The Fee War (9)
Albert Dunstin.
He and a friend had founded a mobile game company called TwoW Interactive.
The games they made caught on, and before long the studio had grown into a mid-sized outfit with a hundred employees. Even the latest release was selling steadily on both major app stores.
As a mobile game company, the biggest expense by far was the app store fee.
If a game brought in a million dollars, that money went to Enple and Guble first. Thirty percent came off the top, leaving seven hundred thousand to the company.
Once labor, rent, licensing fees, and all the rest were deducted, the actual operating margin came out to around ten percent.
Most companies accepted that as a fact of life.
Then, all of a sudden, Legend Games decided to challenge it.
It won’t matter.
Legend Games was a giant in the industry—game developer, engine maker, and ESD operator all at once, one of the top ten companies in the field.
And yet even Legend Games looked like a corner shop next to Enple and Guble.
Still, they had chosen to fight.
When you considered the revenue losses of Nightlight and Block Valley, it was nothing short of foolish.
There’s no way they can win. Their opponents are Enple and Guble.
As expected, Nightlight and Block Valley were kicked out of both major app stores. Legend Games answered by filing a lawsuit of its own.
Albert desperately wanted Legend Games to win.
So did the other developers he met.
“I really hope Legend Games pulls this off.”
“Games can die, and game companies die with them—but Enple and Guble still take thirty percent whether the game lives or not? How does that make sense?”
“If they’d just lower the fee a little, I think we could survive.”
“Forced in-app purchases are way too much.”
If Legend Games lost, only Legend Games would bear the damage. But if Legend Games won, every developer would share in the benefit.
Who had ever fought for developers like this before?
Contrary to expectations, Legend Games did not get pushed around. Instead, it kept tearing apart Enple and Guble’s arguments and driving the attack forward.
Then Legend Games Store, working with CosmicStore on Andromeda, began serving games again, while on NOS it bypassed Enstore entirely by launching cloud gaming.
In an interview with WST, CEO Tom Scott said:
The moment I watched that interview, I felt my blood surge.
I immediately ran to my cofounder, Oscar Stewart, and told him, “We should get into Legend Games Store too.”
Oscar looked flustered.
“Then Enple and Guble will have it out for us.”
TwoW Interactive was already making good money on Enstore and Play Market. In that situation, was it really necessary to do something that would make them resent us?
Oscar said carefully, “Wouldn’t it be better to join once Legend Games Store really takes off?”
As a business decision, that was the reasonable choice.
But...
Oscar stared at his friend in shock.
Suddenly, he remembered the days when the two of them had first started making games. Back then, they had been confident they could build the best game possible.
And now?
Now they were just watching Enple and Guble’s every move.
If they joined Legend Games Store, Enple and Guble would never look kindly on them.
They wouldn’t be expelled, since they weren’t breaking any terms, but the odds were high that they’d suffer all kinds of disadvantages in advertising, exposure, events, and promotions.
But so what?
If the fee dropped from thirty percent to twelve, the game company would keep more of its earnings, and they could give more back to the users who loved their games.
Oscar shouted with sudden energy, “Fine! Let’s do it. Contact Legend Games Store right now!”
Legend Games Cloud sent shockwaves through the mobile gaming industry.
When you opened Legend Games Store in a mobile web browser, the entire screen was laid out like an app marketplace.
All you had to do was pick the game you wanted and launch it.
The games ran so smoothly that it was hard to believe it was cloud gaming at all.
That drew a huge wave of interest from game companies—especially those that supported cross-platform play.
Optimizing a game separately for each operating system was a headache no one enjoyed dealing with.
But cloud gaming handled the game itself in the data center, so none of that had to be managed on the client side.
And best of all, the fees were dramatically cheaper.
Game companies unhappy with Enstore’s fees rushed to Legend Games Cloud in droves.
Some of the games that had been waiting for review on Enstore even canceled their submission requests and moved over to Legend Games Cloud instead.
Johnny Myren was stunned.
Cloud gaming?
There was no way they had built a system like this in a month or two. That meant they had been preparing it for a long time.
Was the real goal to blow up Enstore’s business model with cloud gaming?
If it had been up to him, he would have liked to mark Legend Games Store as a harmful site and block access to it through web browsers.
