Duke Vu - Digital Markets Act and Its Implications for the Mobile Gaming Industry

[Music] so um today I'm going to talk about act and its implications for the mobile gaming industry but before I jump into that um some self introduction uh first um so um my personal background is I was born in a beautiful country called Vietnam uh I was born there but raised in Poland but I've been living in Poland for more than 30 years uh first time coming here in 91 uh of course with uh Vietnam is a great uh besides the touristic uh you know outside it's also a great country

to make games as well um so I've traveled a pretty long distance from from there and uh I have a digital engineering data science background uh I've been been doing and helping um larger Brands to um build their um Big Data Commerce uh strategies as well as I have also set up my own companies um raise financing uh mostly in uh Commerce and and software so um Commerce e-commerce is this something very near dear to my my heart let's say and so um I I I feel like the game industry um still have in terms of e-commerce and commerce still have a long way you guys know how to make games you you guys know how to acquire users through mobile gaming mobile channels but I feel like there's still a long way to go in terms of um uh Commerce um so we have built something uh for the game industry as a

whole uh for steam pc games as well as for mobile games um to help them uh sell the in-game app purchases IAP or uh steam pc games um for self-d distribution on their own web Stores um so as you know the state Mobile gaming is is pretty complicated right now with a lot of layoffs uh and and downsizing um in recent years receiving even more and more games being published uh on on Google Play and and and App Store and and it is now coming back to a point where uh it is um uh in terms of app installs and also EO growth we seeing some rebounds uh uh for the last uh year uh of course the peak was during the covid times but um now I think it is a pretty good um um let's say Prospect in the future in terms of uh user growth um still there are a lot of challenges

in the mobile game industry as you know um post idfa uh very little amount of users actually opt in into be tracked uh by by you guys uh by apps by games uh in the vast uh Network and also the Scot network uh has its limitations if uh we're talking about uh you know correct conversion measurement and attribution and and it is also pretty let's say hard to set that up um the IAP IIA revenues are falling and the downloads along the uh with average consumer spend is um also tanking um with the also convergence with AI generated uh game assets uh we will see even more competition among game developers and and games in general uh being able to fasten your speed uh development process with of course 3D asset generation with

your NPC you know everyone's talking about you know AI NPCs but we are yet to see any let's say compelling um use cases in this but I I'm actually a big believer in in um you know uh shortening the the time of game development process using AI especially uh in terms of scenario building and also uh asset generation uh and so uh what we're seeing now uh on the market as as we see is um there's an growing number of games released each year and um there's also growing um um uh competition among the game developers but time to Market is also shortening and with the legal framework uh for their self-distribution such as digital Market act allowing game developers to one monetize the user base outside the app source and two allowing alternative payment methods inside games or apps um we will see um

Diversified distribution uh among the top let's say priorities among game developers to set them apart from the competition so distribution um is outside of the appsource is something that we have seen in uh the last two years at least the big players have been uh doing that a lot um PLA roia and supercell um they have been all experimenting with with web Stars uh and that is their unique approach to first of all all distribute uh their in-game content to users uh selling directly to the players without the intermet such as marketplaces and and two that is their boost to profitability because when you distribute your games or your in-game assets out outside of the marketplaces up stores it means that you don't have to pay the 30% commission to the the big players uh and so why self distribution matters one is the uh the the uh distribution age over your competitors

uh when you know um everyone is uh pumping their budget uh in terms of user acquisition among the mobile gaming space uh everyone has kind of like the same playbook in terms of UA then you have to differentiate yourself and one of the ways is actually to look at the Web Channel where you can actually have cookies from the users you can track them you can retarget them you can remarket them among the largest appart networks out there you know the Google display Network YouTube Tik Tok um those all those platforms work on the web as well and so you are not limited to idfa or any let's say let's say privacy issues concerns among inside um the app stores and so if Google and apple are all benefiting the most from your hard-earned uh top spending you know players then uh us just be looking at other ways uh to to monetize your user Bas and so um that's why uh one of the

uh uh let's say boosters of such diversification of distribution is the digital markets act that has be that has been introduced in March this year so this is Super Fresh not everyone is uh knows about this and not everyone knows what is the Playbook with the new legal framework in Europe uh in the European economic area EA um and and even more so in in the Americas North America and in South America and so um in part of the um the digital markets act you can of course download it on from the web from the EUR European commission uh website um but I will talk through the most important points of the digital markets AR so the dma is specifically designed to keep The Gatekeepers from having too much

