission: at least $100 million.

The 30% cut Apple takes from developers is the crux of the ongoing trial. During the case's third week, Michael Schmid, Apple's head of game business development for the App Store, disclosed how much Fortnite made the company. He refused to give an exact figure and declined to say if it was above $200 million, saying it would be "inappropriate" to share that information.

The actual amount of revenue Apple generated is likely to be much higher. A 2018 report by marketing firm Sensor Tower stated that Fortnite brought in over $100 million in purchases on the App Store in just 90 days, and it surpassed $500 million in iOS revenue in record time. Users eventually spent almost $1.2 billion on the battle royale title's App Store version, making about $354 million for Apple.

Schmid said that in the 11 months before being kicked from the App Store, Apple had highlighted Fortnite and spent $1 million marketing the game. Epic lawyer Lauren Moskowitz suggested the marketing-to-revenue ratio was a "good deal."

Sensor Tower estimates that Apple made $22 billion from its App Store commissions in 2020. The entire company generated $275 billion in revenue during the 2020 fiscal year, so $100 million - $300 million represents a small percentage of its income.

Reuters writes that the disclosure is relevant as Apple executives previously said they do not track profits from the App Store and view it as an iPhone feature. Schmid added that the App Store team only began tracking commissions from Fortnite after it had been featured by the store's editorial team.

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Dimitriid

Posts: 692   +1,226
It certainly sounds like a big number.

But let me put it in perspective a bit: Epic wanted to negotiate this and go "We're paying too much so maybe we could do a more fair split, you still get maybe 60 or 70 million in revenue from Fortnite"

And Apple decided "No: I rather make 0 dollars by taking Fortnite offline and probably waste at least as much fighting you in court than to give up any percentage of our fee"

In the grand scheme of things, Apple wants a long-term win to be able to have absolute control of their store front and be able to set whatever percentage they want: Maybe stay at 30% Maybe increase it to 40 or 50%. The point is not the money they could be making but are not effectively leaving on the table, the point is not being challenged, the point for them is control.
 

Soaptrail

Posts: 37   +43
I am not believing this comment at all.

"Apple executives previously said they do not track profits from the App Store and view it as an iPhone feature."

I am sure they do not track all apps but the ones that generate lots of revenue they definitely track or they are *****s.
 

Soaptrail

Posts: 37   +43
It certainly sounds like a big number.

But let me put it in perspective a bit: Epic wanted to negotiate this and go "We're paying too much so maybe we could do a more fair split, you still get maybe 60 or 70 million in revenue from Fortnite"

And Apple decided "No: I rather make 0 dollars by taking Fortnite offline and probably waste at least as much fighting you in court than to give up any percentage of our fee"

In the grand scheme of things, Apple wants a long-term win to be able to have absolute control of their store front and be able to set whatever percentage they want: Maybe stay at 30% Maybe increase it to 40 or 50%. The point is not the money they could be making but are not effectively leaving on the table, the point is not being challenged, the point for them is control.
To me Apply loses the fight and should reduce their rate for all games and app when they cut their percent for Netflix.
 

brucek

Posts: 811   +1,130
TechSpot Elite
I'm thinking this guy's wiggle room is coming only from the fact the judge does not see a need for an exact number or percentage in order to rule on whether there's an antitrust violation or not.

If this was say a penalty phase where the judge needed to assess a penalty as a multiple of profits, and Apple tried saying "oh we have no idea what that number is," I wouldn't see that going over too well for them. I think I would enjoy watching a video of them trying it though.

 

AlistairAA

Posts: 7   +8
Apple is trying to free ride on Epic's work. You are allowed to charge whatever you want in your business, open a restaurant and charge twice as much as your competitors if you want to, but only if you allow those competitors to operate. You can't have both only one store, and ban other stores also. Hope Apple loses this. If they want to have only one store and ban other stores, the government should step in and reduce the rate to 5 percent, which is twice as much as it costs Apple to provide payment services.
 

duckofdeath

Posts: 422   +558
I am not believing this comment at all.

"Apple executives previously said they do not track profits from the App Store and view it as an iPhone feature."

I am sure they do not track all apps but the ones that generate lots of revenue they definitely track or they are *****s.
Aren't they in breach of very basic corporation laws if they admit to not keep inventory of their business? If you deliberately don't track anything, then you don't know what to pay in taxes.

Oh wait. Silly me. They don't pay taxes. Ignore this.
 

Watzupken

Posts: 241   +225
Apple is trying to free ride on Epic's work. You are allowed to charge whatever you want in your business, open a restaurant and charge twice as much as your competitors if you want to, but only if you allow those competitors to operate. You can't have both only one store, and ban other stores also. Hope Apple loses this. If they want to have only one store and ban other stores, the government should step in and reduce the rate to 5 percent, which is twice as much as it costs Apple to provide payment services.

I hope through this case, we can find cheaper apps/ games on Apple Store due to lower commission to Apple. Having said that, I think this goes two ways. You can say that Apple is trying to free load on EPIC/ developers' effort, but I feel the same can be said where EPIC is trying to freeload on iOS' success. EPIC wanted in iOS because its obvious that the annual sale/ profit is very lucrative, so much so that its worth fighting this battle with Apple. Please don't think that EPIC is free to throw investors' money at some "do good for the society" initiative with no rewards. Both are profit seeking companies and whatever they are trying to do is mainly to find ways and means to seek dollars and cents. Any "benefit to society" is either a smoke screen and just happen to be a secondary or tertiary side effect.
 

dangh

Posts: 243   +302
I hope I will be able to install any application store on iOS device same way I can do on Android right now.
And we wont get cheaper software, but if developers will actually get a better share, they will have more resources to actually add new features, better QA, and making a decent live for them (not big companies, but smaller devs)
 

Todd Sauve

Posts: 38   +50
The fact of life is this; if you buy Apple you are going to pay way more than for their competitors. Apple rips off ALL their customers but those with more money than horse sense love to hand it over to these corporate thieves. End of story. Period.
 

AlistairAA

Posts: 7   +8
I hope through this case, we can find cheaper apps/ games on Apple Store due to lower commission to Apple. Having said that, I think this goes two ways. You can say that Apple is trying to free load on EPIC/ developers' effort, but I feel the same can be said where EPIC is trying to freeload on iOS' success. EPIC wanted in iOS because its obvious that the annual sale/ profit is very lucrative, so much so that its worth fighting this battle with Apple. Please don't think that EPIC is free to throw investors' money at some "do good for the society" initiative with no rewards. Both are profit seeking companies and whatever they are trying to do is mainly to find ways and means to seek dollars and cents. Any "benefit to society" is either a smoke screen and just happen to be a secondary or tertiary side effect.

No, in no way is Epic riding Apple. Apple can charge whatever they want their products. Epic did EVERYTHING regarding making the game. We don't allow Microsoft to charge Adobe 30 percent when you buy an app for Windows (in fact not even 5 percent, Microsoft gets nothing).