But in court, they had already argued that even apps not available in Enstore could still be accessed freely through a web browser.
If they blocked it now, it would be the same as admitting that Enple was abusing its monopoly position.
They could end up facing lawsuits not only from game companies, but from consumers as well.
He received a report from his staff.
“The other game companies are getting restless.”
“Developers are all demanding that the fees be lowered.”
“What?”
Guble was the first to back down.
Cloud gaming could never fully replace Enstore. But CosmicStore could replace Play Market.
And as the exodus of the game companies that were the main source of revenue gathered speed, Guble eventually announced a revision to its app store fee policy.
For smaller developers, we will lower the fee to 15 percent for companies with annual revenue under $1 million.
But since it still insisted on keeping the thirty percent fee for anything above a million dollars, it was little more than a token gesture.
At any rate, once Guble announced it would lower fees first, all eyes turned to Enple.
In this situation, the game companies began taking collective action.
Like Nightlight had done, they started putting external payment links into the checkout window!
When Johnny saw that, he shouted in alarm, “What the hell do they think they’re doing? Warn them that if they don’t remove those external payment links right now, we’ll delete their games from Enstore!”
The staffer in charge looked flustered and said, “W-well... they said if we want them taken down, we can go ahead. They told us to send people to Legend Games Store.”
“...What?”
How dare they raise a flag against Enple?
In the past, that would have been unthinkable. And yet it was happening right in front of him.
If one person rebelled, you could kill one person. If a hundred rebelled, you could kill a hundred.
But what if it was a thousand? What if it was ten thousand?
Enple sent warning letters to the game companies, but the companies never took down the external payment links.
If Enple followed the principles it had been preaching all along, it would have had to delete every one of those games. But if it did that, Enstore itself would take a devastating hit.
Consumers using Enphone would push back as well.
In the end, Enple did nothing more than send warnings. It still couldn’t bring itself to start deleting games.
Johnny reported the situation to the CEO.
After hearing everything, CEO Tom Keaton asked him in a calm voice, “So what’s the plan?”
“First, just like Guble, we’ll probably need to cut the fee in half for smaller developers.”
“So it came to pass exactly as Han Miru predicted.”
Damn it.
Han Miru had told him, when they met, that regardless of how the lawsuit turned out, Enple would end up lowering its fees.
And now it had happened exactly that way.
“Do you think that will fix the current situation?”
Johnny answered honestly, “Probably not.”
Small and mid-sized developers would welcome the change, but for game companies making hundreds of millions of dollars a year, it meant very little.
In effect, Enstore’s monopoly had been broken, and from here on out it would have to compete with cloud gaming. What had once been accepted as a perfectly normal thirty-percent fee was now being seen as a predatory tax rate, and the lawsuits over Enple and Guble’s antitrust violations were underway not only in the United States, but also in the United Kingdom, Germany, France, Japan, South Korea, and the rest of the world.
CEO Tom Keaton gave a bitter smile.
“The losses are not insignificant.”
It wasn’t just the drop in Enstore revenue that mattered.
The bigger loss was the collapse in corporate image.
Even the way things had looked in court said plenty.
The young Black biracial female lawyer had given Legend Games the look of a revolutionary movement, while the white male lawyers opposing her made Enple look like an entrenched, exploitative landlord class.
Enple had always been a company people loved.
It was an innovator and a revolutionary force, satisfying the needs of developers and consumers alike with new, outstanding products.
So even when the price was high, people happily opened their wallets, and they took genuine pride in using Enple products.
No company in history had made this much money while being so beloved by the public.
And yet...
This incident dealt a major blow to Enple’s image.
It wasn’t an immediate crisis, but long term it would hurt the company.
All of it had happened because of one game company.
No. Because of Continue Capital?
Thinking that, CEO Tom Keaton said, “See this through to the end and take responsibility for resolving it.”
“...Understood.”
CEO Tom Keaton valued stable management above everything else. That was the secret behind Enple’s growth without ever stumbling under his rule.
He might forgive other things, but he would never forgive failure in management.
Johnny realized that once this was over, he would no longer have a place here.
After Johnny left, CEO Tom Keaton murmured to himself, “Han Miru...”