Could web-based development (game) engines be the end of App Stores?
If you own a phone, you have used an App Store to download and/or purchase an application. The convenience of having every conceivable tool for taking better photos, measuring your space, buying fashion, learning or blasting aliens has propelled a massive ecosystem, that for the past decade has been maturing under the watchful eye of gatekeepers Apple & Google. In just 6 weeks, the “lawsuit heard round the software world” between Epic Games and Apple has turned a $77 billion industry on its head.
Even Microsoft’s Mixed Reality guru, Alex Kipman suggests a future without App Stores in this Wall Street Journal Interview on May 13, 2021.
UPDATE (NOV 18, 2020): Apple has capitulated to the pressures of the market and reduced their App Store fee from 30% to 15% starting January 1, 2021. This is a huge win for developers everywhere and shows that Apple remains the trend setter and the best platform for distribution of apps…
UPDATE (March 22, 2021): Google updates their Play Store commission to 15%. Apple CEO Tim Cook to testify in court against Epic Games.
WITH ONE CAVEAT: This generosity is only for businesses and developers making less than $1m/year. Apple’s CEO, Tim Cook said in an official statement “Small businesses are the backbone of our global economy and the beating heart of innovation and opportunity in communities around the world. We’re launching this program to help small business owners write the next chapter of creativity and prosperity on the App Store, and to build the kind of quality apps our customers love. The App Store has been an engine of economic growth like none other, creating millions of new jobs and a pathway to entrepreneurship accessible to anyone with a great idea. Our new program carries that progress forward — helping developers fund their small businesses, take risks on new ideas, expand their teams, and continue to make apps that enrich people’s lives.”
The App Store Decade
Apple’s App Store launched in July 2008 quickly providing a one-stop shop for any and all programs you may need on your phone. The App Store launched with just 500 apps; today it has over 1.8 million applications. When you combine this with the over 2.5 million applications on Google Play; you begin to realize the enormous value these stores have given to consumers and developers alike.
Apple and Google also reduced the traditional margin for software — from >50% for physical retail to only 30% while also taking care of payment processing and providing new tools and algorithms for consumers to find the right apps at the right time. Over the past decade, the standard 30% commission fee model has been replicated by everyone from Steam (Valve), Unity, Microsoft, Facebook (Oculus), and many more, but this trend is slowly starting to change.
Important Note: Apple and Google’s App Stores do not take a commission on the sale of physical goods/services like Amazon, Uber, or even content such as Netflix, Kindle, Amazon Prime, etc. referred to as ‘reader apps’.
In November 2018, Steam made adjustments to their developer commission structure to put more money in the pockets of the developers and companies that work so hard to produce amazing content. Immediately after this, in December 2018, Epic Games launched their own app store with a dramatic twist; Epic offered developers the opportunity to sell their games and keep 88% of the proceeds instead of the traditional 70%. For anyone who has run a business, it is easy to understand that 18% can be the difference between success and failure.
“The 70/30 percent split was a breakthrough more than a decade ago with the advent of Steam, the Apple App Store, and Google Play. But today, digital software stores have grown into a $25B+ business worldwide across all platforms, yet the economies of scale have not benefited developers. In our analysis, stores are marking up their costs 300 percent to 400 percent. We simply aim to give developers a better deal.”
— Epic CEO, Tim Sweeney
Fast forward only 12 months from Sweeney’s statement and Apple’s App Store revenue increased to over $50B alone.
Of all the mobile games in world, none has taken off so massively as the multi-player phenomenon known as Fortnite. Fortnite has over 350 million users playing a combined 3.2B hours of the game, in April 2020 alone!
Enter the lawsuits…
Epic Games (valued at $17.4B) is the maker of the Unreal Engine, and the massive online, cross-platform game, Fortnite. On September 13, Epic pushed an update to the game that would enable players to purchase in-app currency ‘V-Bucks’ via Epic’s own app store for a 20% discount, circumventing the Apple App Store altogether. Fully aware that this was in breach of Apple’s terms and conditions, Epic was prepared for Apple removing the offending app from their store. Epic filed suit and pushed a video to all 350 million of their users accusing Apple of the very thing they had railed against in their 1984 ad for the Macintosh computer. Read the timeline of events here.
