Google Play's Rate Cuts: Winners, Losers, and Unknowns

It's been 2,030 days since Google and Apple pulled Fortnite from their stores. 2,030 days of court filings, appeals, counter appeals, and Tim Sweeney tweeting into the void. And last week, it ended. Epic and Google settled. Fortnite is coming back, and Google announced it's dropping its standard commission from 30% to 20% with a path to 15% for developers who jump through the right hoops. As the industry, we read the headline and exhaled. And then, we read the fine print. The 15% requires joining Google's Level Up program, which means integrating Google's AI sidekick into your games, implementing their achievement system, and by November, migrating to Google saves. On top of that, Google tax an additional 5% if you use their billing infrastructure. So, for a lot of developers, the real number isn't 15, it's 20 or 25 or even 30, depending on

where you live and when did you install the game. Tim Sweeney says this is a win, that Android is now a real open platform on par with Windows. That comp- that competition will drive fees even lower from here. And honestly, there is a version of that argument that holds up. But, here's the question nobody in the press has answered cleanly. What does this mean for the developers who already went direct? Over the last few years, a whole category of infrastructure was built around one simple bet, that 30% was indefensible, that players would follow developers off platform if they made it easy enough, and that owning the customer relationship was worth more than the convenience of staying inside the store. Web shops, direct payments, D2C storefronts. That bet looks different today than it did 6 months ago. So, today I'm sitting

down with Gil Tov Ly, CMO of AppCharge, one of the leading payment providers built specifically for games, to get an honest answer. Is Google's move good news, bad news, or just noise? Does 15% change the math on going direct? And what happens to this whole ecosystem if and when Apple eventually follows? Let's get into it.
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Gil Tov Ly, CMO of AppCharge, uh welcome to the podcast. Thanks, man. Thanks for having me. Google announced that they have reached a settlement with Epic. And it is confusing, at least for my small brain, that there's a bunch of numbers thrown, everything between 15 to 30%. But, it's not clear how and why, what do developers have to do. And so, just explain what has happened, and we'll dive deeper. If you're confused, I think

it's like it's part of the goal. So, like it's a feature, not a bug. Um the breakaway title is uh Google's dropping the the 30% tax to 15. But, when you start breaking it down, it's actually like a bunch of conditions to get to that 15, if at all. Um so, in some conditions, it stays at 30. What was announced is that Google is decoupling the service fee and its payments fee, which was until now just bundled, and you had to take the full thing for 30%. So, its own payments services are now 5% flat, no matter what you do. So, what remains is understanding the service fee that applies to your condition and to your situations. So, the first breaking point is uh differentiating between new users and your existing player base. Shinee uh 15% is when you taking um new users, and if you fall to several of like the Google additional programs uh that we can get to a bit later. Um but, that is not accounting for the 5%

transaction fee for using Google payments. So, um in reality, like the absolute favor- most favorable conditions, you're looking at uh 20%. But, those have a bunch of like caveats and and and hoops to jump through to get to that. It's like going Yeah, it's almost like going to a store in the US where they add the tax and the tip, and you're like, "Wait a minute."
Yeah. Yeah. Okay, the the the final price is very different. Um and in order to do do so, the developers have to integrate Google's AI-powered Play Games sidekick, and that gets you to the 15% to qualify for the program, as well as implement Google's achievement system. So, basically put in a lot of Google's data scraping features into your game.
All right. So, let's break it down. Um to get to that 15%, like to get down from 20% for new users to 15%, you need to um apply and then like get uh accredited for a program that's called

Level Up. That has a several requirements inside of it. Uh one of which is, like you said, cloud saves and a bunch of infrastructure that in of itself, that's already like a huge undertaking or overhead. Like, if you look at like the top developers, they would usually um have their their own back-end services that they build. Um so, like cloud saves and achievements and the user logins and all that. Small developers would sometimes use like PlayFab or MetaPlay uh like a Auryx Labs.
Um and the Nobody uses PlayFab. Nobody Okay. Uh you So, so So, Unity Unity Unity also have services that you can use. Like the the the core purpose of using these is that you build once, and then you user get like a cohesive, coherent experience across regardless if they played on iOS or or Android, right? So, like you build it once to allow multi-platform. So, now Google coming in and forcing you to do cloud saves on the Google ecosystem with just like this it's a huge overhead. Like, it will make you have to integrate that and then do a

