Session: The End of Global DTC: How Regulation Is Forcing Regional Player Flows - Archie Stonehill.

So, up next, I'd like to welcome Welcome Archie Stonehill from Stash to the stage who's going to be talking about the end of global DTC, how regulation is forcing regional player flow. So, please give a warm welcome to Archie. Hello. This works. All right. Hello. Good to meet you all. I'm Archie. I'm the chief growth officer at Stash. Um, and today I'll be speaking about regulations and app store policy and DOC. If that doesn't get you excited, I don't know what will. I'm always going on about this stuff. So this is the first time my team actually let me give

a presentation about it because it seems like people are suddenly interested in it. Uh so be running through a bit about app store policy background and what what the app store policies say then looking at kind of the history how we got here and where we're going in terms of regulations. Um and then we'll just touch very briefly on some strategies that we deploy that are kind of compliant for different types of regulatory um frameworks. So just starting quickly with the um the background on app store policies. So more or less there are three ways that app stores uh restrict game developers that really matter. Um so the first is that they force you to use their payment rails and they charge you 30% for that. Um I think everyone's familiar with that and that's specifically for app store distributed games which kind of touches on the second point which is third here which is distribution kind of how you can distribute your game is determined by the app stores. And then the third one is anti- steering which is kind of what you can say to your users about where else they can purchase and how you can direct them there and that's called

steering when you tell them hey you can purchase on the web. So you can think about these three restrictions as kind of through the user journey. Okay, how do I access the game? That's distribution. What can I pay? How can I pay when I'm in the game? That's um native app payment rails. And then there's well what can I do to send the user elsewhere? That's anti- steering. There's a few other ways they dist they restrict game developers which matter. Kind of probably the most notable is the store within install restrictions which have presented the growth of super apps. But for most individual game developers, these are the three uh policies that matter. And so you might want to keep these in mind uh throughout the talk because it'll pro provide some important kind of context and frameworks. So if we look at the history, you kind of have the the kind of traditional landscape which was um you know before 2021 uh app stores restricted all of those things. You had to distribute you know through their policies with some exceptions on Android or or they placed very severe user experience restrictions on distributing uh outside of the apps. You

know you couldn't steer users and then and and you of course had to use their payment rails. The first thing to change was in 2021. This was the first consequence of the Apple versus Epic lawsuits. Um, they got rid of a restriction which said that for users acquired from within the app, you weren't allowed to tell them about alternative purchase options even outside of the app. So that was the first restriction. So that meant if you got a user's email in the app, you couldn't even email them saying, "Hey, we have a web store." That changed in 2021. And since then, you've seen a real like kind of reduction in those policies. And there's kind of two ways this has happened. The first is through new legislation. That's basically everywhere outside of America has implemented new legislation that's changed this. Um and then the second one is in America, you've seen a kind of um a different type of push back through the courts, most notably through the Epic versus Apple, Epic versus Google lawsuits, which have really taken aim at anti- steering. Um so we kind of had this period where nothing changed for a long time. And then starting in 2021,

but really picking up in 2023, you suddenly saw a lot of changes with the DMA in Europe um and uh you know the Epic versus Apple case in America and we'll be talking about what what's actually changed, what hasn't changed, but that's kind of the history and we might now be entering a new phase in which some of those gains are being solidified or kind of pushed back. Okay, so the this is going to kind of lay out some broad policy archetypes of where we live today. So the first archetype is the traditional archetype. That's where no anti- steer anti- steering is in place. So no steering, you have to use their payment rails and you can't distribute outside of the app stores. So for everywhere that hasn't been ch that hasn't seen any changes, that's still the status quo. The second policy archetype is what I'm calling the open steering archetype, which allows for complete restrict like no restrictions on steering. Um you can direct users anywhere to pay um outside of the app, but you still have to use app store payment methods for app store distributed games. Um and then you know there hasn't really been any serious change there on payments or

