2020 has been a wild ride for Epic Games. At the start of the year they were best known for being the company behind the incredibly popular “Fortnite” video game, and they were doing quite nicely out of that. By the middle of the year, they’d made headlines all over the world for going toe to toe with Apple about its App Store policy – a battle that they’ve taken to court, where it remains to this day. Apparently, they’re not content with that. Trying to force Apple to change the way it charges developers for apps and games isn’t enough for them. They now want to get involved in app distribution themselves.
For those who haven’t been keeping up, Epic’s issue with Apple is that the company charges a thirty percent fee for any and all payments taken by apps listed in its App Store. That doesn’t just extend to purchasing apps – it also extends to any in-app payments that players might make. Epic believes this is unfair and that Apple is effectively trying to create a monopoly by refusing to allow developers any other way to have their apps installed on Apple devices. They’ve been joined in that battle by several other companies, including Spotify and (worryingly for Apple) Microsoft. Whether or not they’ll eventually win that argument, they want to take things one step further by offering apps other than games and offering a rival App Store service. Perhaps unsurprisingly, their first customer is Spotify.
Epic’s app store isn’t new but has so far mostly gone unnoticed or unused by the majority of potential customers. They launched it two years ago as a counter to Steam, which has been run by Valve for more than a decade with great success. Up until now the store has only offered games, but does so with a twelve percent charge to developers as opposed to the thirty percent taken by Apple. Their cut of payments is also lower than the one Google takes through its own native app store. There’s an obvious financial incentive for companies to use the service, but up until now, that incentive has been mitigated by the fact that so few people use the store, and so developers have to use the Apple and Google platforms if they want to reach a wider audience. If, by introducing non-gaming apps to the store, Epic can expand their customer base, they could become a viable alternative. Their store still can’t be used to download content onto Apple hardware, but it would theoretically put Apple under further pressure.
With so many different app stores available – many of which offer the same apps – it’s becoming increasingly difficult for one company to make their service stand out from another. Unable to compete on apps or content (because all the biggest and most popular apps appear everywhere), they have to compete on terms again. This is akin to what we’ve seen happen in the last five years with online slots websites. During the early days of internet-based casinos, you could find different online slots listed on different websites. That’s no longer the case. All the most popular slots UK appear on all the most popular websites, and so the companies behind them have had to find something to compete on other than the online slots themselves. In most cases, that’s either incentives, promotions, or other offers. That’s the same tactic Epic is attempting with its lower rate of commission – and if they can draw more customers by offering more non-gaming apps, it’s a strategy that could turn out to be a winner.
We’re likely to see more diversification from streaming companies in the future as big-name brands attempt to step out of their comfort zones to compete against each other. At almost the same time Epic Games announced this bold new partnership with Spotify, Spotify got bad news from elsewhere. That came in the shape of Netflix announcing that they now offer an audio-only service for mobile customers. As Netflix doesn’t currently offer any exclusive podcasts, it isn’t clear that there’s a large number of people who want to consume Netflix content without being able to see the accompanying video, but it’s to be presumed that the company has internal data that persuades them the move is worthwhile. You could even argue that it wouldn’t make sense for Netflix to be trying this if they didn’t have an intention to introduce audio-only content in the future, and that idea has probably set alarm bells ringing at Spotify.
Spotify has only recently begun to invest significant sums of money into exclusive podcast content, signing exclusive deals with people like Michelle Obama, Joe Rogan, and Kim Kardashian. If a company of Netflix’s size was to decide to compete against them, it would almost certainly put a dent in their market share at the exact same time they’re trying to expand and reach more people. It also opens the door for other companies to do the same. If Netflix starts offering audio content and it proves to be popular, it would only be a matter of time before other streaming platforms – Amazon Prime, for example – started doing the same. YouTube has started pushing a similar idea through its premium YouTube Music service recently, too, and so we’re starting to see brands that were once confined to one section of the entertainment industry trying to expand into others. In a battle like this, not everybody is going to survive.
There will be more non-gaming apps coming to Epic’s store in the near future, but starting with Spotify is a statement of intent and an eye-catching move. When a company of Spotify’s size and prestige becomes available on a platform, other companies will feel like they have to be there as well, or they’ll appear to be lesser by comparison. 2020 might be all-but-over, but the content streaming wars are only just beginning to heat up. When we eventually get a verdict on the confrontation between Epic and Apple in court – which will presumably arrive at some point next year – they’ll get hotter still.
