Master Thesis for MSc Information Science: Game Studies
University of Amsterdam, Faculty of Science
Full creative freedom versus greater financial performance: has Apple’s App Store
actually led to a renewed business relationship between developers and publishers?
Bas Bastiaans
6041256
bas.bastiaans@student.uva.nl
Supervisor: David Nieborg
Second Reader: Frank Nack
Full creative freedom versus greater financial
performance: has Apple’s App Store actually led to
a renewed business relationship between
developers and publishers?
!
Bas Bastiaans
Information studies: Game Studies
University of Amsterdam
bas.bastiaans@student.uva.nl
ABSTRACT
In this paper we will analyze how Apple’s App Store affected the relationship between developers and publishers by focusing on the importance of “complementary assets”. We used semi-structured interviews with Dutch mobile game developers to explore how the App Store changed the roles of the actors in the traditional video game production network and how it influenced the development and business practices of developers. The App Store allows developers to independently publish games, making the developers able to bypass the traditional dependency on publishers. However, the highly competitive market of the App Store results in a dependency on “complementary assets”, such as marketing experience, relationship with gatekeepers and an organizational reputation. Publishers generally own these vital assets, which forces them to extract value out of the actors in the mobile game production network by controlling access to “complementary assets”. Furthermore, we found that the business practices of mobile game developers involve a balancing act in which they have to consider whether an investment of time and resources in the involvement of a publisher justifies the loss of full creative freedom.
Keywords
App Store, mobile application stores, independent game development, publishers, video game production network, complementary assets
1. INTRODUCTION
"The very fact that you and I can release a game on the App Store tomorrow means that every other developer can do the same thing. That's where it's less about creating an awesome game and more about discoverability. Guess who is really good at discoverability? The publishers." (Jason Della Rocca, co-founder of Execution Lab1)
In 2007, Apple CEO Steve Jobs refused to allow third party developers to develop applications for the iPhone2.
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1 Hiscott, Rebecca. (2014). Why Indie Game Devs Thrive
Without Big Publishers. Retrieved from: http://mashable.com/2014/03/08/indie-developers-self-publishing/
The iPhone was a preconfigured device on which Apple designed all the available apps (Zittrain 2008). That changed in 2008 when Apple released the iOS Software Development Kit (SDK) and introduced its own online digital distribution platform, the App Store. The iPhone subsequently evolved into the device as we know it today: a multipurpose smartphone which, among others, altered the mobile phone users’ experience and opened new avenue for developers (Cuadrado & Dueñas 2012). The App Store greatly lessened the barrier between consumers and developers, generating huge interest among consumers and developers (ibid.). In July 2014, the App Store already contained more than 1 million applications, of which more than 200.000 were games3.
Moreover, customers spent over $10 billion on the App Store in 2013 alone4.
Management scholars claim that Apple’s App Store has “revolutionized” the mobile applications landscape (Cuadrado & Dueñas 2012)5. The “revolutionizing”
nature of the App Store, as is argued by Broekhuizen et al. (2013), concerns the dramatically increased ability for developers to independently commercialize applications and games. This means that developers are now allowed to publish their content directly to the customer without necessarily having to rely on publishers or other intermediaries that exercised power over the developers
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2 Markoff, John. (2007). Steve Jobs Walks the Tightrope
Again. Retrieved from:
http://www.nytimes.com/2007/01/12/technology/12apple. html?_r=0
3 Ingraham, Nathan. (2013). Apple announces 1 million
apps in the App Store, more than 1 billion songs played on iTunes radio. Retrieved from https://www.apple.com/iphone-5s/app-store/ ; App Store Metrics. (2014). Retrieved from http://148apps.biz/app-store-metrics/
4 App Store Sales Top 10 Billion in 2013. (2013).
Retrieved from
http://www.apple.com/pr/library/2014/01/07App-Store-Sales-Top-10-Billion-in-2013.html
5 Apple’s mobile application store was not the first
attempt at provisioning mobile content. Prior to the App Store, the dominant business model for the distribution of mobile content was based on the “semi-walled garden” approach where mobile network operators exercised complete control (Cuadrado & Dueñas 2012).
in the traditional video game production network (Johns2006; Broekhuizen et al., 2013)6.