In its massive anti-trust lawsuit, the company wrote “Epic brings this suit to end Apple’s unfair and anti-competitive actions that Apple undertakes to unlawfully maintain its monopoly in two distinct, multibillion dollar markets: (i) the iOS App Distribution Market, and (ii) the iOS In-App Payment Processing Market”
Later that day, Google removed Fortnite from their app store and Epic responded in-kind with another monopoly lawsuit. You would think that suing two TRILLION dollar companies would be costly and you would be right, but far less than the 30% the app stores are taking on a game estimated to rake in over $1B a year!
As of this writing, Apple has filed a counter suit against Epic stating “There is nothing anticompetitive about charging a commission for others to use one’s service, many platforms — including Epic’s own app marketplace and Unreal Engine — do just that.”
There has even been a new Coalition for App Fairness created that claims “Everyday, Apple taxes consumers and crushes innovation” with prominent members like Epic, Spotify, Deezer and Basecamp.
Microsoft, who recently acquired game studio ZeniMax and their Game Publishing division, Bethesda Games for $7.5B in cash, is trying position themselves in the best possible light sharing their ‘10 app store principles to promote choice, fairness and innovation’ on an internal blog.
It would seem that there is a major tectonic shift in how games and other applications are created and shared/sold to users around the world.
Rise of the Game Engines
Another massive event occurred recently when Epic’s game engine rival, Unity Technologies (U, NYSE) went public (IPO) raising over $1B in fresh capital valuing the company at over $13B on launch. Unity’s stock closed on day one up about 31%, to $68 a share. As of October 12, 2020, Unity’s price was $92.00 for a market cap of over $24B.
Unity’s interactive, real-time 3D game engine is a rival to Epic Games’ Unreal Engine. Unity CEO John Riccitiello has been noted as saying “[Epic is] a very good and noble company, and they do some really cool things that we benchmark against,” he said. “But… I don’t think of them as competitors.”
So what is a ‘game engine’ anyway?
Development (Game) Engine (Wikipedia): a software-development environment designed for people to build experiences or video games. Developers use these engines to construct games for consoles, mobile devices, and personal computers. The core functionality typically provided by a game engine includes a rendering engine (“renderer”) for 2D or 3D graphics, a physics engine, sound, scripting, animation, artificial intelligence, networking, streaming, memory management, threading, localization support, scene graph, and may include video support.
Things seem to be really heating up in the development (game) engine space. But in reality, there are still only two main players in this space.
“So instead of a choice of half a dozen rendering engines, we’re now down to 2 and a 1/4 and one of those (Mozilla) is on life support” — Rene Ritchie
With all this chaos of lawsuits, app stores and IPO’s, it is easy to lose sight of the fact that consumers now have really powerful supercomputers in their pockets and the most ubiquitous content delivery system in the world has improved by leaps and bounds. This ‘original app store’ is also known as the internet.
While development (game) engines like Unity and Unreal represent nearly all of the apps developed on the app stores, they actually represent a very small number of applications and services that are delivered every day, for free on the web.
Enter a new type of development engine, one that uses the power of the web to unlock access to apps, games, education tools, marketing, training, advertising all without having to pay a single % to anyone. Enter the Metaverse.
“The Metaverse is going to be some sort of real time 3D social medium where instead of sending messages and pictures to each other asynchronously, you’re together with them and in a virtual world and interacting and having fun experiences which might span anything from purely games to purely social experiences.” — Tim Sweeney, Epic CEO
Wikipedia describes the Metaverse as “a collective virtual shared space, created by the convergence of virtually enhanced physical reality and physically persistent virtual space, including the sum of all virtual worlds, augmented reality, and the Internet.”
Before we can get to the point where we all put on glasses and live, work and learn in a completely virtual world, we will have to prepare society for less physical contact, but more social interaction. The pandemic certainly sped this up by connecting billions of people on Teams, Hangouts, House Party and of course Zoom, all delivered via the web, and the app stores.