Monopoly um in in the app marketplaces um and so they have designated The Gatekeepers who are companies with in a reach over 45 million users per month and 10,000 business users per year or if they have the turnover or market value exceeding $7.5 billion or $75 billion respectively and the European commission um requires them to do certain things with that legal framework that has been introduced March uh this year um and so those Gatekeepers are of course companies that are such as Facebook uh Google Amazon um meta um and the dma has been in work um for a very long time so only this um March this year it was the deadline to comply for um all those companies but before that Apple was find um uh Google was find 600 million

uh Apple was find even more than that so it has been all boiling up in the recent years even with the epic games versus Apple um legal bottle suit U legal Suite um it all it all you know um ended up being uh a written paper um that was um um put out there from by the European commission so the notification and designation of The Gatekeepers was uh set up in September 2023 uh and that was the opening also of Market investigations into the gatekeeping practices of all those monopolies or apple and and Google you know U favoring your own search results in the search results uh keeping game app developers from accessing alternative payment methods or distribution uh all those practices now has been lifted up at least in Europe for you for game develop ERS to be more

free in terms of how you distribute games or your in- game app purchases uh so there's a long list of effective Services uh from from the dma uh that pertains uh that pertains online search engines online marketplaces but specifically today we're going to talk about how it affects the mobile gaming industry um so the benefits of of um the dma is four fold one is the reduce control over the marketplace from from Apple and from Google so there's going to be new opportunities for you to for example uh Implement alternative payment method inside your app or your game um with some consequencies in terms of uh commission uh but it also um gives a fair app review process uh it it uh allows you to get get more information about why your app was for example rejected by Apple um there's more stress in

interoperability among uh the apps and games and also data portability uh so offering different features that enable users to transfer from one app to another and from one ecosystem to another that may lead to you know Apple and Google marketplaces app stores to be more interoperable um and and you will certainly see that in the future with the introduction with for example Microsoft mobile game store which uh would come later this year and also the epic games mobile game store um also later this year so we're going to see four major players having the marketplaces on users phon so it's not going to be the mon dual poly of Apple and Google anymore it will allow other developers to introduce their own app marketplaces inside um Google and Apple so that means for you as game developers it's going to be um more challenging uh more costly certainly to distribute in different marketplaces uh but with dma

it also means that uh it could be you know they will also be in enforced with um you know open um portability and there's a long list of also other benefits from the dma the protection of personal data it will be harder for um Apple and Google to harvest that data um uh to uh show ads in other networks um um protection unfair practices like sour results favism um um you will be able to freely promote also your other games other apps and also way other ways of monetization uh um among your apps um and so in terms of uh how specifically all those Giants have uh implemented those measures specifically for the game industry Apple has new guidelines has new new sdks for you as

an example you can you can now um offer different payment methods alongside Google play inside your app or your game uh but of course with consequences that for example if you have an alternative payment method sure you are not paying the full 30% commission for uh Google um but um that would be 25 27% um and there are s certain thresholds and different categories of apps or games that have different uh commissions for example for developers that enroll in the 15% C fre feed tier um uh that has less than a million dollars of Revenue uh for the um each year they can have 15% of commission uh and that grows to 30% if they exceed that um number you can also have different um payment methods alongside Google play not just one but but you know you can

offer um how many you would want and they all come with sdks appropriate sdks as well as user interface and user uh experience guidelines by Google how to implement those alternative payment methods and alongside that you uh Google has also introduced consent mod uh version two which is um uh you know let's let's say even more protective of the um users uh data so um up until now for apps um um the instance ID can be collected for analytics purposes the app um storage means that the device ID can be also collected for advertising purposes and now there's going to be controls whether user data can be spent for Google for advertising purposes and also ad personalization um so what it means for uh for example Google uh I mean game advertisers is uh that one um um you have to use a certified Google