Figure 1: the traditional video game production network (Johns 2006)
Figure 2: the production network of the App Store (Jansen & Bloemendal 2011)
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6 A “production network” functions as an “organized
nexus of interconnected functions and operations by firms and non-firm institutions through which goods and services are produced and distributed” (Johns 2006).We refer to the “traditional” video game production network that was shaped by the “bricks-and-mortar” offline economy, in which developers are reliant on publishing houses and retailers to reach their end consumer via a console (i.e. Sony PlayStation) or a PC (Broekhuizen et al., 2013).
The App Store’s “revolutionizing” effect is shown by comparing tthe traditional video game production network (figure 1) to the production network of the App Store (figure 2). As is shown, the App Store contains less necessary intermediaries. Nowadays, the App Store and competing mobile application stores play a significant role in the total video game market, set to obtain a revenue of $22 billion in 20157.
Although the App Store has led to an enormously increased interest among the independent developer community, we note a critical issue wherein the structure of the App Store inherits a drawback for independent development (Holzer & Ondrus 2011). On the one hand, developers are able to perform development and business practices independently, meaning they are able to bypass the involvement of publishers, take full responsibility of both creative and revenue-driven activities and appropriate the full value of their creativity, but on the other hand, independent development does not automatically lead to viable business strategies (Broekhuizen et al. 2013). In other words: Broekhuizen et al. (2013) suggest that developers stay dependent on established publishers because they control “complementary assets”, which are
“those assets or capabilities that go beyond the mere technical knowledge of the innovation itself. Complementary assets include tangible resources, such as financial capital, and intangible resources, such as marketing skills, referrals and contacts, and proprietary distribution channels (ibid.).”
Economy scholars suggest that “complementary assets” can be used by incumbents (i.e. publishing houses) to deflect attacks by new entrants (Seppälä & Kenney 2012). Because the App Store allows developers to bypass complementary assets owners, publishers are forced to develop, recruit and control specialized complementary assets in their advantage so they are of value to developers (Seppälä & Kenney 2012; Broekhuizen et al., 2013). In contrast to generic complementary assets, specialized complementary assets are of much greater strategic importance, because they are not readily available in the marketplace (Broekhuizen et al., 2013). Consequently, it is suggested by Broekhuizen et al. (2013) that developers who lack the complementary assets to successfully commercialize their games should acquire these assets, either through acquisitions or strategic alliances with publishers (ibid.).
We examine the App Store’s effect on the value, distribution and acquisition of complementary assets by continuing upon the work of Broekhuizen et al. (2013), which provides us with a unique empirical analysis on “complementary assets”. They use a case study of a Dutch video game developer who brought one single game to the market using two different but comparable distribution channels. In the first channel they independently released the game using online distribution, whereas in the second they used an alliance with a publisher. The study resulted in the claim that an
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7 Stamford, Conn. (2013). Gartner says worldwide game
market to total $93 billion in 2013. Retrieved from
alliance strategy, even though the developer had to share a fraction of the game’s revenue, provided greater financial performance. However, Broekhuizen et al. (2013) do not take the specific characteristics of the App Store, such as its market structure and Apple’s governance model, into consideration. Next to that, Broekhuizen et al. (2013) base their claim on financial performance, not including the importance of full creative freedom.
In this paper we provide insight into the effects that the App Store had on the video game industry, mainly focusing on the relationship between developers and publishers and the involvement of complementary assets. We examine this evolution by answering the question: ‘How has the App Store affected the game developer’s
dependency on “complementary assets” owning publishers? Furthermore, we examine the way the App
Store affected the role and importance of developers and publishers. Finally, we contribute to the question whether or not the App Store has actually initiated a renewed business relationship between developers and publishers. We chose to specifically research the context of the App Store, and not mobile application stores in general, so we could focus on providing a detailed analysis on one particular case. Furthermore, we chose Apple’s App Store over its competitive mobile application stores, such as Google’s Android Store (Google Play) or Window’s Phone Store, due to its higher selection criteria, strong aesthetics and better prospect of selling applications, making it the most popular standard application store for revenue driven developers (Bergvall-Kåreborn 2011; Mosemghvdlishvili 2012)8.