But watching hours of zoom calls lacks the presence and physical cues of meeting in real live (IRL). Technologies like VR and AR are starting to bridge the communication gap and are rapidly advancing towards maturity.
The author has also contributed to a free global resource guide to virtual, augmented & mixed Reality (XR) collaboration tools to help individuals and organizations understand the best practices and available options of these tools. Download the guide and access the directory at XRCollaboration.com
Why am I mentioning XR in an article about game engines? Good question…
Every virtual experience you have had whether it was a dancing hot dog, face-filter, animal in your space, or slicing fruit in VR, every one of these experiences were built with the same game engines that power all the mobile apps on the app store. They power EVERY digital experience we have with the exception of video. Even live concerts are bringing in millions of participants in these game engine created virtual worlds.
Over the past 10 years, in the era of the app store, Unity and Unreal Engine reigned supreme in the mobile app market. They also play in the elite world of AAA games with a few other players like Crytek’s CryEngine, EA Sports’ Frostbite and Microsoft’s DirectX. Here are a list of the major game engines based on their ecosystem (let me know if I missed any):
The Rise of Web Engines
Web development engines have mostly come out of research labs at universities such as MIT. These ‘game’ engines have focused most of their efforts on games, and tried to compete with mainstream engines like Unity & Unreal, but since the web had some fundamental obstacles such as single-thread CPU access and the lack of a robust and simple creation editor, most of these have been relegated to obscurity. Recently there has been a resurgence of highly optimized, mobile-first architectures, combined with the every growing power of mobile devices, opening the door to delivering app-quality games and experiences over the web.
In June 2020 at Augmented World Expo, a new web-based game engine was introduced after being in stealth development under the name Cherry3D for four years. Forbes referred to MetaVRse as the ‘3D Game Engine for Business’ and prominent XR blogger, Skarred Ghost called MetaVRse the ‘XR Engine for Enterprise’
Paid Endorsement Notice: The Author is the Co-Founder & CEO of MetaVRse.
The MetaVRse Engine has already demonstrated the ability to push over 1M polygons on a mobile device with photorealistic quality and has a robust and versatile feature roadmap that will give developers and creatives a powerful new tool that is no longer bound to the need for any app stores. You can try the list of live demos yourself on any device.
Building with MetaVRse is 3X faster and 2X simpler than building with Unity — Sikaar Keita, Head of XR Lab at Oracle
Once written off like Flash and HTML5, web-based game engines are finally catching up to the power of the incumbents and could power the next generation of mobile apps, games, VR and AR as the fight for the 30% rages on.
The question we posed at the beginning of this article was ‘Could web-based development (game) engines be the end of the App Stores?’ While it seems unlikely that users will want to fully surrender the benefits of walled gardens, the Apple/Epic lawsuit is part of a larger struggle where developers will take advantage of new and emerging technologies in order to reduce platform commission costs. This “flight to the web” will explode if Apple proves to be the winner.
Only time will tell, but at least developers and creatives now have powerful new options to consider when building their next 3D game or experience for mobile without having to consider app approvals, commissions and censorship.
One thing is certain, the world is now becoming aware of what a game engine is and how much these invaluable tools empower us as we live, play and socialize on our devices upwards of four hours a day on average. I think we can all imagine a time where we can save 30% on our apps.
About the author
Alan Smithson’s purpose in life is to inspire and educate people to think and act in a socially, economically and environmentally sustainable way.
Mr. Smithson is the CEO of MetaVRse, a universal, web-based 3D creation platform that enables anyone to leverage the power of spatial computing. He is a proud Father, Business Leader, TEDx Speaker, and Podcast Host. Previous to MetaVRse, Mr. Smithson co-invented the World’s first touchscreen DJ system, Emulator — featured on Dragons’ Den and winning DJ Mag’s Innovative Product of the Year in 2011. His 10-year-old daughter invented sandals that leave a heart-shaped tan line on your feet called Love Sandal winning Top 20 Under 20 at only 10 years old. He is an Independent Global Advisor on the Business of XR.