distribution. That paradigm really exists in America where you've seen iOS in America for example has allowed linkout payments but no real other changes. Um and then the third archetype is this kind of mixed or taxed archetype which is um more traditionally associated with like these new pieces of legislation like the DMA in Europe. And there it's kind of a mixed bag. You've won a lot of gains on paper, but none of them have really been worthwhile for developers because a lot of in those cases, a lot of the anti- steering restrictions, the lifting on those has been combined with attacks on those linkouts. Um, so although there's been a lot of gains on paper, there haven't been that many that have led to substantive changes in how game developers operate with the real exception of America, um, which is where you've seen anti-tering policies be lifted. Um, so those are the kind of rough archetypes you can think about. The thing that's notable here on the mixed one is that one of the other pieces of this legislation is typically it's more expansive than what you see in America. So it has in theory opened up the use of alternative payment rails and

it's opened up distribution a bit, but I'd say those those kind of wins are still in their infancy. So we're going to we're still seeing whether or not they're viable. Game developers still need to experiment and push the boundaries with them to see what's possible. One of the reasons you've seen the uh American archetype open steering kind of take off is because it's been so easy to implement with just web- based checkout links just telling users about existing web stores etc. Cool. Um so despite some kind of geographical grouping there are real differences by country. Um and uh this does a bit to break it down. So I'm going to run through the most important countries. So in the US you've seen the kind of lifting of anti- steering restrictions in the case of Apple and in the case of Android. I'll talk about this in a second. Androids goes further than that. Now, that is under threat. So, iOS has kind of won in theory the right to tax those restrict those linkouts. Um, Google is appealing them. Right now, the status quo is that you can link out and you can steer users without any tax, although that could be changing, you know, in a few days. Uh, but all of

that's very TBD. Uh, in the EU, you know, there's a lot of excitement about the DMA that came into effect. The pro and Apple is now implementing its new like two-tier policies. uh this that kind of policy will be reviewed every year by the European Union. So I think you could continue to see some changes there. Um what Apple's already kind of been forced to do is to allow sideloading, but again the UX restrictions are so severe that you know that hasn't led to any consequences and their new fee structures kind of have made any other um opportunities not really worthwhile. Now that kind of archetype where there's been very exciting new legislation but then the app stores have kind of pushed back so hard and kind of you know maliciously complied in such a way that it hasn't won led to any wins for game developers. That's kind of I would say sadly the model you're seeing a lot. Um now Japan and the UK are both countries that have legislation coming into effect this year where that's kind of possibly where it will go. Although there's very much the chance that it doesn't. That just needs to be looked at and there's even the chance that Europe could open up more.

Um, and then South Korea is another example where like some of this legislation had some exciting stuff on paper but didn't really lead to anything. So all of this is like not that exciting of a landscape when you read it on paper because Apple and Google have done a very good job at kind of finagling their way to reduce um any kind of meaningful impacts of this policy. Now I think we're going to see probably um uh kind of shift in two directions. So in the US, I think you'll probably see Apple and Google win back some of those um gains that developers have made or at least complicate the picture. And globally, you I think you're more likely to see some gains than you are to see regression there. So I think in Japan, for example, like Japanese courts have proved very very skeptical of the 30% tax. So, uh, you know, Brazil recently came to a settlement that has some exciting opportunities for distribution, but that's all going to get pretty country by country and, um, you know, that complicates the landscape and it's just going to take time for game developers and DDC platform providers to really

figure out what's possible in each country. Uh, but there I think you could see some gains in the coming year in particular. I would definitely be watching the UK and I would be watching Japan here and then even the EU because app store policy is coming into effect. So, that's kind of the global picture. So if we zoom in on the US where you see the most action um so starting 2025 you saw the Epic versus Apple ruling come in in in May and that led to the complete removal of anti- steering policies that led to explosion in um you know linkouts in steering based DTOC growth uh in the US which really has been amazing and and massive you know many games are doing north of 50% of their US volumes through these direct channels now including some of Stash's customers uh and then Android took a little longer but that ruling was far more radical. Uh I'll talk about that in a second. Uh but what you've now seen literally in the last month um is some appeals against that. So Epic is Epic and Google announced a settlement um that Google is trying to implement literally in the next few days. Uh so Google has a hearing on the 22nd that

will determine whether or not their new proposed policies come into effect on the 28th. Um and those policies would basically tax uh the linkouts. That's the kind of most important takeaway. And then Apple has kind of won a court ruling in theory to put some payment tax um on linked out payments, but the details of that are TBD and that could take a while. So Android's a nice example of like what the broader kind of landscape of these changes can look like for Android. Um you saw uh not only the removal of anti- steering, but you actually saw really significant changes to um the payments landscape and to side loading and distribution. In Android's case, they were they've been forced to really crack open distribution and enable much easier side loading and and kind of alternative app store distribution. Um, and then similarly, in theory at least, Android might be forced to allow native app payment rails even for app store distributed games. Um, so you know, this is all being appealed, but Android could be a pretty good case