Table 1: Dutch iOS developers
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8 Statistics show that iOS users are more likely to pay for
apps than Android users. Evans, Benedict. (2014).
Market shares. Retrieved from http://ben-evans.com/benedictevans/2014/6/25/market-shares
9 We were permitted by every developer to use their real
name and to mention their authentic game titles.
We hypothesize that, even though developers have a prospect for full creative freedom, the App Store forces developers to acquire “complementary assets”. When developers pursue financial gain in the highly competitive market of the App Store, viable business strategies are crucial to get noticed by the consumer. However, the developer’s increased agency has significantly altered the traditional role of publishers. Our assumption is that developers gain power and control in creative development practices, while publishers have to extract value out of their control over “complementary assets”.
The structure of the paper is as follows: at first, we introduce the research methodology. Next, we provide a definition of Apple’s App Store to present how specific characteristics reconfigured the role of developers, publishers and platform owners in the traditional video game value chain. Then, we examine how the App Store affected the developers’ dependency on “complementary assets”, by elaborating on the developer’s development practices and its relationship with publishers. Finally the paper ends with a concluding analysis.
2. METHODOLOGY
To get a better understanding of the renewed relationship between developers and publishers we conducted semi-structured interviews with game developers. We use a qualitative research method, because we set out to constitute arguments that explain how things work in particular contexts (Mason 2002). Qualitative research is based on methods of data generation that are both flexible and sensitive to the social context in which these data are produced (ibid.). Furthermore, qualitative research leads to an understanding of the complexity, detail and context of a phenomenon (ibid.). This relates to our goal of explaining how the traditional developer’s dependency has evolved because of the App Store.
We chose the developer’s perspective because of the emerging power structures in the App Store, which put developers in a position where they can choose whether or not to get affiliated with a publisher. Developers have the choice to invest in independent development practices or a relationship with a publisher. We wanted to look into the motivations that ultimately lead up to a certain business practice.
Within a period of one month (June 2014) we interviewed four Dutch iOS developers (Table 1). In three of the four cases, we conducted the interviews in a personal format and visited the developer’s office. These interviews lasted between 30 and 60 minutes. The fourth interview was conducted by e-mail, for which we set up a structured list of questions. All of the developers were available for follow-up questions via e-mail.
During the interviews, we asked the developers for both their own experiences and their opinions on the mobile game industry as a whole. In this way, we pushed the developers to reflect on their own position within the wider context of mobile game development. Furthermore, we asked the developers for their motivation for whether or not to affiliate themselves with a publisher. Also, we inquired how and why the developers engaged in certain business and development practices, and how they efficiently altered these practices to the App Store.
Name9 Company iOS
Games Business approach Interviewee 1: Joris Dormans Ludomotion (Utrecht) Bezircle (2014) Publisher Interviewee 2: Eric Diepeveen Stolen Couch Games (Hilversum) Kids vs. Goblins (2012), Ichi (2012), Castaway Paradise (TBA) Publisher, independent, independent Interviewee 3: Dylan Nagel Freelancer Dwarf Quest (2012) Independent Interviewee 4: Joram Rafalowicz Weirdbeard (Amsterdam) 99 Bricks (2014) Independent
3.1 A Brief Description of Apple’s App
Store
This section provides a brief description of Apple’s App Store, presenting a broad context that frames the redistribution of ‘complementary assets’. It is important to know that the App Store inherits key characteristics that influence the role of every actor in the video game value chain. We analyze how developers, consumers and Apple extract value out of the platform structure of the App Store.
