App Store revenue could take big hit if developers fight Apple's cut | Cult of Mac

App Store revenue could take big hit if developers fight Apple’s cut


Apple waives developer fees for nonprofits, others in 8 additional countries
Apple's App Store cash cow may not last forever.
Illustration: Ste Smith/Cult of Mac

The App Store is a big money spinner for Apple, but that could change if more developers, helped by regulatory intervention, push back against the commission that Apple currently takes.

In a note to clients, Macquarie Research analyst Ben Schachter suggests that this could cost Apple up to $16 billion annually. This follows news that Netflix is currently experimenting with a way to circumvent the cash it has to pay Apple.

“We believe that the traditional … commission rates for app distribution may come under pressure,” Schachter wrote. “Changes in the commission rates would meaningfully impact profits.”

Schachter notes that some game developers already view it as unfair that companies like Apple take such a big cut (normally 30 percent) to host apps.

He also suggests that there could be further legal challenges. Apple is currently facing one lawsuit which claims it is using it’s abusing its position by charging overblown commissions. Should this lawsuit ultimately fail, it could still be enough to make regulators aware of the issue.

Talking numbers

To give an example of what this could mean, Schachter does some number crunching. Currently, the App Store is reportedly on track to make $20 billion in App Store revenue by 2020. This would be more than 1/4 of Apple’s projected earnings. However, if Apple was somehow forced to cut its commission to 15 percent, this would reduce revenue to $11.2 billion. A 5 percent commission would reduce it to $3.7 billion.

At present, these are basically no more than fantasy figures. It certainly comes at an interesting time, though. Yesterday, we noted how Netflix is testing a new way of circumventing Apple by no longer allowing new and re-joining customers to subscribe to Netflix through the App Store.

And let’s not forget the wildcard that is the fact that China, which isn’t always friendly to Apple, now generates more App Store revenue than the U.S

Source: Business Insider (paywall)


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