EMERGENCY EPISODE: Capitalize on The Epic vs. Apple Ruling

[Music] Mah, welcome to the podcast. Thank you. Thank you, MK. Honored to be here for the first time. And thanks for jumping in on such a short notice because we have an emergency podcast episode. Oh, yeah. Now, we're having you here because you've been in the trenches. You've been building alternative payment infrastructure for years now, Appcharge, and we got to just dive right into this. So, last week there was a big ruling and if I'm a studio that has around 10 million in annual run rate, what is it that I should be doing? How should I be changing my strategy with the uh the latest ruling in Epic versus Apple case? So I I want to zoom out first before we we deep dive into everything like uh give a little bit of background to the audience. Uh so it it all started in in in 2020 and uh in the ruling of 21,

Judge Ivon Gonzalez Rogers uh which held the case. Uh and basically Epic lost on everything including getting excluded out of the app store besides of the external payment links. And I think back then the court was premature to decide what's going to be and how it's going to look like. Um, now Judge Gonzalez is way more specific in practice. What does it mean? It means that mobile developers can make link freely to external payments from within the app. You don't even need a web store, but let's let's hold our horses. I don't think it's the end of of of this court case. What does it mean? It's a big moment. It's a big moment for all of us. Uh, we we won the battle. It means you can link freely from iOS, but only in the US. uh if you're a a small studio or a medium-sized studio, 10 million a year, it's just way more

simple now to uh sell directly to the consumers without paying the Apple tax. And this is not that old of a case. Like if we zoom back, it started with 2020 when when Epic released those payment options in Fortnite and then Apple removes Fortnite from the app store. Then Epic sues Apple. Then Apple counters sues Epic. They go to the uh the trial. And in that trial, basically what is being ruled is that Apple is not monopolisted under the federal or state antitrust laws. And that Apple was ordered back in 2021 to allow developers to direct users to alternative payment methods. And then both Apple and Epic appealed that decision. And since then what was happening is basically Apple's normal where heads I win and tails you lose. So essentially they yes you could have done it where you push to the other payment services but then you had the technology fee that they put in

50 cent for every install every year and reoccurring payment and also you have need to pay 27% tax on the payments done on an outside platforms and then there was the whole the steering issues whether if you see an ad for a link in YouTube was that YouTube downloaded through app store or not is it part of it or is not so basically there's just being very anti-competitive and where it ended up just last week was that essentially judge f found Apple to be in willful violation of the 2021 injunction. So all these court l kind of ended it back in where it started. Uh the whole imposition of that 27% tax on external purchases was BS according to the judge. You can't restrict developers about informing of alternative payment options. And more importantly, they even went directly against Apple and against their VP of finance to federal so

informed the federal prosecutor of potential crime on contempt charges. Yeah. Yeah. So, so, so basically where we are right now is last month or last day of last month, Apple was ceased collecting commissions on external purchases. They allow developers to communicate freely with users about alternative payment methods. They had to pay Epic's legal fees, which is Epic. And Epic announced that Fortnite is back on US iOS app store. And I just recently saw from Gil, your CMO, he was posting on LinkedIn the changes on Spotify, how they inform users on alternative payment systems and the new prices. That's already live in the US. So, a lot has changed in just a couple of days. And what you're saying is we won the battle but the war is not over. Right. Exactly. Interesting. Who really benefits from this? So who really benefits? I would say the the rising tide lifts all boats my friend. So uh everybody's benefiting

from smaller to medium studios. I think it just became way more simple to go live in one day. you can link directly and uh and the funnel is not that inferior anymore. Boom. You're going back to the game. You're linking, you're going to the checkout uh from the regular funnel that the the developers designed for the user and going back straight to this funnel without leaving the app at all. It means it's not only rational purchases, it's also emotional purchases as well. H yes in theory everybody benefits but some benefit more than others. So let me provide my hypothesis of this. If you already have integrated alternative payment systems let's say you are one of the big publishers you're Scoply you're Stillfront you're Supercell you have a lot of live games large audience a lot of paying users and they are already doing web purchases. So between 50 to I

don't know 25% of your revenue is coming already through web shops. You'd assume that these established players are benefiting the most because now they already have the process, they already have the web source and they can be much more efficient in driving users to use their own payment solutions that are battle tested, if you will. uh compared to let's say smaller developers who maybe are just now integrating web shops and because these larger games, larger companies have headway, they are able to cement their position because now they are even more profitable than before. What do you think about that? If we're under the assumption the ruling is going to stay still, and I personally don't think it's going to stay still, it's it's extremely temporary. But assuming it would, on the contrary, be due to the simple reason you just don't need a store and you don't need to pay uh to get a lot of extra value and do the extra effort to

um steer users to the web stores. It's just a part of the regular funnel and the integration is simple. It's like a one-day integration. That's it. It's just a part of the regular funnel. You you you let's say you want to purchase a digital currency a spin uh a skin, you click it and instead of opening the Apple screen, it just goes to the checkout and goes back to the game. So the whole hard work that we've done and we've accomplished and other developers did really amazing job there, it just not as needed as before. Yeah, you want to have the the direct to consumer channels and the and the portals and the way to communicate, but it's just not the superior funnel anymore. Okay. So, it's easy to integrate and that's not the uh the challenge. But how about you you said one thing, you're not you don't believe that this will stay. So assuming that you're a careful

