Yeah! Developers Can Sell Into iPhone Apps: Apple's Unbiased Indifference Edition

I was on my way to the airport for another business trip in a month where I spent more days on the road then at home, and I saw another of the ubiquitous billboards for the PSP Go. My first thought was “I have to get one.” I mean come on, it is not just gadget porn. They are dangling a slick new drug in front of a junkie. It is small and electronic and it lights up and makes noises. It even has a slidy thing with buttons. It doesn’t do anything the old one doesn’t do and in fact, with is smaller screen and inability to use my UMD games, it does less. But Sony’s blatant pandering to my addiction didn’t bother me. I am used to it and accept it, as well as my inevitable succumbing to temptation followed by the post purchase depression as a fact of life. It was the next thought that bothered me. After I looked at it I thought I would not buy one because I could just get games for less money on my iPhone. The abuser is not Sony, it’s Apple, and not just because they are bumming my high.

I wrote about Apple’s attempt to reinvent the game business. They saw consumers spending more than they ever did before for content, just not to the content owners. The money was going to a disparate group of companies making PCs, storage devices, MP3 players and broadband and consolidated all of those dollars under one roof. By doing so, they are able to commoditize the content. As I said a couple weeks ago, they did it to music, and now they have their sights set on games. The point hit home when my sleep deprived mind wandered to the bad place and I realized my support for the game device would be out of loyalty to the business model that paid for my house, and not basic logic. Sure the games on the PSP may be better, but better doesn’t always win - especially in the face of a great price disparity.

Apple is different from Gamestop or Gamefly who simply need interventions, because Apple is indifferent. Where Gamestop and Gamefly are only harming themselves by capturing revenue from the companies who feed them, in the long run, they know their survival is inexorably tied to content. Apple, on the other bears the same indifference toward developers as Godzilla to Tokyo. They don’t really want to hurt us, but they also don’t really care if they do. We are simply collateral damage resulting from the attack on the market or killer kaiju, as the case may be. Apple is attacking the game industry stalwarts by regressively taxing the disenfranchised developers by offering the false hope of lottery riches. In the beginning, I thought it was a good idea, but that was when I thought the platform would be protected and people wouldn't just be collecting free apps. Developers can see the big gooey pile of apps, but every one of them is confident they are creating the next tetris. No filmmaker sets out to make Howard the Duck and no game maker sets out to make E.T. – the game that is.

Developers are investing their own money because Apple told them they have an outlet. Sure, Apple is not telling the developers to do this, but no one is telling the poorest segment of society to buy the lion's share of lottery tickets either. The campaigns are tailored to the most susceptible. Apple tells developers they have an opportunity to reach the market and their return is only limited by the scope of their imagination and the quality of the offering. What Apple doesn't say is Apple will continue to make money on the hardware while the app store will continue to be managed for volume. Sure you can make the really cool app to tell the temperature on the moon and we’ll let you charge USD 5.99, but nothing is stopping us from approving the other guy’s moon temperature app for free. Even worse, while Apple zealously guards the ceiling price on media, it certainly won’t protect the floor. Apple would love for you to charge USD 9.99 or 29.99 for a game, but it really doesn’t care. So long as developers provide content, Apple is happy. So far it’s working – for Apple and with a recent change it may be working for developers.

On October 15 Apple changed the rules for in-app sales. It not only allows developers to quickly convert a free demo to a paid version – rather than the current Lite and Full versions – but it allows developers to join the social gaming revolution and start selling objects into games, additional content and subscriptions. The concept is a much closer alignment of interests between Apple and the developers at no additional cost to Apple. Developers are incented to keep prices of apps low, driving more downloads and more appeal for Apple. If trends from freemium content on other platforms prevail, consumers will pay more money over time for in game purchases than they would have paid for the game. So Apple gets more free content and developers, in theory get more money. This is crucial to the future of the platform. I won’t say it is a threat to Nintendo and Sony because their dedicated consoles have allowed for this content all along. A lot of DSi owners have yet to purchase a single game, continuing to play only downloaded content. However, I will say it is a huge benefit the community of iPhone developers and shows us Apple doesn’t really hate developers, they just remain indifferent.