Google won’t be lowering their 30% from its Google Play store.
While everyone has been dogging Valve’s Steam on its 30% revenue cut, which has given rise to multiple competitors that are willing to take less of a cut. Which in turn makes them more desirable and has gained some support from developers and consumers. However, there is another big gaming store that also happens to take as much as Steam does and that’s Google’s Play store. To which was asked by one of Google’s investors, Barclays Capital Inc’s Ross Sandler, if Google had any plans to lower this.
The answer, by Sundar Pichai, Google’s Chief Executive’s Officer, was answered with a “not anytime soon”. To which he backed up his reply with some very legit reasoning.
First Ross Sandler’s question;
Great. Two questions. First, there’s a lot of discussion right now about alternatives to Google Play and Apple’s App Store for distribution. And some of the large developers are starting to come up with these workarounds around the App Store fees. So, I guess, just philosophically, how do you think about the 30%? Do you think that’s the right long-term rate for Google Play? And then, Ruth, coming back to the headcount and CapEx growth moderating comments, so you have expenses growing well in excess of revenue for some time in the core Google segment, and 2018 was the lowest operating income growth since you started disclosing the segments. So are you just flagging this as a change of direction? Is this a material change or is this just a small amount of moderation in 2019? Thank you.
Sundar Pichai’s reply to that question;
On Google Play, obviously, we do this at scale, thousands of developers rely on it to safely and seamlessly distribute their game to billions of android users worldwide. And we invest a lot in our infrastructure to continuously make sure their overall experience is safe and results in high engagement and for the developer’s back. So I think there’s a value exchange there and it’s been the industry standard. And so, I think we will continue down that path and — but obviously always adapt to where the market is.
That answer, which I agree with, makes a lot of sense. Sure, developers would love to see Google take a lower percentage of the take. However, if you look at Google’s investment, they’re the ones growing the infrastructure, providing the API’s that enable several services, payment services, marketing and more. There’s a lot of money being put into the service and while I think Google can do with less (but what do I know?), there’s no real pressure to make them change their stance. Similar to another service we all know of.
Lastly, I’ll point out that while the question was answered to which some might say in a negative light. Sundar did also mention that Google will watch the trends and will adjust to the market if need be. Meaning just because the answer is no right now, doesn’t mean that a few months down the line that the answer will remain the same. All we can do is watch and see.
As for the 70/30% revenue split, it’s definitely an industry standard, save for a few places right now. Why several major markets aren’t going that route, it’s going to be all on the new blood and how they fair that’s going to be a pivot point for the rest to decide on changing their stances or not. There are high chances that the old guard is definitely in a reactive mode right now.
You can listen to that earnings call here.