In an attempt to provide an overview of the features and policies that determine the structure of the App Store, Jansen & Bloemendal (2013) describe the App Store as “an online-curated marketplace that allows developers to sell and distribute their software to actors within one software platform ecosystem”. From a developers perspective, we acknowledge this definition. Developers give “meaning” to the software platform ecosystem because they provide the content which influences the iPhone’s user experience (Mosemghvdlishvili 2012). However, considering how the App Store reconfigured multiple vital roles within the production network of video games, we propose a new, slightly altered description:
“the App Store is an online curated marketplace, inheriting a free market structure governed by Apple, allowing developers to independently develop, commercialize and distribute their content to consumers within one software platform ecosystem.”
We emphasize the notion of “independence”, because a unique characteristic of the App Store is that it bridges the distance between developers and consumers, allowing developers to directly commercialize their content to consumers without necessarily being reliant on publishers (Jansen & Bloemendal 2013; Broekhuizen et al. 2013). Our definition thereby reveals the developer’s increased importance in the video game power structure. Developers are now able to take full responsibility over creative and business-related decisions. In the traditional video game production network, the publishers maintained decision-making powers over the development and business practices of a video game (Johns 2006).
In comparison to the traditional video game production network, Apple has a vital role in the production network of the App Store, by playing an intermediary and verifying role. It connects developers and users to profit from each other interdependently and it verifies the identity and controls the quality of market participants (Kouris 2011).
Another relevant way to look into the App Store is from an economic perspective. We thereby explain how developers, consumers and Apple can extract value out of the structure of the App Store. The App Store functions around a “two-sided market” model with developers being on the one side and the consumer on the other (Kouris 2011). The success of a two-sided market depends on network effects, which means that the value of one group benefits the other (ibid.). In other words: developers are attracted to the large user base of, while
users are attracted to the large offer of applications and games (Holzer & Ondrus 2011).
However, the functionality of the “two-sided market” model reveals a key tension. On the one hand, consumers benefit from the increasing amount of the content and the resulting lower online retail prices (Broekhuizen et al., 2013). On the other hand, the highly competitive market is putting huge pressure on the profit margins of new entrants (ibid). As a result, Mosemghvdlishvili (2012) expects the developer sector to become more concentrated, meaning that the number of individual developers will decline.
Concentration is
also expected to occur because consumer amounts remain steady, while developer amounts keep growing exponentially (Rafalowicz, interviewee 4).As the platform owner, Apple profits from the positive feedback loop that is caused by the two-sided market, because it receives a 30% revenue share from every application (Holzer & Ondrus 2011). Apple also financially benefits from the App Store in it being a long tail distribution platform (ibid.). As there are no storage costs, the App Store can generate revenue from both the best selling applications as from the applications that are only sold a few times. The generated revenue from the long tail might not represent a substantial part of the overall revenue, but it is still significant (ibid.).
3.2 The App Store and the Rise of
Independent Game Development
According to Holzer & Ondrus (2011), the structure of the App Store has given developers new opportunities, but also poses threats10. The App Store inherits several
key-characteristics that are both beneficial and a drawback for independent game development. In this section, we will elaborate on the way the App Store affected the development practices of game developers in comparison to the traditional video game production network. We use our data to provide an analysis of contemporary mobile game development. Our analysis is divided in sub-categories, each elaborating on a different characteristic of the App Store.
3.2.1 The Apple Developer Program
All the necessary components for game development are included in the iOS Developers program, costing $99 a year11. A subscribed Apple developer can develop
applications with the iOS SDK, test and debug code on Apple’s hardware and distribute applications on the App Store. According to the developers in our study, Apple created an environment that is accessible to both developers and consumers. The App Store’s greatly enhanced user interface has made downloading, installing and buying third-party applications a “one-click” operation. The developers in our study unanimously mention the low development and distribution costs and the accessible development tools as two of the main
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10 Game developers are (traditionally) responsible for
creative development practices meaning they perform significant amounts of creative thinking, while performing practices like computer programming, design and substantial amounts of testing (Tschang 2007).