study depending on how this ruling goes of what more expansive changes look like. And these are the kinds of changes that I think you could see somewhere like Europe which you've already seen a little bit in like Europe and Brazil for example Apple now does have to allow sideloading which is again even if it hasn't yet proved to turn into much actual traction um it's still something where I think you're seeing movement so that's kind of the overall policy landscape like where does that leave us um so you know what this means is that we essentially at stash operate with kind of three different models so the first is what I'll call like um the open steering model and that's where you're allowed to link out. So the compliance strategy here that's the most aggressive is direct linkouts from within the game to a web-based checkout. Um so uh you know that doesn't just have to be a direct link out to web-based checkout but it can also be linkouts to web store. The most important thing here is that in these models, you could originate transactions within the game that you then complete, you know, in a web-based interface, uh, either kind of

like, you know, in theory outside of the native app client. Um, that has proved to be like the lowest friction, you know, best model. And with that kind of somewhat under threat in America with these appeals, a lot of game developers have come to us really concerned, kind of freaking out like, oh no, what are we going to do without this? Now that is a cause for concern because that growth has been extraordinary and what's been really nice is it's unlocked kind of new types of games particularly casual games have been able to launch successful DTOC channels uh with this kind of uh framework but you know the appeals that Google and Apple are placing mostly will take us back to a premay 2025 landscape. So you know the worst case potentially is just that we go back to we were where we were before. Now it could be that they go further than that but it's kind of hard for them to go further than that because where we were before May 2025 was like web stores. Um so this is uh the kind of framework that I apply for thinking about um you know that kind of

taxed or restricted landscape or the traditional landscape which is really where there have been some wins in the game uh some wins on policy but really you're still operating in a world where um you know you can't do much from within the apps because it'll violate app store policy. And there you have to think creatively. So you have to think about how do you acquire users into your DDC channels without just easily linking out from within the game. And so we have a whole bunch of frameworks, a whole bunch of tools that we use to think about how you can drive acquisition without doing that. Um now what you can do within the game there is you can link out to non-commercial functionality that sits in the web and that um uh and that you know will then direct you to a web store. the app stores kind of are like you know not fans of this model but there's very little they can do to police it. What this really means though is that almost always in these frameworks so in these kind of uh frameworks where you've had to opt into some kind of entitlement uh according to

app store policies. This is kind of like the the marker of where this policy framework is in play is where the app stores have launched kind of a link out entitlement and that's where you have to sign up tell the app stores you're linking out and then you know in theory potentially pay them some money based on your linked out revenue. Almost always we've so far found that's not been worthwhile. So almost always when you've had to kind of sign up for these entitlements, it's not been worth doing because you can use these alternative strategies to grow DTOC traffic without drawing attention to yourself with the app stores. And so we've yet to actually work with a customer ever to opt into these frameworks. Now that could very well change. Um but uh just to call attention to some of these strategies. So I always think about like okay how are we going to acquire users? you can think about three possible services. There's what you're doing in game, there's what you're doing out of the game, and then there's what you're doing in the TTOC channel. Um, and so in-game, as I mentioned, like a lot of this is about

linking users to um non-commercial functionality using systems like loyalty programs, other web- based engagement systems, uh, content or community tools to really kind of like bring users into that channel. Uh, and then also using the in-game channel to acquire contact information to communicate with them outside of the channel, outside of the game. So, that's where you would be using the in-game interface to acquire emails, Discord followers, uh, know Facebook followers, etc., and then using those channels to kind of direct users. Um, and then there's stuff you do kind of on the channel itself, uh, just to smoothen that. Um, now what I found in general is that it's more worthwhile to just use these strategies, not alert Google and Apple to kind of anything and not really be liable for any payouts to them, um, than it has been to kind of subject yourself to those payouts, subject yourself to the auditing that they'll submit that they'll require as part of those linkouts just to be allowed to kind of do the linkouts. we haven't found that the conversion

