Does the move to app stores inhibit software development and competition?

Microsoft today confirmed its launch hardware partners for its new touch screen/ARM based version of Windows, Windows RT (is this a subliminal advertising campaign by Microsoft to encourage people to promote Windows on Twitter?).

At the end of the BBC News article linked to above, a comment is made about the fact that Microsoft has locked down software distribution on the platform. As pioneered by Apple on the iOS platform, apps for Windows RT may only be distributed through a Microsoft controlled app store, in return for which Microsoft will take the now standard 30% commission.

The article includes a comment from a couple of games industry executives, who label the decision a “catastrophe”, “not awesome” and a “wrongheaded approach”.

So does this mean that games and app developers will turn away from the new platform?

The games industry and app stores
Last week, I was at Edinburgh Interactive one of the UK’s major video games industry conferences.

What struck me was how many of the speakers (from both large and small developers) are focussing their development efforts on the iOS and Android platforms. There was very little discussion in the sessions about the development of games for consoles and PCs. It was all about iPads, iPhones, Android and promoting your product on the app stores. And the future sounded pretty bright.

Indeed, a large amount of discussion on the first day looked at the move to so-called “freemium” products, where the app is free to download and the developer then makes its cash from selling in in-app content (such as additional levels, power-ups etc) or in-app advertising.

So it seems that not everyone agrees with the view of the larger games companies – or if they do then they are prepared to accept the commercial model in order to access the new platforms.

Indeed, for smaller indies, the app stores operated by Google and Apple offer an easy way to market. You can self-publish, without the need for a traditional middle-man to publish your game, and don’t need to fund expensive promotions in bricks and mortar stores – instead using social media and word of mouth to promote your app. This reduces the risk to the developer and fosters the development of innovative new products.

The 30% margin is high (particuarly given that it also now often includes a share of revenue from in-app purchases), but given the sales platform provided (and the fact that the app store will handle all payment processing), for many developers the cost is worth it.

In reality, I suspect the comments quoted above reflect commercial concerns over the fact that the publisher’s margin for Windows products is now under attack. They can no longer sell games to consumers direct from its own website – it is a return to the pre-internet days where a distributor and a bricks and mortar retailer also took a cut.

Competition law
What will be interesting is whether any of the competition authorities look at the cast iron control the operating system providers have over the sale of content on their platforms, and whether this constitutes an abuse of a dominant position. Unlike the Android platform (where there are multiple app stores), it looks like Microsoft will follow Apple and others in that its app store will be the only way to sell content on the platform. In the absence of any competing app store, the 30% margin cannot be challenged. This could be viewed as anti-competitive.

What do you think? Does the app store model put you off developing for iOS, Android and Windows RT? Or are you prepared to work with the new model to access new markets?

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