11 For more information on the Apple Developer program
benefits of the App Store and mobile game development in general. Furthermore, the App Store takes care of administrative tasks, such as billing (Holzer & Ondrus 2011).
The developers in our study also explain the ways in which they prefer the App Store over the Google Play Store. Most importantly, the developers claim that the consumers of Apple hardware are considered as a “paying audience”, in contrast to the consumers of Android devices12. Moreover, Apple provides one
ecosystem, in contrast to Android devices where the hardware and software are developed by different parties (Nagel, interviewee 3). It is suggested that this results in reliable products (ibid.). Next to that, the App Store is more well-ordered than the Google Play store (Rafalowicz, interviewee 4).
3.2.2 The creativity-debate
Another beneficial characteristic of the App Store could be that developers are able to extract full value out of their creativity (Broekhuizen et al. 2013). This means that developers are able to bypass revenue driven intermediaries that traditionally have a lot of decision making power (Diepeveen, interviewee 2). However, the fact that publishers are no longer formally needed to publish a game has set of a debate on whether the power structure actually tilts towards the creative developers, or that it just represents an additional way of distribution with limited strategic potential (Broekhuizen et al. 2013). On the one hand it is a valid assumption that the absence of a publisher would increase creativity, considering that creating a game traditionally involves balancing the tension between creatively concerned developers and revenue driven publishers (Tschang 2007). Moreover because individuals have an inherent desire to be creative (ibid.). On the other hand, the absence of a publisher can also be considered as a burden (Bergvall-Kåreborn 2011).
Game development is complex and games can benefit from rational structuring and systematic development in order to improve productivity and to ensure the certainty of the games’ development (Tschang 2007). Publishers can also function as intermediaries, judging and hiring talent (ibid.).
Our data verifies that tension, stating that game development is still a balancing-act between creative development practices and business-oriented practices. The biggest difference with the traditional game industry is the increased control that developers have over their own game. Mobile game developers are able to say “no” to publishers, which elevates developers in the power structure (Dormans, interviewee 1). That affected power structure should allow developers to be more creative (Rafalowicz, interviewee 4). However, the increased freedom that developers have in the App Store is not necessarily beneficial for creative development practices:
“It is definitely not the case that the ommitance of publishers and the openness of the App Store leads to more creativity. You still want to make
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12 As formerly said, statistics show that iOS users are
more likely to pay for apps than Android users. Evans, Benedict. (2014). Market shares. Retrieved from http://ben-evans.com/benedictevans/2014/6/25/market-shares
money as a developer. It is definitely easier to get a creative game published, but just as hard, or maybe even harder, to achieve sufficient financial performance (Dormans, interviewee 1).”
It is thereby suggested that, although the App Store lets developers publish games independently without having to rely on intermediaries, developers are limited by the need for commercialization strategies (Dormans, interviewee 1). According to Broekhuizen et al. (2013), these commercialization strategies should be based on “complementary assets”. The claim that commercialization strategies influence creative development practices applies to both the traditional video game production network as to Apple’s App Store. In that respect, the App Store has not changed as much as most developers might have expected. Commercialization strategies logically affect (independent) development practices and should even be taken into account at the very start of development, in order to achieve greater financial performance:
“If developers start to think about monetization near finishing the game, they are already too late. There are more than a million apps on the App Store. If a game does not focus on monetization from the start, it is going to be difficult to generate revenue (Diepeveen, interviewee 2).”
The developers do acknowledge the opportunities that the App Store has given them. The App Store has created a platform for certain niche genres, like casual puzzle games, that weren’t showcased by previous game distribution platforms before.
3.2.3 The discoverability-problem
The emphasis on commercialization is, among others, caused by the discoverability-problem, which is claimed to be the biggest drawback of the App Store by our developers. The discoverability problem is stimulated by the facilitation of the App Store, which is not optimized for discoverability:
“Discoverability on the App Store is horrible. When a consumer goes to the App Store, he or she can only view the front-page and the top lists. That’s it. That means only a few hundred games are presented in the App store. If your game is not among those games, a consumer cannot find your game unless he or she already knows its specific name. The functionality of the search bar is also limited since you cannot search via keywords (Diepeveen, interviewee 2).”