wrap around that to maintain that same experience regardless if the user logs in from iOS or or Android version of your game. Uh so, that's that in of itself, that's already a huge undertaking. And like that's a lot of engineering overhead. Um what you said about the AI assistant is another requirement there. Like, it's supposed to be user-facing, like player-facing, Google coming out to service the player better. Um but, do you remember like the first days of Gemini with like every Google apps, like you want to use Gemini, you would Like, that's what I have in mind when I look when I think about that. And yeah, there's also like the data play. So, all in all, like though that program exists, the Level Up program exists, but yeah, we're seeing also hearing like developers coming into this with like um like a grain of salt or like just like uh some hesitance hesitancy and trying to figure out what will that entail. I've heard uh concerns about uh data issues. I've heard concern about the UX. And And if you look like like a top game developer,

they're so analytical and they're so they've been experimenting for years about just like getting the perfect UX. Do you want to like break it out like a pop-up of a of a UI assistant? Like, that's like that's a very harsh requirement to to be even be like admitted to that like the Level Up program. The sidekick's role is to help the players to figure out what to do in the game, which is um confusing. I never Yeah, it doesn't seem like a like a thing that players are demanding, and this is finally coming. It's It's what we've always wanted. It's to swipe right and figure out exactly what you can do next, because in free-to-play games, that's really clear. We have missions, we have tasks, we have all of those things kind of attached. You don't you know, if you want to dive deeper into strategy, you kind of dive in into the different forums and the community pages, not to an AI assistant. Yeah. There's a lot of good in this new deal. Like, we believe there's a lot of good in for the industry in this new deal. But, like that requirement for the Level Up program, I think that like uh

in broad strokes, that's going to be very hard sell for big publishers. Maybe for mid-tier, that's like something interesting for them to explore, and like the 5% is like justifies that. But, for like the top, I don't know, top 100 studios, it's probably going to be a very hard sell. And like you said, like you even hear the studios say the same. Yeah, I've I've I've heard some of the top studios not being very receptive for this sidekick and all the uh the integration. What have you been hearing on your side? This is just a proposed settlement. So, we advise to not rush into any actions or not to rush to any um change changes to your engineering roadmap until this gets like the final ink. So, there's a court hearing in April 9, and the judge Judge Donato has to approve this. Uh so, before that, everything is still like proposed. So, we recommend like holding firm. Um but, even after the fact, like we recommend that um once this gets approved, and we think it's like likely

going to get approved, we do recommend that publishers will sign up to um the official program, not the Level Up one, but just like the official program of utilizing all the good stuff that is in this deal. And maybe we can get to that later. Um but, in terms of like the Level Up um specific program and in uh implementing those features into the games, um we want to see what is like the exact technical requirements, because uh Google hasn't been clear about that perfectly yet. So, for that too, like we recommend waiting.
What's good about this program? So, there's a bunch of cool stuff about this. For start off, um it's the first time that DTC is being getting like this like official recognition that this is something that's like it's it's no longer cloak and dagger. It's no longer like gray hat. Um this is like an off- There's an official route to steer players outside of your app to either like discover the web store or make a purchase. Or not not even not not not even just the web store, like even like a web checkout for completing like an an in-app purchase. And there's a pathway to do that globally, which is cool. Because until

now, all of this like amazing period that we have experienced in the last year with in-app purchases and steering, what we call payment links, that was US only. Um it it used to be iOS only for the first 6 months, and now it's like it's iOS and Android. Like there was a Tim Sweeney interview with Dean Takahashi, and he said like So like if you look at like Android players, only like 5% of Android users are US-based. Only then only they got a a chance to enjoy this until now. So that's like the first cool part. The second cool part is that it allows a bunch of like really cool things. It allows you to communicate freely. There's no like guardrails around that. You can communicate freely with your players about the existence of a web store. If you built a website and you manage your web store, you can communicate freely about the existence of the web store and even like talk about like the value proposition. Um once you once you do a link out, there's those fees involved. But just talking about the web store, um as we understand it now, there aren't any. Um secondly, even when you take into the account all of the fees, there

are certain conditions that the link out uh serves a purpose. Once you look at like the mid-tier players, the mid-core players, um there's an an added advantage to like educating them about the existence of of an option to pay else to pay elsewhere. And you you get it um the benefit of getting their email, getting their saved credit card, and that in of itself there's a lot of value in that.
Mhm. Got it. So there's a clear link out process now. And there's an allowance of communication about the uh the existence of a web shop that is official communication rather than uh shady WhatsApp messages that can come into the player. Um so so what's the the final number that that developers have to pay? Because you know, everything from between 15 and 30. So this is only for new users, right? So let's actually talk about the existing users because for the most of the of the the the big studios that we know, like the bulk of their definitely like power users are existing. Um So for existing users, uh if you don't

