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30% No More? Why Every Studio Should Be Rethinking Mobile Monetization
19 Plays2 hours ago
📖 Episode Summary:
In this episode, we delve into the evolving landscape of mobile game monetization with Chip Thurston, Head of Gaming at FastSpring. We explore the implications of the Apple vs. Epic ruling, the shift towards direct-to-consumer (DTC) strategies, and how webshops are becoming essential for game studios aiming to retain more revenue and foster stronger player relationships.
🔑 Key Topics Covered:
- Impact of the Apple vs. Epic ruling on mobile payments
- Transition from app store reliance to DTC models
- Advantages of integrating webshops for game studios
- Understanding the Merchant of Record model
- Strategies for scaling monetization efforts
👤 About Our Guest:
Chip Thurston is the Head of Global Partnerships at FastSpring, a leading e-commerce platform for software and digital products. With extensive experience in digital monetization, Chip provides valuable insights into optimizing revenue streams for game developers.
📌 Resources & Links:
📣 Call to Action:
Enjoyed the episode? Subscribe to our podcast for more insights into the gaming industry's evolving monetization strategies. Don't forget to leave a review and share this episode with fellow developers and industry professionals.
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Transcript
Episode Introduction
00:00:01
Speaker
Welcome to Player Driven. Here's what you're about to listen to on today's
Introducing Chip Thurston and Apple vs. Epic Ruling
00:00:04
Speaker
episode. Today we're talking to Chip Thurston from Fastspring. We talk about the recent Apple vs. Epic ruling and how it impacts the direct-to-consumer strategy for not just indie studios but studios of all sizes.
Impact of Industry Changes on Game Strategies
00:00:18
Speaker
We talk about why maybe Midcore will thrive and Casual might need to create a new playbook for kind of the changes that are coming up. And what is the role of a merchant
Understanding the Merchant of Record in Gaming
00:00:26
Speaker
of record? What does that mean? It was a really insightful conversation with Chip, and we hope you enjoy this week's episode.
Chip Thurston's Career and Expertise
00:00:37
Speaker
Good afternoon, everybody. Welcome to Player Driven. Greg here. Today, we are joined by Chip Thurston. He is the head of gaming at FastSpring and has a really cool background as director of product at Scopely. He was at SciPlay for a while. He was at Dell for a while. And we are going to talk about all things consumer and more specifically direct consumer because there's been a lot of news on that recently. And I want to help break it down before we jump too much into it. Chip, thank you so much for joining me today. How is your day going?
Insights from the LiveOps Summit
00:01:06
Speaker
Yeah, thanks for having me, Greg. Today's going well. Just ah another day in paradise here in Austin, Texas. So a beautiful weather today. Nice and warm. Yeah, you were also just at the LiveOps Summit, right? And I think that was the first year they were doing it. How was your experience at the LiveOps Summit?
Implications of Apple vs. Epic Ruling on Developers
00:01:22
Speaker
ah it was really cool. It's, ah ah yeah, like you said, the first time they've done it in Austin and it's become, i think it'll be a nice pillar of ah North American gaming events and a way to congregate people in Austin. and It's nice central location, a nice senior audience. So yeah, but it was great to attend.
00:01:38
Speaker
Cool. Yeah, it's one of those conferences I'll need to check out for next year. I know a lot of people that went and it seems like a really fun time. Plus you're in Austin. It's like the best food here in the kind of in the States. so So that's awesome.
00:01:50
Speaker
Yeah, no no disagreement there. I can't get enough Tex-Mex. ah So the big conversation of today was something that happened about two weeks ago, and i want to help kind of break it down, the battle of Epic versus Apple. And before we get too deep into it, let's just be aware that things are going to continue to change. Anyone that's settling, thinking, oh, it's done, it's done, it's far from done, but here is the current.
00:02:19
Speaker
As of May 1st, I believe the date was, it was that Apple can no longer restrict or block people from purchasing or using their currency outside of apps.
00:02:32
Speaker
So the ruling means that Apple cannot impose any commission or fee on a purchase that consumer makes outside of an app. It It ah says Apple cannot restrict developers' style or formatting or placement of links in an app or block the limit or use of buttons are called to action.
00:02:50
Speaker
So this was a pretty major change, but for people that are not in the industry, that just might be a bunch of jargon or gibberish, and might be a, what does this mean for me?
00:03:00
Speaker
Chip, can you dumb this down for me so I have a better understanding of what does this mean for indie developers, publishers, AAAs, anyone that's
Opportunities Beyond the Apple Ecosystem
00:03:09
Speaker
creating an app. Well, what does this actually mean to me?
00:03:12
Speaker
Yeah, yeah, absolutely. That was a good good breakdown of kind of more tactically what it means. When to think of the high level of of what it means, I think it's helpful to start with like what we couldn't do previously to understand what we can do today.
00:03:26
Speaker
And what we couldn't do previously as game developers was... ah direct players from a mobile game into a web shop. Like we couldn't have a button inside mobile game that says, go to my shop and you click there and it goes to your shop on a website or any third party shop, any any outside payment platform. If you did that, Apple and Google had policies in place that said you would be in violation of those policies if you were to do that.
00:03:52
Speaker
And they went as far as to say you cannot even promote that. You can't have a banner in your game that says, web shop. we We have one and it exists. like Even something as as general as that was against the rules.
00:04:04
Speaker
and And with this ruling now, we can have those banners and those buttons. That's basically what it means. We can now steer players from our mobile game off platform to make a purchase.
