The International Game Developers Association has sent an ‘important advisory’ to its members warning them to take care if they are planning to submit content to the Amazon Android App Store.
The IGDA said that it had “significant concerns about Amazon’s current Appstore distribution terms and the negative impact they may have on the game development community” and encouraged its developers to “educate themselves on the pros and cons of submitting content to Amazon.”
The first aspect of concern to the IGDA is pricing, in particular Amazon’s right to pay developers either 70% of the purchase price of an app, or 20% of the developer’s list price.
“While many other retailers, both physical and digital, also exert control over the price of products in their markets, we are not aware of any other retailer having a formal policy of paying a supplier just 20% of the supplier’s minimum list price without the supplier’s permission.”
The IGDA is also concerned about how Amazon controls what price developers can set elsewhere:
“Furthermore, Amazon dictates that developers cannot set their list price above the lowest list price “available or previously available on any Similar Service.” In other words, if you want to sell your content anywhere else, you cannot prevent Amazon from slashing the price of your game by setting a high list price. And if you ever conduct even a temporary price promotion in another market, you must permanently lower your list price in Amazon’s market.”
The IGDA identified five problematic scenarios:
1) Amazon steeply discounts a large chunk of its Appstore catalog (imagine: “our top 100-rated games are all 75% off!”). Some developers will probably win in this scenario, but some developers - most likely, those near the bottom of the list - will lose, not gaining enough sales to offset the loss in revenue per sale. Amazon benefits the most, because it captures all the customer goodwill generated by such a promotion.
2) By requiring all developers to guarantee Amazon a minimum list price that matches the lowest price on any other market, Amazon has presented developers with a stark choice: abandon Amazon’s market or agree never to give another distributor an exclusive promotional window.
3) Other digital markets that compete with Amazon (both existing markets and markets yet-to-be-created) may feel compelled to duplicate Amazon’s terms, and perhaps even adopt more severe terms in an effort to compete effectively with Amazon. In essence, we’re looking at a slippery slope in which a developer’s “minimum list price” ceases to be a meaningful thing.
4) Amazon steeply discounts (or makes entirely free) a game that has a well-defined, well-connected niche audience. The members of that niche audience snap up the game during the promotional period, robbing the game’s developer of a significant percentage of its total potential revenue from its core audience.
5) Amazon steeply discounts (or makes entirely free) a hit game at a time when the game is already selling extremely well. This sort of promotional activity may attract consumers away from competing markets and into Amazon’s arms. But it might actually represent a net loss for the developer, which was already doing quite well and didn’t need to firesale its game at that moment in time.
The IGDA goes on to give a stark and worrying thought for developers:
“… under Amazon’s current terms, Amazon has little incentive not to use a developer’s content as a weapon with which to capture marketshare from competing app stores.”
So, is Amazon’s Android App Store a good thing or a bad thing?