content management platform um update your CMP uh and make sure your um mmps up to date to receive the new tax from CMP and not complying that will impact uh your um ability to measure the performance uh of your campaigns and what about Google um so Google uh um Apple will has been forced to allow uh advertise and sell uh services to users acquired through the gatekeeper services so you can um advertise your other games within your existing game um um you can also allow your users to access the services that has been bought um um in places other than the App Store so it means that um for example let's say that the epic game store is going to be there Microsoft game store is going to be there if they purchase something on the Epic gam store let's say an i they have

to be also be able to use that item inside the game from um the the App Store um the users will also be allowed to install and use uh third party software and it is especially important to allow more competition among the app marketplaces that's why um now you know Microsoft and and epic games they are able to launch their own marketplaces just because the article 6.4 from dma allows that um you know enforces Apple to do that um so it means that you know in the future we may also see um steam Marketplace on the app store for example and one of the most important um uh consequences of the dma is that you can sell your iip and redirect your users to your web store um so um uh within the game you can advertise through notifications through messages through banners through through uh you know U other notifications that there's

something you know that the transaction can be finalized through web stores or third party Services where the user will be redirected and can finish uh finalize this transaction elsewhere and and that would mean that you don't actually have to pay the third commission from Apple or even the new commission guideline that has been introduced with the dma not everyone is happy about how Apple handled the the introduction of dma um among uh the the the app's Marketplace uh and and I think that in my personal opinion that will also um take some time before Apple will um lower much more the the commission that they're taking for for in-game app purchases or for um uh subscription uh paid payments inside the apps um we have made a Matrix where you can understand more clearly uh which is

your let's say tier in terms of like uh current dmaa setup in the Apple guidelines if you are a small business if you enroll into the program for small businesses with one less than 1 million um dollar of um um annual revenue then you fall into the small business and with you being um uh able to sell digital Goods the current plan will entail um uh 10% plus 3% using Apple's payment Service Plus uh 50 cents per install over a million um app installs um the the 50 cents per install over a million does not um so repeat installs count as one install so um at least there's no let's say double counting towards your bill to to Apple so in effect uh that's 13% plus u 50 50 cents um and that is when you are small bus business and you enroll into the new

plan and the dma uh for for Apple for larger businesses that's 177% plus 3% uh plus 50 Cent per install of a million uh so as you can see that is um not much of the change let's say uh and and apple will try to keep those you know percentages high enough um for uh for you to um um to reconsider let's say um your alternative payment method so um uh if you look at apps with at least a million app installs by vertical um then uh of course generative AI shopping have um um a large let's say share of apps which with more than 1 million uh app installs gaming overall that is um uh more than 4% um so Apple's um explanation for the new fee is that it will affect only 4% of the

total Mobile gaming Market 96% will stay um will have let's say less commission uh for the in-game up in our purchases for the new uh plans so if you want to uh try it out if your game has certain number of downloads um you can try out these two calculators you can see for yourself where you start uh paying more where you start paying less uh does it you know um uh is it worth it to switch to a new plan or not and so um one of the consequencies of opening um the app market places and the ecosystem for other players is that Microsoft epic gam store as I mentioned before they are introducing their own uh game stores at the end of this year so when you self distribute uh meaning that you um have your own distribution Channel you actually own the data um so uh one of

the advantages of having uh also your own distribution Channel such as web store is that you can actually see all the users behaviors on your web store for example um I take this um supercell Star as an example um Star Trek Fleet from from scle and all the big players on the uh Mobile gaming space has been essentially not only experimenting but thriving in the web store alternative distribution Market with um pla reporting over 25% of their revenue that's hundreds of millions of dollars uh per year um distribution via the web store so direct to Consumer is a strategy that um has um let's let say long been implemented among the largest players and as an example uh you can see the supercell star where um you can buy brawl Stars you can buy Clans items on

that web store uh being 10% 20% even in some cases 20 5% cheaper uh than the you know in-game uh purchases um they're not actively at least um how how it it is uh in practice they are not actively promoting that among their apple version of the game but for Android it's it's much easier uh at least for for Rio examp for example you can see notifications you can see messages banners promoting the web store where you can actually buy those in-game oppes uh up to 30% um cheaper uh than um in-game store and um this is not the only examples um out there um from Poland for example 10 square games uh has their own web store where you can buy um the ingame opportunties through the uh web store and also huge games um um uh has

