June 16, 2024

Mikayla Macfarlane

Serving technology better

Revenue opportunities for game developers in the wake of the European Union’s Digital Markets Act

4 min read
Revenue opportunities for game developers in the wake of the European Union's Digital Markets Act

The European Union’s Digital Markets Act (DMA) — all 66 pages of it — was activated almost exactly a year ago, became generally applicable this year on May 2, and will start to be enforced around March of next year. Its aim, of course, is to regulate major online platforms and gatekeepers, and the goal is to establish fair competition, consumer protection and data privacy. It’s pretty certain that the online global gaming industry, in which developers and game studios are profoundly affected by platform dynamics, will feel the brunt of the changes wrought by the DMA.

At GamesBeat Next 2023, Josephine Friday, senior business development manager of enterprise mobile gaming, Americas, at Xsolla, was joined by Felix Hilgert, tech and games lawyer and partner at Osborne Clarke as well as Don Reilley, EVP of Publisher Development & Partnerships, SCUTI to talk about what developers, studios and industry professionals need to know, right here and now — and where the opportunities lie.

Taking down the gatekeepers, Reilley said, is “all about the publishers being able to control how they are able to go out and generate revenue for their games, so that they can reinvest that and continue to do what they’re here to do, which is create great products and great experiences for gamers to participate in.”

The direct impact on the game industry

The act directly applies only to certain large companies, the so-called gatekeepers, Hilgert said: Meta, Amazon, Google, Microsoft, Apple and ByteDance for TikTok, but that doesn’t mean game companies can relax.

Core platform services are in the scope of this act, including search engines, browsers, operating systems, social networks and importantly for game industry professionals, what they call online intermediaries or intermediary services. Up until the Digital Markets Act, antitrust in the digital space was difficult to effectively enforce, because of the complexities of the argument around what constitutes abuse. With the DMA, two key paradigms are shifting significantly.

The first is a long list of very specific obligations around the data you can collect and what you can do with it. The next is where the opportunities for developers lie.

“There are rules about having to let your competitors do their own thing on your platform and in your ecosystem,” he said. “These are rules about having to allow an alternative app store, or having to allow an individual app or individual piece of software that’s somehow in your ecosystem to point users to. By the way, you can subscribe to this somewhere else using a different payment system, using a different way to get into my content, where you then don’t pay that same commission to the online intermediary that you’re forced to be on.”

There’s also a new level of accountability required, with the reversal of the burden of proof. Gatekeepers must be completely transparent about what’s happening behind the scenes, which allows developers to more easily contest unfair decisions.

“Enforcement is going to be easier because you already know where you’re starting if you think something they’re saying is not sufficient,” Reilley says. “That’s a starting point where you can start arguing.”

The opportunities in the market

This spells out some positive changes for developers. For instance, escaping from the 30% fee that the major platforms take from their customers by opening up their own online presences. Or leveraging easy-to-build web shop solutions like Xsolla’s, which give developers a direct-to-consumer portal to sell all their digital content on a website, and directly to the players.

“You control the content. You control the user journey. You control the entire purchase journey,” Friday said. “They buy it and play with it in the game. We think this is a very good opportunity, because you control everything, so you have a higher revenue return.”

SCUTI already has a market place, Reilley said, designed to sell physical goods. While they’re not selling digital goods yet, they have a rewards system in place: gamers are rewarded for the purchases they make every day, and those rewards can easily be used for in-game purchases.

“We’re in a position now where we can easily sell publishers’ digital goods — packages, coins, tokens — and make it easier for gamers to get those digital goods, and for publishers to earn more revenue on those goods,” he explained. “We’re all aware that a very small number of players make in-app purchases in games. What we want to do is make it easier and make it more beneficial for gamers to make in-app purchases, to fuel more revenue for game makers.”

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