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The chief executive officers of online gaming companies have criticised Google’s decision to charge a 26 per cent service fee on alternative billing systems for in-app purchases and subscriptions.
Google Play Store will on April 26 introduce a new policy in India that will allow app developers to offer users alternate billing systems along with Google Play Billing System (GPBS). The tech giant has been asked by the Competition Commission of India to allow app developers to use third-party billing or payment processing services for app purchases, as well as in-app purchases.
Google Play Store, however, levies a service fee on transactions with a discount of 4 per cent. As a result, the effective service fees on payments through an alternative billing system stand at 11 per cent for the first $1 million earned by a developer in revenue each year and 26 per cent for earnings above it.
Sai Srinivas, co-founder and CEO of Mobile Premier League (MPL), said the 30 per cent commission may be viable in advanced markets like the US, but in India it is crucial to ensure that game developers receive more revenue to invest in game development and build more games.
“Let's evaluate the unit economics: if a developer charges 100 rupees, 30 rupees go to the play store or app store and 70 rupees go to the developer. From that 70 rupees, they have to pay for hosting, user acquisition, and other expenses. My view is that we should provide Indian game developers with more revenue to invest in game development and build more games,” said Srinivas at a conference organised by the All India Game Developers’ Forum (AIGDF).
Games start-ups argue that developers would be liable to pay processing fees to third-party service providers in addition to Google’s 11-26 per cent service fees, thus bringing total charges on developers at par with, if not exceeding the 15 per cent- 30 per cent GPBS fee they pay today.
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Sean Hyunil Sohn, CEO of Krafton Inc. India, called for government intervention and encouraged the development of competition from third-party stores, supported by consumers.
"When app stores and play stores were launched, the 30% fee was revolutionary compared to the 70% charged by OEMs or Telcos for game developers. At that time, it was a very good idea, but as the industry and business models have evolved, there needs to be a relook at the rates,” said Anuj Tandon, CEO of Gaming, JetSynthesys.
Separately, the Delhi High Court on Monday asked the CCI to decide on a plea filed by the Alliance of Digital India Foundation (AIDF’s) in the matter on or before April 26. ADIF’s plea alleges that Google was “blatantly violating” CCI’s October 2022 orders.
A Google spokesperson has previously said: "When a consumer chooses to use an alternative billing system, the standard service fee the developer pays will be reduced by 4%. Google Play’s service fee has never been simply a fee for payment processing. It reflects the value provided by Android and Google Play, and all of the developer services we offer, including app distribution and discovery, the commerce platform, developer tools, analytics, training, and more."