Our data further suggest that discoverability is the biggest and most essential challenge for developers to overcome in order to be successful. “Complementary assets” are means to bypass the discoverability-problem, but these cost time and/or resources. Big developers like King and Supercell have a huge amount of resources, making it hard for new developers that lack those resources to compete in the same ecosystem. Consequently, the App Store has developed into an “unfair” market:
“Success leads to more success on the App Store. Games like Clash of Clans (2012) and Hayday (2012) are still being featured by Apple because they make Apple a lot of money. The top-grossing list has been steady as a rock for quite some time. It is impossible for small developers like us to get on that list (Diepeveen, interviewee 2).”
The enormous amount of games that compete in the “unfair” marketplace of the App Store forces developers to look for new business models (Diepeveen, interviewee 2). The most dominant new business model is the free-to-play model, which refers to games that give free-to-players access to a significant portion of their content without paying. These games rely on in-app purchases and are optimized to keep audiences playing and inviting new players (Nagel, interviewee 3).
3.2.4 Apple’s governance model
Another negative side of the App Store could be that developers have to conform to the rules defined by Apple (Holzer & Ondrus 2011). This is supported by Zittrain (2008; 2009) who claims that the control of Apple limits innovation. However, the influence of Apple’s governance model on development practices is at least debatable. In another article about the future of the internet Zittrain (2011) explains Apple’s intent:
“Apple’s restrictiveness had at least some good reason behind it independent of Apple’s desire for control: rising amounts of malware meant that the PC landscape was shifting from anarchy to chaos. (…) Apple was determined not to have that happen with the iPhone.” The App Store thrives on the image that it is safe, intuitive and it “just works” (Zitrain 2011). Bergvall-Kåreborn (2011) claims that the appeal of Apple’s brand image even overrules the drawbacks of Apple’s governance model. On the one hand, developers claim Apple can be “too controlling”. Developers have to conform to Apple’s extensive review guidelines, namely own a Mac and acceptance to the App Store is not guaranteed (Bergvall-Kåreborn 2011). On the other hand, developers praise Apple’s governance model for resulting into a high-end brand with strong aesthetics. The App Store also offers a “slick” ecosystem, whereby the App Store, the website and the iPhone seamlessly integrate (Bergvall-Kåreborn 2011). Developers are attracted to Apple, because it offers a unified look and feel on every device (Wikhamn et al. 2011).
Our data go further against Zittrain’s thesis (2011) and claim Apple’s reviewing process does not negatively influence their development practices. They also have never experienced problems with Apple’s governance model. The fact that Apple uses higher selection criteria means that developers are forced to produce something good (Nagel, interviewee 3).
3.3 The (Changed) Relationship between
Developers and Publishers
In comparison to the traditional video game production network, the App Store affected the importance of the traditional publisher. Some criticasters even go as far as
declaring the “death” of traditional publishing as a business model13. However, the highly competitive
market of the App Store still inquires a demand for “complementary assets”. Since these assets are generally controlled by publishers, an affiliation to a publisher is still a valid strategic option for developers. This section will present an analysis of the (new) role of publishers and the value they can have for developers. Our data provides a developers perspective on the effect that the App Store had on the (new) business relationship between developers and publishers.
3.3.1 The (new) role of publishers
Traditionally, a publisher functions as an intermediary between the developer and the console manufacturer, although console manufacturers can also have in-house publishing facilities (Tschang 2007; Johns 2006). Independent publishers maintain a relationship with the console manufacturer (i.e., Sony, Microsoft or Nintendo), negotiate about the distribution, provide a marketing strategy and serve as a gatekeeper (Johns 2006). Publishers also provide financing, usually in exchange for intellectual property rights of the game and decision-making powers over the game until it reaches the customer (Johns 2006). These characteristics suggest that publishers have a powerful negotiation position towards developers. That powerful position is caused by the fact that an affiliation to a publisher is a requirement for publishing a game on a console:
“What I know from the Xbox Live Arcade is that publishers have certain slots for a limited amount of games. Therefore, publishers are forced to perform strict selections. Developers have to invest a lot of time and resources to measure up to that selection (Diepeveen, interviewee 2).”