uh opt into the um uh level up program, you're looking at 25%. So if you take in that 5% purchase fee, that's still 30%. So nothing has changed. But um in certain conditions when you don't discount uh when you don't use the the Apple payments, um it's still a lot of interesting things. So nothing changes for the existing users. Can you use both? So you sign up to level up, you start making your own web shop for existing player base, and then the new player base comes in at this discount, right? Or how do how does this work? Big studios buy users all the time. Um when when we when Google talks about a new user, it's a new user. Um it doesn't like the install date compared to when this new terms will pass. So we're talking about like end of June. Um but uh for them it's it's 5% lower. How does this affect the business case

for web shop and direct-to-consumer providers like AppCharge? So we've been saying this since April 30th when the the the big like uh iOS court case in the US was passed that um web stores will remain the most profitable, the highest margin DTC channel always. And um the the fact that the gates were have opened and allow like communicating to players in app just made it even more important to educate them about the existence of the web store. And the cool thing cool uh stat is that we saw from iOS payment links is that um payment links is actually a great educator uh or on-ramp to like regular DTC or web store. So like studios who operate both a web store and in-app payments saw that like 25% of players who buy through payment links end up being retained web store purchasers. So it's like a it's like a UA cost um to get them to adopt DTC. Um for the business case, we still think

that this makes the web store more important than ever. If you take like even the most favorable conditions of 15% plus 5% Google Pay, so 20%, um compared to um regular margins you usually pay for web store, which is like 4% 5% depending on your volume, that's a huge margin change. Um and we have to remember like we've been doing DTC at scale before all of this. Developers have been investing for years in like direct communication. So Discord groups, WhatsApp groups, Facebook groups, and um emails, CRMs, like the way to educate players not just that the web store exists, but that continuously reinforce the habit of that's where you're going to get your best deals. Um we've we've helped studios get to 30% before like last year in April 30th and all those court cases. So all of these tools to steer your highest paying users to web store still exist, and they're stronger than ever now because there's are more refined, more approved methods now to educate players about your web

store, that it has the best deals, and how to steer them towards that. And what does the business case look like when I compare between let's say I integrate AppCharge to the fullest, get the web shop, get everything going, how much do I save versus if I go all in on level up, put in all the sidekicks, all the Geminis on top of my game, and get to that is it 15 plus 5%? So 20, right? What's what's the uh what's the difference in ter- in terms of percentages that you're seeing? So the cool part is that you don't have to choose. Um with a good partner on your side, like a good you should you should build your web store and keep like relevant offers on that, and integrate um cool monetization features to get players um retained and to adopt the habit. And you also you can also integrate in-app payments through those new programs to um steer uh high transactions, for example, where like you those 5% those 10% discount will pay more more of a

factor. And also to again like to acquire that user to like get their email, get their credit card details to get them to then be like a repeat purchaser on the web store. So the the right answer is is both. You should use both. You shouldn't just like um prioritize one over the other or go all in on one over the other. Um these tools work extremely well when you combine them together in a smart way. And that's how we saw a lot of success with publishers who surpassed 30% 35% DTC share out of their revenue. Yeah, of course. So owning your own DTC strategy or your own web shop means that uh it's not just about saving on commission, it's about owning the customer relationship, their data, uh the the whole subscription infrastructure. So that that's understandable. I'm I'm nevertheless curious to understand is like how low can a percentage go? Like I we know with Google the the lowest percentage that it could go now is 20. How low have you seen it go through

um similar type of integration with your own web shops? So like I said before, we typically charge like between like say four and four and a half percent, 5%, or sometimes even lower depending on volume. Um and that's what you see. Like that's what that's the that's the the the the big delta in in the in the margins, those say 15% of added profit to you. Um and we've been doing that for years to a lot of success. It seems like you see this move by Google as positive for AppCharge, right? This industry has been like there's been ebbs and flows and in shifts all the time. But we think that this is a positive trend, and we hope that Apple will follow suit to allow this done globally. And we actually think that it's it's a really good advancement that the platforms are acknowledging DTC properly this time around. And we've will work with our clients and our developers to make sure that we implement this in the right way, and the way that like benefits all parties. We think that there's a a good advantage

