IGDA: Amazon could "use a developer's content as a weapon"

IGDA: Amazon could "use a developer's content as a weapon"

Summary: 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.

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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?

Topics: Software Development, Amazon, Mobility

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9 comments
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  • I think Amazon just gave Apple some new pricing ideas

    It's not a problem, Apple will follow then it'll be the norm.
    Will Farrell
    • History actually shows the reverse.

      Before Apple released iBooks, Amazon was only paying 10% royalties to publishers. Then Apple came along and forced Amazon into paying 70% royalties.
      fr_gough
  • Message has been deleted.

    Linux Geek
  • RE: IGDA warns that Amazon could

    I don't see that big of an issue at this time.
    Using this and other tactics, if Amazon can focus users their way they will bring an established market that will only grow.

    For them, this is new, this is risk.
    In the long run I think we all will benefit....
    ;)
    rhonin
    • RE: IGDA warns that Amazon could

      @rhonin
      Even if Amazon is discounting the paid app, Amazon should take risk and pay the actual amount to developer then I think it is a good practice. But Amazon is making the developer to take the stab by making the paid app free, which is not good and eventually Developers will stop publishing on Amazon Store.
      Ram U
      • Totally agree with you!

        @Rama.NET

        Developers should be able sell their app to the Market, if that market want to discount it that's their choice.

        I was hoping for good things from Amazon's App Store but being in the UK I can't even use it!
        DevJonny
  • Clash of various titans

    Electronic Arts had a weekend sale on some of their games for iPad, discounting them as low as 99 cents for two days. If Amazon tells EA they now have to sell their games for 99 cents if they want to be in the Amazon App Store, EA will tell them to pound sand.
    Robert Hahn
  • Message has been deleted.

    lauralielee
  • RE: IGDA warns that Amazon could

    I have a dozen or so apps that I got for free from Amazon's daily free app offer. I have saved about $25 so far and I am waiting on a few purchases to see what else they come up with for free.

    Has this free stuff helped Amazon and harmed the developers of the apps, based on my shopping, probably.
    John238