publisher, how should you think about it if you want to stay on Apple's good side for the long run and not kind of jump on this this latest result of a battle between Epic and and Apple? So luckily um that's already in Apple's guidelines, right? In the United States storefront, no prohibition on app, including buttons, external links, or other calls to action, and no entitlement is required to do so. It's perfectly legal. So, there is no good side or bad side on Apple. As long as it's legal by court of law, Apple can't do anything about it, and you should take advantage of it as as fast as possible. And it's time to act now. If you're smart, you're planning for the long run and you want to uh cover all the um possible scenarios in the foreseeable future, you also pump the the web store and the direct to consumer channels cuz there might be a day when Apple is going to overrule uh um what happened the

injunction and you want to have as many FTDs as you can so users will get to know the external payments, the web store regardless of what's going to happen. What's an FTD? First- time deposit. Okay. So, basically now because of the uh the latest ruling and because now you can freely drive traffic to your web store, we don't know how long this will be active. The more firsttime deposits you can have right now, the larger customer base you will have for future whether this ruling stays or not. Exactly. Exactly. And it's there's a big friction. It's I think it's one of the biggest frictions on uh web stores to get the first time deposits. And now when you have the liberty to promote the the payment links or the links out uh alongside with the web store and uh your direct to consumer channels, it's just

it's it's a blast. It's a it's it's a golden opportunity. Today's podcast is brought to you by Absly, inviting you to dive into their new firstofits-kind report, the state of creative optimization 2025 edition. It's not about how to make creatives. It's about understanding what makes users actually stop scrolling and what emotional and psychological triggers drive performance. Based on over a million creative variations and nearly $2.5 billion dollars in ad spend, the insights in the report will help you develop a winning creative strategy. Check out the link in the podcast description below or go to appslire.com and search the state of creative optimization. That's appslire.com. So talking about blast and golden opportunities, is it going to be the wild wild west of of you know developers driving first time deposits? It's going to be very straightforward. Hey, do this, get that.

We we recommend all of our uh clients and friends uh uh even when you're opt to do so, do it carefully. Do it with a feature flag. Every move that you take, I don't need to tell it to developers. They know it better than we do. do it databased. Start with a specific segment. See how they react. Even though it's almost like 100, it's not 100. It's like 98% natural flow. It's a different uh checkout method. You want to see how they react. Maybe you want to pop a window before it's like, hey, this is our new payment method. So, do it carefully. Do it smartly and then uh you will be the victorious. Got it. So, first thing for a publisher or developer is set up a task team. Basically, product managers and UI designers and and an artist and maybe a programmer to work on experimenting with your web store flow, trying different AB tests, seeing the conversion, just doing the normal product management stuff to optimize it. Even though the integration

of a web shop is not that difficult, optimization is a part of any game, web shops included. Exactly. Exactly. We're talking about the the the payment links in specific, the linkouts. Yeah. So, we've been talking about these smaller to midsize studios on who can immediately benefit from this by setting up their their their web shops and starting to optimize against them. What about the large publishers? like what is their strategy? What kind of opportunities they have that the the smaller to mid-size developers don't have? Everyone should connect these purchases to their MMPs. Um and then the larger ones uh with that are sophisticated and have deeper pockets, they can already take into the account the new LTV. And when you take into account the new LTV, you're competing and you're bidding better on the user acquisition market. So I think this is one of the uh

strongest benefits the larger studios has. But the small medium one has from my experience they usually they're more agile, they're nimble, they're quick, they're moving fast, they're testing fast, they're going live fast. So um if you could do both, you're going to be a winner. And weren't they able before connect that new LTV to web shop users or is this just a new opportunity? No, they were they were 100%. It was always a part of our our pitch. Now it's just very significant. You're you're able to steer half of your traffic. Take it on on on their account cuz it's not going to happening happen in a day. If you're planning it ahead and uh and and and and you're already spending like you're doing it, you're going to be ahead of everyone in the market. So basically, you're able to bit more and in a market that is not growing significantly, you're taking larger market share and taking market shares from others that are late to this new