The App Store affected that necessary role of publishers by giving developers the opportunity to independently publish games (Broekhuizen et al. 2013). The need for publishers consequently declined and lowered their position in the power structure (Rafalowicz, interviewee 4). However, independently publishing a game does not automatically lead to viable business strategies. Broekhuizen et al. (2013) suggest that independent developers are still dependent on publishers because they generally lack the complementary assets that make up a viable business strategy. This means that publishers can now control their “complementary assets” to extract value out of the developers (Broekhuizen et al. 2013). There is shared sympathy among the developers of our study about the claim that “complementary assets” obtained through a partnership could greatly benefit the commercialization of a game. Dormans (interviewee 1) for example, explains their publisher provided them with feedback to optimize their game for the selected target
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13 “Who needs Chillingo?” was a developer-centric
community publishing effort that stated that “the publishers are dead”. Jordan, Jon. (2011). Thumb Arcade
preps self publishing developer movement under banner of Who Needs Chillingo?. Retrieved from http://www.pocketgamer.biz/news/29903/thumb-arcade- preps-self-publishing-developer-movement-under-banner-of-who-needs-chillingo/
audience and arranged international press reviews and a feature by Apple. Next to that, incumbent publishers contain superior marketing skills, have relationships with gatekeepers and have a reputable name that could also endorse the reputation of the developer (Broekhuizen et al. 2013).
However, even though developers claim they cannot compete with incumbent publishers in acquiring specialized “complementary assets”, it is still considered to be a viable option to engage into development and business practices independently. It is even suggested that the ability to bypass the involvement of publishers allows developers to extract more value out of self obtained “complementary assets” (Rafalowicz, interviewee 4). Rafalowicz (interviewee 4) explains their company choice to develop their game independently, hoping to build up a reputation as an indie-developer and benefit from their full creative freedom. Moreover, the low development costs of mobile game development makes developers less reliant on financial funding, which was an asset of publishers in the traditional video game production network.
Consequently, independent developers engage in a balancing act. In principle, developers are able to acquire “complementary assets” themselves. Publishers are only considered to be more skilled in successfully using
specialized “complementary assets”. Therefore a
developer has to consider whether he wants “100% of a small amount or a smaller percentage of a potentially higher amount” (Rafalowicz, interviewee 4). Developers have to consider whether an investment of time and resources in the involvement of a publisher justifies the loss of full creative freedom.
Developers are also able to overcome the dependence on specialized “complementary assets” by trying to mobilize resources into the development of these assets and in time learn to mimic these assets (Broekhuizen et al. 2013). Dormans (interviewee 1) explicitly explained their strategy was to affiliate themselves to a publisher for their first project, from which they could benefit in their future as an independent developer. Generally, it is claimed by the developers of our study that experiencing a relationship with a publisher could greatly profit an independent developers’ future development and business practices.
3.3.2 The power of Apple
The structure of the App Store can be a significant drawback for the value of publishers, mainly because “a hit success” can never be guaranteed (Diepeveen, interviewee 2). According to our developers, their games are reliant on Apple for getting a feature on the front page of the App Store. Because the App Store relies on application sales to increase its revenue, Apple heavily promotes downloads of these applications (Holzer & Ondrus 2011). The promotion of applications is mainly done in the featured section where several applications and games are exhibited. This section is completely controlled by Apple and it has been said that developers and publishers cannot rely upon Apple being a marketing vehicle14.
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14Wallis, T. (2014). Interview with Michael Ehrenberg,
On the contrary, Broekhuizen et al. (2013) do claim relationships with gatekeepers is a crucial “complementary asset” for successful commercialization. They thereby refer to the traditional video game production network in which the console manufacturers act as gatekeepers that ultimately decide which games are given acces. Upon deciding which games should be given access, these platform owners usually rely onpublishers’ advice and support (Broekhuizen et al. 2013).
