A recent article from the Toronto Star sheds some light on the state of affairs on Apple and Google. More specifically we are talking about the respective App Stores which are a significant staple of the revenue pie. The article goes on to say that companies such as Netflix and Spotify are transitioning their customer base towards a more customizable solution when it comes to app store purchases. It could be a troubling sign for Apple and Google when developers start to rebel against the system.

The App Store revenues generated in 2017 for Apple accounted for just over $11 billion. Compare that to $8.8 billion from the year before, and it’s easy to see how important this platform is for both the tech giant and developers.

While it may or may not be an outright rebellion, it seems as if more developers are sick and tired of the wall garden approach that Apple has on its platform. it’s tightly controlled eco-system with strict rules that must be abided by.

While less restrictive and more developer friendly than Apple’s platform, Google’s Play Store is just as important, even though less revenue is generated by comparison.

It is an age-old debate as to which is better, Play Store vs. App Store. In a nutshell, more polished apps are found on Apple’s platform, and most of the time, developers tend to release iOS versions first, before Android. The same apps(more or less) can be found on both sides.

Major Players

 

Neflix App

 

The majority of developers are still selling on the App Store. It’s the place to grow and nurture an App. But when you get to a certain level of prominence, you start to take matters into your own hands to further growth and profitability.

Epic Games already has a roster of titles from its App Store and doesn’t need a 3rd party solution to survive anymore.

Netflix is such a massive entity with an extensive library of movies that it doesn’t need help to market and promote its services on the App Store as it once did.

These companies along with Spotify are just a growing list of brands that are making the switch to a more direct customer relationship. And as a result, a more customizable solution is tailored towards customer acquisition.

A decline in revenue from just the companies mentioned above represents tens of millions in lost revenue per month for Apple and Google.  And to make matters worse, shoppers aren’t pulling out their credit cards in droves to buy the latest batch of iPhones.

Astronomical prices for incremental results aren’t reasons enough to take the plunge on an iPhone XS which is nearly identical to the previous generation iPhone X. All of this results in weaker demand which affects revenue forecasts.

As a small-time developer, you are more than likely to need the App Store to gain exposure and brand recognition where you would have little to none otherwise. That hefty 30 percent cut that’s taken off revenues is a big pill to swallow, and there are still many developers who need that pill.

Apple and Google are going to have to find better ways of incentivizing developers to stay on their platform while remaining profitable if they want to see continued growth.

It’s not as if Apple and the developers aren’t making any money on the App Stores.  Just take a look at the year-over-year revenue for the past couple of years for Apple, as they represent healthy numbers. Developers made a whopping $26.5 billion in 2017 which is more than the previous years.

Matthew Barnes
Loves all things tech. He's a musician, writer, and founder of Techmalak.