LTV enhancement. Yeah, exactly. So you talked about this ruling not maybe staying over time and we know Apple doesn't take anything lying down. So so what kind of a counter moves could they make and how would this impact developers who are jumping in on this web shop train e or have jumped in and now just you know really optimizing against it. It's it's an interesting question. So just uh firstly uh let's understand the math. Do you know approximately how much Apple are profiting in percentages out of their ebitita on the on the app store? Uh ebida from app store revenues I would say less than 10%. So it's even more it's like 15% of the of Apple Apple's uh EBIA. Wow. So it's even though the revenues are quite small

the profitability is incredibly high. Profit is incredibly high. Apple's EBITA in 24 was 136 billion. App Store revenue was 91.6 billion for Apple and let's say on average they're keeping 25% out of it and they have incredibly incredibly high margins on it. I would say more than 90 something%. They're they're they're saying not because they are incentivized to show it differently. But the number is probably around $20 billion profit to the underlying. So Apple is not going to let go. It's big bucks for them. I think they're going to fight it first and foremost on the federal level and the state level. Um, and then they're going to look on how to optimize specifically uh with developers probably trying to get back into like uh ASO considerations mostly for developers

that are counting on organic promotions. But uh that's the only thing that I can u um I can imagine. You can't you can't stop the progress and competition. What's what's the uh what's the practical advice on on if you really want to move fast and as you say like you need to take advantage of this right now get the first deposits in establish that customer relationship if that still does not exist but you don't want to also get burned by future policy changes like it's a challenging thing for an executive to think is like how much should I be investing into this knowing or not knowing having a hunch that something big is going It's uh good question. So it's it's since the the integration is very straightforward and simple. I would advise first and foremost integrate a payment link. It's one day of work. Start testing it. Do it smartly. Like just just like we said, start steering

uh traffic directly to your payment link or your link out. That's like the short-term plan. On top of it, I would still highly uh recommend to establish the direct to consumer strategy, web stores in specific for the day that the the the ruling is going to be o overridden and and promote both test the the payment links the the the steering directly and now you are perfectly obliged to promote your web store, your direct to consumer links, your loyalty programs. So just do both. The web store is a bit of a longer integration, but that's like the short and medium-term strategy I would recommend. So just to summarize this, like the playbook now, I'm running that $5 to$50 million mobile gaming studio early things, payment link right away. And the payment link basically is when I'm trying to purchase something from the store, it gives me an option whether I

want to use Apple Pay to get the uh the missing gems or I want to use this channel that will give me ability to store my credit card and use uh my you know direct deposit essentially to to pay right you don't even need to present Apple's payment method like in today's rule you can strictly go directly to yours. You need to test if it's uh not if you're not losing on the funnel. But you can go directly solely to your payment link, your link out. Yeah, that's how straightforward it is. Wow. After you're doing this, simultaneously promote your direct to consumer channel, your inner circle, your loyalty program for the day to come to make your users, your players aware aware of what's going on out there to make the uh the FTD just to lose friction for and and then to to be the the developer that planned ahead. Got it. And promote loyalty program

means join this WhatsApp group or email mailing list, right? Yes. Yes. Yes. One one of many. Join, sign up, buy, claim the freebie, everything that will bring attraction outside of the native gently, smartly, datadriven. But yes and then and that's that's so the payment link testing whether you can use just the link and you able to h have higher EBID or profitability then versus using the Apple payment or the combination of those two. So you're running uh AB test on that. Then second step is you're promoting your loyalty program. So, you have to actually develop some type of a loyalty program or it's just a signup list at least where you can get start getting the, you know, the emails or the WhatsApp groups and whatnot to to start building around that. And that's kind of your shortterm targets. The um the first 30 days, the the first 60 days, you should be implementing your own web

store, right? Yeah. implementing your own web store and promote it as the direct to consumer place to come that uh things are happening there trying to to push for a even a minor deposit just to to to o overcome the the friction of uh leaving the the credit card details there or using the Apple Pay not in the native app environment. So that's what I would do. What's the sort of a long term? we're talking about well longterm like 3 months and beyond like what what type of strategy should I be pursuing? So it's really hard to plan in today's market uh what's going to happen three three months and beyond. So I'll just share my my thoughts of of what we're sharing with our partners. Uh and it applied before um the uh the recent ruling and it applies now. Own your users, meaning somehow get their emails, get their phone numbers if you're

allowed on the region. Connect your their Facebook ID to their player ID. Understand who they are. Establish multi- channelannel communication. So, you'll be able to get to everyone from one click to to uh multi- channels, email, Discord, Facebook, even in-game chat. Now, it's allowed. And reiterate, automate, see how it works. Perfect. So, optimization, unoptimization, and building your CRM essentially. Exactly. And does Appch charge have kind of like these playbooks or something you can you can study to get to get started really in terms of uh loyalty programs, in terms of payment link integrations, in terms of uh how to build your web web store and what kind of an AB test to run? Of course. So we have a a a great team, the best people have ever worked here in Appcharge. Uh you can go into our website. There are a lot of materials like you just said, uh our CMO is constantly uh posting.

Everyone are are savvy and are constantly keeping up to date what's happening in the market. And if you want the off menu stuff like the good stuff, just uh you need to approach us in person. All right. So I'll add links into the description below. So both your LinkedIn, your CMO's LinkedIn link to App Chargers's page where you can find all kinds of material that gets you started, gets you collecting your customer relationship base and hopefully increasing your LTV significantly enough so you can take larger market share. Exactly. Thank you so much, Mishka. I'm a huge fan of this podcast. So, uh, thanks for having me and, uh, see you soon. See you soon. You did it. You made it to the end of the episode. As a fan of the show, it would help us out if you'd subscribe and leave us a review on the podcast service of your choice. Those stars and likes, while small action on your part, mean a

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