here. Apple is majority of all the in-app purchase in-app purchases that are happening on mobile. What is it? 70 to 80%? So Google is actually quite small. It you know, volume-wise big, but purchases-wise small. Is there um timeline uh that you believe, or not believe, but you assume when Apple would be following suit with these uh lowering of the fees and allowing the uh the link outs and communication of the web shop?
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So I I wouldn't expect anything until like the ink ink has dried. So uh like we recommend developers just like hold tight and and see what where the where the dust settles. Um I'm guessing we're not going to see anything from Apple at the very least until like April uh 9th and and the court ruling of accepting this settlement. Um and if you look at like the roll out dates, uh Google is rolling this out in in waves. So it starts in like June 30th and goes all the way to September when they when this

roll when when they roll this out globally. So even if this gets accepted, there are a few months until we like start seeing this. I don't expect Apple to um move preemptively uh by any means. I don't think that like it's it's in their um nature to act until they're either compelled by regulation or compelled by a court. Uh so we just saw them like dropping rates in China because they were compelled by regulation. They they dropped it by 5%. Um but I don't expect to see anything from them until say Q3. Yeah, I I would agree on that. Like it's very unlikely that Apple would budge on on the uh on anything that they're doing even with the uh with the court case going with Epic.
If you look at like like just like break down revenue of like the iOS App Store, um maybe it's not a huge portion of like Apple's revenue, but it's actually a huge portion of their margin. EBITDA revenue. Yeah, EBITDA. So, it's it's something that they will hold like they hold very dear. They will hold close to chest and and as slow as they

can. So, unless they're like compelled by regulation or courts, um I'm guessing like we're going to see them um being very late to the party if at all. I I we we which is a shame. Like we do believe that again like more choice means better uh options and and like a win-win for every one. Uh we intend if this like gets approved, we intend to work um with Google. Like we intend to work with the platforms to make sure that we um can guide developers to um uh implement those terms um um properly and in the right way. You have to make sure that you do this properly um to usher in this new age of DTC which is like more organized and more white-listed. That's what we aim to do and we would hope to do the same with Apple. Um should this thing get approved and there's like a one global terms and a regulated way of DTC. We think this is positive. We think this is how it should be. The Epic settlement, when talking to different people, somebody can view it as a win and others

can view it as a sellout. Uh what's your opinion? That's tricky. Um So, I think it's better than the last one. Like this one is better than the last one. If you remember like the last settlement that the Epic came and brought up with Google, there was a carveout for cosmetics and cosmetic which was subject to like 9% fee. So, this one doesn't have this. So, and then and like for that settlement the judge basically like declined to accept this as a as a proper settlement. Um and this time around they removed it. So, there's no longer a carveout. Um as they were discussing this, I'm guessing that Google is getting more favorable sorry, Epic is getting more favorable favorable terms than your average developer. But be that as it may like this has been like a huge undertaking um for Epic and for Tim Sweeney to fight this globally in different countries. Like the legal costs alone must have been insane. There's actually like again like a cool tidbit from the uh Tim Sweeney Dean Takahashi interview in GamesBeat that like Google is actually

covering Epic Games legal fees uh as part of the settlement. So, that they haven't they haven't mentioned a number, but like I I found that interesting that uh Epic's actually going to get their legal fees covered in all of this. So, um I don't know if I would call all this a sellout. Um it's not the best deal it could have been. Um Tim Sweeney has said uh that for them this is like um like after the gains that were like on the table to grab rather than like having this drag out for years on end to get approved one country at a time. I wouldn't call this a sellout. What do what do you think? I think they've taken a lot of damage. Like Fortnite was one of the top games when they started this process. It was not only top games on PC and console, but it was also a top game on mobile. They took it off uh they started this fight. They believed it was existential.

And now they're they're coming back. There's a slight discount from where this this began. I don't see this as a monumental change for the industry. It moved the needle perhaps a little bit. At the same time Fortnite is all but gone from mobile players. It's much smaller than it used to be on on on the other platforms. So, it's understandable that they kind of come to terms. Uh but again, they were fighting giants. The likelihood of winning that especially with um with this lawfare as as you would call it where they can drag out the cases. Google is not going to run out of the money. Neither will Apple. I mean Epic is not going to run out of money, but their businesses is being hurt because they essentially have one single product which is Fortnite. Epic engine Unreal Engine is you know cool. Uh but it's it's it's not the one that that justifies the billions of dollars in valuation.

