Why it matters: If successful, Epic's app store could force Google to lower its commission cut. This, in turn, would probably prompt Apple to do the same, leaving more money in developers’ pockets. How will app stores recoup their losses?
Epic earlier this month launched the Epic Games Store, a digital storefront for PC games on Windows and macOS. The store is already making waves but Epic isn’t done shaking up the waters just yet.
According to a recent report from The Wall Street Journal, Epic will start selling games for Android devices in 2019. Taken at face value, the Journal’s wording suggests Epic only plans to sell Android games but a broader move into a general app store may also be a possibility.
Apple and Google take a 30 percent cut of revenue from apps sold through their respective app stores. Epic, in contrast, only grabs 12 percent of revenue generated from its Games Store, leaving developers with 88 percent.
Epic also bypassed Google’s store with the launch of Fortnite for Android. Given the success of that game, it’s plausible that Epic could generate significant traffic with its own app store.
Research firm Visible Alpha indicates Apple and Google parent company Alphabet generate about five percent of annual revenue from their app stores. Since neither company makes the apps they sell, however, their margin contribution is much higher. As such, Ben Schachter of Macquarie Capital believes that the hit to pretax earnings could be as high as 14 percent if the stores were to reduce app commissions to match Epic’s take.
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