benefit is worthwhile um if you have to then pay that tax even if it's just a tax on a portion of your revenue. Um and so these are a few strategies that kind of like optimize acquisition within that second model. So one is kind of linking out to in-game uh linking out in-game to rewards um replicating your UX using creator codes or kind of having onboarding that takes you through the web portal through the web engagement like from within the game. Um, a good example here is like this is a loyalty program we built and you know this is a channel that's reached very very sizable like um, you know, DDC adoption that any developer would be happy with. Um, wherein we have a set of missions that you can win that you can only claim on the web in order to progress through a web-based loyalty program. And all of that you can compliantly link to from within the game without violating anti- steering provisions. One thing I'll note as well is even where anti- steering policies have been lifted with like that taxed model almost always the kind of ability to link out even if that's taxed those policy um injunctions have also come

with an open with a with a removal of restriction on messaging. So even if you're not linking out to, you know, your web stores, you now have a lot more freedom in countries like Brazil or in Japan in actually just informing users about the web store and that doesn't have to be taxed so long as you're not linking out. Um, so you know, the the main takeaway I would say from this presentation is that like we've entered a world in which every like every country, every every jurisdiction is starting to have a real patchwork of different policy landscapes. And what we do at Stash is basically equip our developers with a set of DTOC solutions that you apply in each jurisdiction based on what's possible. Um so the the basic fallback solution that you apply globally is principally based on web stores. Um and that's based on acquiring users outside of the game and using non-commerce based um tooling to uh direct them into the game into the web store. Uh and then the second framework where you apply it where you can is really um you know the linkouts which has only been in the US. Um and then the

thing to watch out for going forward that we're always looking for is like okay are there starting to be countries where you can distribute outside of the app for example outside of the app stores for example that's yet to happen but I think it's something we should all be on the lookout for because I would say the optimal DTOC channel is not only the one where you complete a purchase it's also one where actually distributing the games. Um and you've seen some of the most successful uh DTOC ch um developers out there like principally play tikka really led you know their DTOC charge with sideloaded distribution um of the game itself. Uh and then other countries like Pllearium have really shown that on desktop where you don't have as many restrictions which is one of the reasons we have a launcher product at Stash that many of our mobile developers who are crossplatform like to use. You can also distribute directly there very successfully. All right so I'll just conclude this and then maybe take a couple questions. I also have some bonus slides if you want to look at those. But I would basically say to you like there's the the ideal is to take advantage of the most aggressive possible regulatory um framework you can while remaining app store compliant.

Just to cut it down really simply that basically means you should be prepared with two solutions right now. The first is the open steering linkoutbased solution whereby you're linking directly from your game to checkouts or your game to web stores. Um and then uh the the second solution which is the kind of fallback solution which was where you can be be applying everywhere globally because it's globally compliant is like a web storebased solution where you're using your in-game interfaces to collect contact info um and to inform users about non-commerce based a non-commerce web- based functionality but you're not directly linking and one note I'll say that I think is very important and we're really prioritizing with our customers now is to make sure in the open steering landscapes you have available Today you're using that as much as possible to onboard players to DTOC in the case that those policies change. We've seen um our linkout channels have actually grown our web store channels in the same countries. This was surprising to us. We

thought when we rolled out linkouts that would cannibalize web store revenue. We've actually seen the opposite. And so we're really really pushing our customers now to try and onboard as many people to DTOC channels as possible. Um while you still can. Okay, pause there. Maybe we have time for one question.
Does anyone have one quick question for Archie? Um, so there's many reasons. You're right. They are they are massive, but like okay, so one, you want to distribute yourself because they charge extraordinary fees. They don't give you access to player data, and they place artificial constraints on the kind type of UX you can offer. Now, I would say, okay, well, what do you get from them? There was a time when you got a lot more from them. There was a time when you got organic discovery where you got new users from them. If you still have a ton of organic users, and that's a hugely important thing for your acquisition channel, I can I can understand being wary of, you know, upsetting Apple and Google. The thing I'll just say there is like go look at the top 10 most featured

games and they're the most aggressive games when it comes to DDC as well. So, I don't know if that's necessarily linked, but I would say unlike Steam on PC, for example, where Steam is the primary discovery channel for many, many games, that's not the case on Apple and Google. So, all you have from them is like really commodity distribution rails where you're being charged pretty luxury prices.
Brilliant. Can we give Archie a lovely round of applause, please?