been has been has um seeing some major success in terms of the web shop Revenue uh and also direct to Consumer um approaches um if you read through the pla's financial report for that year um the director consumer as I mentioned is already more than 25% of their revenue so um in short the mway game industry is where you know 22 billion of dollars is uh coming from the top U players so um having your own Diversified distribution Channel really works on your bottom line not so much uh you know the the top line revenue uh but the web stores and also alternative distribution will affect your profitability um and it will also unlock you know new ways of user acquisition uh on the web um so we we have built some

um out of the box let's say um solution uh so you can build that um Web Store using our solution um and the commission is really really low it's just 5% and and uh um 50 cents per transaction um how does it work in practice um the players they get communicated if it's not in the game they can get communicated through social channels through influencers that is the quisition channel for your existing players um you don't actually spend more on user acquisition because you redirect those users in the game to the web store um so essentially making more money from your existing player base not growing you know the marketing budget for acquiring new users so that is uh you know milking as much as possible from the your existing users so as you can see here once you um as a best practice let's say uh once you buy from the web

store um you can come back to the game uh and and you get an instant notification that the item was purchased and that's it and and the player can start using that item and and you know continue playing now having spent uh you know 10% to 25% less than um the in game in game store um so I'm going to talk about a few best practices that we see on the market as well as from from our own experience is one is um uh it is best uh if you build if you have a portfolio of games it is best to use one single web store or Marketplace for all your games um because um every time that an user purchases something from the web store they leave the email on the web store so you can essentially cross sell or upsell among your games and redirect users from different games to uh to one

to another and two is um um you will need a really intuitive and simple builder in uh to not um take away the time from precious time from your developers to build the web store and it also needs a native Payment Processing integration with custom customize branding and one of the best ways as mentioned to monetize that web store is actually to redirect the user from your existing user base um uh to to the web store from inside the game and the way it U Can Work is really simple the web star will can just send a web hook information or from your II um uh to check the user ID with or not send that information to the games back end the games back end will recognize if that transaction have gone through and if the user ID actually exist in the game or not not and then rewarding that

item or that currency uh to that uh user so um integration and time to Market is also really important uh the simpler let's say the better the best Solutions out there are the ones who will have definitely just a couple of calls to your games back end and and re verifying that transaction and verifying if that user ID or that server ID is correct or not um the SEC another best practice is to actually promote in the game you have to if you um are to use utilize the best from the web store is one redirect the users uh in the game um tell them about promotions tell them about the discounts that they get through the web store and typically we have seen 60% conversion rate from mobile from mobile game to the web so it means that if you do it correctly from your social media channels from your games um you can actually drive you know 60% of players

coming to the web store they will end up um um finalizing a trans transaction through the web store so thus you know saving you the 30% commission or any commission from the app marketplaces it is also important to localize the web store um so uh depending on the users's IP you have to actually offer them different currencies or payment methods that are localized for their um for for the let's say payment um usual needs so of course for the Polish market that's um bleck or J 24 um for Germany that could be Sofer uh and so um the next thing was would be you know actually having payment methods or the payment processing provided or payment or orchestrator to allow the glal payment methods for best converting um web store and two is to actually

handle the tax calculation the international taxal calculation um so inde is important for certain user IPS to calculate correct taxes because you in the end will be you know uh be responsible for filing those and Reporting those taxes um in our case in our solution we are the Merion of record so we take care of uh tax reporting and also calculation as well um but bear in mind that um and the payment integration also should be natively integrated within the web store um or you can also integrate it for yourself um um in terms of um how uh some of the partner providers out there um um provide the payment methods um they can act as let's say a master Merchant where they can distribute all the users payments to the

merchant account of uh your game your developer and then you can pay out those uh proceedings to your own bank bank account uh minus of course all the all the taxes all the commissions um uh along along the way um so this is uh something that we have also built um this is the the web store that um has been used by being um our solution uh so we can have uh a lot of play payment methods including credit cards Google play um wechart pay and other payments methods as well um and at the end uh you won't have to involve as much um from your development team because everything is Dr and drop and um uh no code um solution um so yeah uh that is uh everything from my side um and I hope that you can um get to know more about the dma um uh um using our

solution and also I encourage you to ask any any questions about the dma and also the web store Solutions on the market thank you [Applause]