Although it is suggested that the selection for the feature-section is facilitated internally at Apple on an unbiased basis, the developers of our study do claim that being in contact with Apple, either independently or via a publisher’s network, could greatly benefit a game’s revenue15. It is even suggested that Apple ultimately
decides which games have success, which gives them significant power (Diepeveen, interviewee 2). That power is considered to be a huge drawback of the App Store, which affects the value of publishers:
“There is no single guarantee for success on the App Store. That’s where it gets less about creating a brilliant game or continuing on a previous hit, and more about optimizing the chance of success. That’s where most developers go wrong (Diepeveen, interviewee 2).”
4. Limitations & future research
It is suggested that the publishing community is significantly broadened (Diepeveen, interviewee 2). There are more publishers to choose from, all owning different specific expert skills. We were not able to develop a clear profile of the new publisher. We were reliant on first hand experiences provided by our participants, but their perception of publishers was quite negative. Nagel (interviewee 3), for example, states that there are a large number publishers who are not able to live up to their promises, simply due to a lack of resources. Publishers are forced to succumb to creative business strategies, of which one is to publish as many games as possible with the expectation that one commercial succes will cover the expenses of every game. The developers consequently state they are reserved towards publishers because they expect to be “just one game out of many” (Dormans, interviewee 1). We therefore suggest a new study containing analyses from a publisher’s perspective. We would also greatly stimulate a more thorough research towards creating a profile of publishers acting within in the mobile game industry.
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Former Apple App Store Marketing Manager and iOS consultant. Video Games Intelligence. Retrieved from http://www.videogamesintelligence.com/
15Wallis, T. (2014). Interview with Michael Ehrenberg,
Former Apple App Store Marketing Manager and iOS consultant. Video Games Intelligence. Retrieved from http://www.videogamesintelligence.com/
5. CONCLUSION
Through first-hand experiences of new and experienced game developers, we examined the App Store’s effect on a developer’s business and development practices. The way in which the developers of our study interact with publishers shows a changed dependency on publishers. Interestingly, all of the interviewees prefer to extract full value out of their creative freedom and expect to benefit from the complete control they have over both the development and business practices of their games. Although they all agree on the importance of “complementary assets”, there is shared sympathy implying that the investment in a publisher’s involvement does not necessarily justify the loss of creative freedom. The fact that developers have the choice to bypass the dependency on a publisher is perceived as a huge benefit of the App Store.
Ironically, while developers state they prefer independent development practices for its full creative freedom, it is also suggested that developer are not able to fully benefit from their implied creative freedom. The developers state that creative development practices are influenced by the need for commercialization and monetization strategies. Furthermore, the discoverability-problem has increased the emphasis on external marketing. Developers have to take monetization practices in consideration from the start of their development process in order to bypass the drawbacks of the discoverability-problem. This also puts pressure on the price competition in the App Store, resulting in a domination of free-to-play games. Finally, all of the developers acknowledge the significant role of Apple, which benefits from the long tail of the App Store. As a platform owner, being both in control over the hardware and the software, Apple has the most power in the production network of the App Store. The developers all state that contact with Apple can have a huge impact on the financial success of a game. It is even suggested that Apple can single handily decide which games become a success and which do not. Our data shows that the featured-section of the App Store is an important factor for financial performance. Moreover, the discussion of whether or not to be affiliated to a publisher is considered to be irrelevant when a game is not featured in the App Store. The aspiration of a feature in the App Store gives Apple significant power over both developers and publishers.
ACKNOWLEDGEMENTS
We would like to acknowledge the efforts made by our friends Jelle Damen (Bachelor student in mechanical engineering at Technical University Eindhoven), Linda van Pelt (Master student in educational sciences at University of Utrecht) and Rob van Pelt (MsC graduate in industrial engineering at Technical University Eindhoven) in providing extensive feedback on both the content and the grammar of this master thesis.
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