Is third-party distribution the next killer opportunity?
Fortnite is the biggest game on the planet. But could it become one of the most influential distributors too?
Epic Games, the company that develops Fortnite, announced that the shooter would not appear on Google’s Play Store, but would be distributed on its own website, sidestepping the typical route of releasing on official platforms - at least on Android devices.
The reason? 30% in lost profit for every transaction - or, in total, a projected $54m - if Fortnite were to launch on the Play Store. The free-to-play title generates revenue through in-app purchases, namely its ‘Battle Pass’ system, and the ability to shop for cosmetic skins for characters and weapons. For every purchase, Google and Apple take a cut in return for distribution - a stake which, it seems, Epic wasn’t willing to lose.
Whether this tactic will prove successful remains to be seen, and there are a number of challenges that Epic Games could face - including the difficulty in bridging the gap between desktop, web and app, and by encouraging players to deviate from their normal behavior.
So, what could happen? We’ll take a look at the potential outcomes based on current data, and look at the real issues that could affect the release. For more, read on.
What does the data say?
To get a real idea of how third-party distribution stacks up against the Play and App Stores, it’s best to look at available data to see how they rank.
According to App Annie’s dataset published on eMarketer, third-party app stores well exceed downloads on the App Store, and are set to double within the next three years. As it stands, revenue generated by third-party Android stores are a few dollars short of their official Android counterpart (which is perhaps the most relevant stat when thinking about Fortnite), generating $20bn in 2017. To say that there’s a lot of money in third-party distribution is an understatement.
In 2018, global app revenue soared, at 27.8% higher levels of spending than in the same period as last year. Furthermore, in Gaming, “spending...grew 19.1% in the first half of 2018 to an estimated $26.6 billion worldwide on the App Store and Google Play, representing about 78% of the total spent in apps across both stores.” The App Store has seen spending growth of 15.1%, and Google Play more, at 26%. The number of gaming downloads has also increased, 10.3% on the Play Store, and 14.1% on the App Store.
We can see there’s potential on all platforms to draw increasing amounts of revenue. So, you could ask, aren’t Epic Games missing out on a huge market - even with that 30% loss? Wouldn’t it be sensible to release on both official stores, as well as create an offshoot for extra distribution?
Perhaps, but Epic seem to believe that such a strategy would reduce revenue significantly and (rather than split an audience), would therefore want to keep distribution on their own terms.
Now, with their large locked-in player base, it’s easy to envision some form of success, particularly with the right marketing. However, such a move could only conceivably be pulled off by such a popular app, a cultural phenomenon, like Fortnite. What about everyone else?
The pros and cons of third-party app distribution
Bear in mind, before we begin, that we’re focusing on Android here - distributing (or attempting to distribute) apps outside of the App Store “violates Apple's developer agreements” and could land developers who fail to meet those guidelines in some trouble.
This approach from Apple ties into one of the main cons of not distributing via an official app store. Namely, the sheer amount of fraud (and lack of security) found in many apps outside of Google Play and the App Store.
Malware, and methods of fraud including click injection and SDK Spoofing, can be easily added onto apps without the levels of testing and regulation required to be featured on either Store if there’s no-one there to regulate. As such, downloading an app away from an official source could lead to fraudulent apps on your device. Benedict Evans mentions a further point, that the move potentially, “encourages pretty unsafe behavior - there will be a lot of people trying to trick users (and a lot of Fortnite players are children) into downloading malware from look-alike sites.” This problem has already been found across YouTube, with the potential of children given free reign over technology (and their parent’s credit cards) often leading to scams from users who are incredibly enthusiastic about their favorite game.
Beyond fraud, official stores offer a more convenient experience for both app users and developers. Many users will default to the easiest path of discovery - and each Store provides that obvious place to shop. Choosing to download apps on Android also means opening up and changing settings, which may make some users uncomfortable. For legitimate developers, a single point of access means less management of multi-platform shopping - two stores, two app versions, simple stuff.
In terms of the benefits, obviously, losing revenue is the main reason Fortnite (and others) choose to distribute their applications on their own terms. However, it’s not just money we’re talking about, but also not having to follow the aforementioned wealth of guidelines that restrict what some developers might want to create.
Furthermore, a point often mentioned to do with discovery - each app store is like a supermarket with overflowing stock. Because the means of organic discovery are limited, many apps are hidden from view - in fact, of the over 2 million apps on the App Store currently, 96% cannot be found organically at all, not featuring on a list for more than two consecutive days. This means that you either need to be linked to, searched for, or advertise in order to be discovered. For some, it might be worth questioning distribution if your app cannot be found.
So, with all that in mind, what’s the answer for most developers? It really depends on the type of app you want to make, or what your own philosophy or feeling might be. However, for most, the only way is to release on an official store - and not worry too much about the difficulties of hosting and distribution.
A third way? Or no way?
Fortunately, many apps (particularly in Western markets) don’t have to consider the third-party option all too much. However, in other markets such as China, third-party is the only way to play, and so distribution has to be planned and thought out where there’s no official solution, just bigger stalls in an already bustling market.
We’ve talked about high levels of friction, but these are experienced by users in developing markets every day. And, as we see such users become used to certain behavior, it’s not impossible to imagine third-party catching on in developed markets too. Particularly with big names such as Fortnite potentially able to herald another new trend.
Yes, Fortnite is a unique case that can demand that level of commitment, but is it paving a way for others to follow?
Whatever happens, it could be an exciting new chapter for app distribution, and a new challenge for us to keep track of.