Xsolla: Apple and Google are “the grandpas that overstayed their welcome at Christmas”

 

Business was already pretty good at Xsolla before the Epic Vs Apple trial. But afterwards, it stepped up another notch. 

With legislation in different parts of the world gradually tilting the balance back in favour of game-makers, developers and publishers are no longer terrified of upsetting Apple and Google. And they’re actively seeking ways to dodge that 30% platform tax.

“We are talking with all of the top 50 grossing publishers,” says Miikka Luotio, Xsolla’s regional director for Europe. “All of them. And they are coming to us pro-actively,” he tells us.

Luotio has been around mobile for over 16 years, starting out at Digital Chocolate before roles at Wooga, EA, Popcap, Flaregames, Rovio, Tilting Point and SuperScale. He helped set up Xsolla’s European presence two years ago, and sees the current marketplace as one close to liberation from the fusty, inflexible IAP payment systems offered by Apple and Google.

Xsolla regional director for Europe Miikka Luotio.

What Scopely is doing with its web stores through Xsolla is a prime example of what’s coming. Star Trek: Fleet Command, WWE Champions and more are playable on PC as well as mobile, and if players sign up to a Scopely ID, they can explore bespoke, dynamic IAP offers not available on the App Store or Google Play (while Scopely dodges the 30% platform tax).

There’s also no upper limit on purchases as there are through Apple and Google, and naturally the kind of players who want to buy through these portals are the most engaged and the highest spenders. 

In short: whales are migrating away from Apple and Google’s IAP systems and into web shops.

“Over 90% of our revenue comes from tier one countries,” says Luotio. “It’s no longer this esoteric thing you do somewhere in Southeast Asia to set up a shop and then sell there.”

“It’s important to think of this shift into publishers wanting to own their own e-commerce platforms to not only to monetise outside of the app stores, but for other things, too.” Web shops also allow for greater IAP offer personalisation, says Luotio, and can serve as VIP programs for top spenders.

An example of a dummy web shop from Xsolla.

On top of how rigid the current IAP setup is through Apple and Google, it’s also surprising to learn the extent to which these platforms have failed to provide local payment systems for great swathes of the world, particularly across Latin America, Asia and Africa. 

Luotio has done the maths, of course: “By only relying on the payment methods that Apple and Google offer you’re missing about 260 million people globally,” he tells us.

But what happens to Xsolla if the platforms suddenly decide they’re going to cut their commission in half? Won’t that halt the flow of folks away from Apple and Google’s IAP setup?

“Even if they changed their commission setup, the problem that I see there is they’re still controlling the part that the publishers want to control themselves,” says Luotio. “I think fundamentally, no matter how they change their rates, you still don’t have the control.”

“If you’ve used Amazon, the more you shop, the more you get relevant recommendations. When you look at the most successful ecommerce platforms in general from all industries, they are extremely accurate and they’re able to recommend you things that you want to buy. The platform tax seems to be less relevant now. And, obviously, diminishing returns on these platforms mean that people want other sources of revenue.”

Xsolla cites Nexters’ web shop in Hero Wars as a key case study for how to operate outside of app stores.

Luotio’s also keen to point out that should Apple and Google open up their platforms to officially allow third-party payments, Xsolla is ready to pounce.

“We already have SDKs for iOS and Android,” he says. “Technically we are ready to go. We have been for a while now: the developer documentation, everything is out there online already. I think it’s a matter of time where, when and how.”

Luotio even jokes that if Apple and Google did want to open up or evolve its payment systems, “they might call us up and try to do a deal.”

The endpoint Xsolla wants is players being able to transact anywhere they are on the web, from any device. (And for Xsolla to provide that service, obviously.)

 “It’s the power of a hyperlink,” adds Luotio. “Links should be able to enable you to do anything you want. But right now on if you’re on Apple or Google, you can’t necessarily do everything you want. So the platforms are also holding back web3 when you think about it.”

“The mobile platforms are increasingly like that: the grandpa that overstayed their welcome at Christmas.”