So, I think I think that was a I would have say I would say anticlimactic ending to it all. Uh we'll have to see how this will play out and like you said like if developers will actually take this and adopt this and and if they do adopt this like do they go all in and go through the engineering overhead to apply and meet the requirements or they just like okay, so we'll take the 20% and we'll find how to utilize that extra 10 with partners like Upcharge and alternative app stores and all that. Is it 20% or 25%? I'm so confused by this 5% tip to Google.
So, for new users uh if you don't apply to uh level up, it's 20%. And if you don't use Google's payments. If you use Google payments, it's uh 25. Okay. So, essentially it's a 5% discount. Uh at least you can not use Google payments and and use it use a smarter uh

partner um to charge globally uh actually to accept payments and to process payments globally. And then like it's 20%. What what would be an alternative to Google payments? Upcharge. Got it. So, but essentially you're saying just use both. And if you start using Upcharge for your payment provider, then you might as well just set up a web shop as well where your more audience will be doing more payments through that and you're saving on a bigger chunk. Yeah, we think there are a bunch of cool new opportunities that this opens. Again like if this gets approved of uh new innovations for DTC and in-app purchases to make it more native, to make it more convenient uh that we're um exploring and developing. Um but even if you look at like the tools available today, yeah, use both, use everything uh in a smart way. Everything that makes sense like like in terms like justifies the overhead because creating a good web store is it's a process and you have to commit to like not just building it, but

actually running it like in the live ops and managing your players and managing like the offers and and and uh and do personalization and all that. Um but it's worth it. Like we're seeing such a huge portion of the industry growth uh contributed to DTC. Yeah, profitability always is a good thing for especially when CPIs are going up. Um just to conclude this. I mean again, there's a two ways to see this. So, you can see this as as Epic forcing Google to be more pro-developer um and coming up with these sophisticated solutions to help players to find new content and engage more with the content that they're playing like the sidekick. Uh or there's a view of this as um Google is not giving in actually. They are doing this little discount, but it comes with with sophisticated data acquisition played dressed as generosity. Uh which one do you believe this is?

So, I'm an optimist. Uh always have been. I'm a romantic. Um I want to see the good in people. I want to see the the good outcome that is to be held or to be um drawn from every situation. Um I do not know if like I would adopt um level up because of the data concerns, because of the UX concerns, because of the overhead of um maintaining cloud saves that I don't want to. Um so, I don't know if I'll go all in on that. Maybe there's like a mid-tier studio that it will fit him, but I don't know if I would. But I can choose to not take that and I can choose to take out of this deal what service me as a studio and what service my players. So, I can educate them about the existence of not just the web store, but a place to have a direct relationship with me. And I can get their email and I can get the communication. I can get the credit card. Uh so, they can have better offers and they can purchase faster and quicker. Um and I can cherry-pick what what's good for me in this deal and uh

do what's right for my studio. I don't have to drink the full Kool-Aid. Um yeah, I do share some concerns that you mentioned, but I think it's good that those all of those things are optional and there's value to be had even if you don't adopt level up, even if you don't adopt that and you do a smart job of taking the best of every new tool and every new channel to uh um get the most out of it in a synergistic way. Well, thank you Gil for neutral take on on this this latest change. Uh I tried to push you to give a more uh
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more edgy one, but you stay you stayed right in the middle. I tried to. Kudos for you on that. Um it's uh we'll we'll follow up. We'll we'll we'll see how this evolves, what the implications are for Apple, what are the biggest publishers going to do, whether they are going to adapt. Will they going to get drink the full Kool-Aid or take a couple of sips? Uh we'll see that over time, but this is definitely an interesting

turn of events both in in terms of the settlement of this long haul Epic case as well as the way this has been communicated in the middle of GDC in a quite confusing of a way throwing different percentages tying in different types of elements that you have to put into your game to get a bigger discount. All of those are always question marks and um worth the conversation. So, thank you again Gil for jumping in on this quick podcast to explain from your perspective what's going on and how this affects DTC web shops um and platforms and games overall. Thanks for having me and and uh like last message is like um to all of our clients and to even people who don't work with us. We're very happy to discuss. We're very happy to like we're keeping very close tie eyes on this to understand exactly the technical requirements that Google will release soon and what will happen on the

court hearing in April 9. So if you're of any confusion or you want to just like dive deep and and have us help you understand what's right for your studio. We're happy to chat and we're very happy to take the call. And we'll stay on this and make sure that like we guide at least our partners and our clients to the best of how to navigate this like rough waters and changing times in the industry. All right. Well, connect with App Charge best in the business. Thanks everybody for listening. And catch you on the next next episode. You did it. You made it to the end of the episode. As a fan of the show we would help us out if you'd subscribe and leave [music] us a review on the podcast service of your choice. Those stars and likes while a small action on your part mean a lot to us and help to grow the show. More importantly, are you a member of the Deconstructor of Fun Slack Group? If you have five years or more of games industry experience, go to

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