00:04:17
Speaker
So we can promote that in the game, which is much more significant in terms of being able to actually grow the revenue that we're driving direct to consumer. ah And some companies have even been exploring being able to link a direct button in the game to say, I'm just going to route the payment directly off platform.
00:04:36
Speaker
So I don't have to send my purchase through Apple in this case in the United States. um I can just send that payment elsewhere. And so we're still waiting to see how that part plays out. But at the end of the day, it means we can steer it. But it's also important to remember this only applies to the United States and it only applies to iOS at this time.
00:04:55
Speaker
So just for my own kind of curiosity, ah the last concept you were saying where you have the button that links to payment directly outside the platform, does that mean you won't even link to a web shop? It just means I'm making an API call to a wallet back end that will make the transaction and I don't even need to utilize the iOS or or Google. Well, it just affects Apple now, but.
00:05:16
Speaker
Yeah, I would say possibly. um that's that's kind of the That's where some of these rulings are specific, but still somewhat vague. And so we're waiting to see how that part plays out.
00:05:27
Speaker
um the what It could be as simple as the backend solution that you just mentioned. It could be a web view that pops up over so you're still inside the game instead of being redirected to a a website entirely, the purchase is facilitated that way.
00:05:42
Speaker
um And that's the part where, you know, my my ah not being a lawyer and having no legal expertise here, i struggle a bit to ah interpret exactly what is doable and what isn't. So I think it really depends on a studio and how aggressive they want to be um knowing that this rolling is in place.
00:06:00
Speaker
Why does a studio want to bypass the Apple ecosystem? i mean, at the end of the day, and and I've always been an Android user because I enjoy the freedom, right? And although it's...
00:06:11
Speaker
Not as much freedom as people think, but like, why why bypass the Apple ecosystem if everything's just baked in nicely? Yeah, you do get a lot of value out of being inside the Apple ecosystem, right? Like you said, it's all very turnkey solution.
00:06:27
Speaker
There's a lot of trust that players have with that. It is an easy
Off-Platform User Data and Payment Systems
00:06:30
Speaker
way to do it, but you have to pay 30% every dollar of revenue to Apple in that case or to Google on their platform. um And when you route that to a webshop, it's much lower. It'll be somewhere under 10%, could be five, six, 7%.
00:06:44
Speaker
um So you're making significantly more profit when you drive that revenue through off-platform channel as opposed to on-platform. Is there additional data that you're able to connect when you're taking that user off-platform, or do iOS still prohibit that type of data that you have the ability to access?
00:07:04
Speaker
Yeah, it's it's a little bit of both. Like iOS does have their privacy policies in place, but when you're taking players off platform, you are handling more information that way, right? And so you're able to get more information to connect with them directly, whether that's email,
00:07:20
Speaker
um or other information you get. And there's a lot of value in that. you're You're establishing a more direct relationship with that player, and that does open up a lot of flexibility in the future. So yeah, there's there's a lot of value in that just from a long-term player relationship management.
00:07:36
Speaker
standpoint that you get from having off-platform channels too. What's the overhead for a studio that wants to implement a tool like this? Has it become much more complex since you're not just using the baked-in ecosystem again?
00:07:49
Speaker
I would say it depends. um It can be as little or as much as a studio wants it to be. And so that's where that's where a merchant of record like Fastspring comes in. So the reason a company like Fastspring is valuable is because we'll be the one to come in and handle the payments because ah when directing payments off platform, well, you're no longer using Google or Apple to facilitate that. So they're not handling currency conversions or taxes um or any risk management that all then falls on you.
00:08:24
Speaker
and so you can then offload that as a game developer you can upload that to the merchant of record and so the merchant of record comes in and says okay we'll handle the checkout so fast brain goes in we handle your currency conversion to different areas um we handle the tax payouts to different places we handle risk management if there's any maybe fraudulent purchases or any um anything with chargebacks that might come through that's all handled directly by fast spring and so uh the that's it the checkout process, right? Offloading that part of the work, but the work the game developer would still do would be saying, okay, how do we build this shop?
00:09:00
Speaker
And that's where it it depends and can kind of be something that is a, I think of it as a crawl, walk, run of you crawl by just, we need a shop, right? We need a page with our store items on there, and that's something players can go and purchase. And that's a pretty light touch effort. It doesn't take a lot to build that shop, but there is some effort to actually build the page and connect it to your game.
00:09:23
Speaker
But then over time, you can layer in more features and more engagement drivers and other maybe other pages to your website, maybe a news page or a leaderboards page um or some other event page. And as you do those, your your website can become this truly complimentary experience to your mobile game.
00:09:42
Speaker
And in doing so, you grow your direct-to-consumer revenue. But again, that's more the run stage, right? That's more you kind of build to that over time. And so ah going back to your original question, the investment can be pretty light to start and just get that foundation in place.
00:09:57
Speaker
And then you can really think about, okay, how can we grow this? And how do we ah maximize that
Direct-to-Consumer Strategies in Gaming
00:10:02
Speaker
over time? And how much does it make sense for us to invest in that? I think that's such a great art analogy. I'm a huge fan of when people use the terminology crawl, walk, run. ah and When I was in my sales engineering stage, it was kind of my pitch that I would talk to every customer. Like, all right, and this tool can do a lot, right? And if you try and start this tool and by doing everything all at once, you're going to fail. You can't just take on every feature of this tool at first. So so look at the k crawl, walk, run stage. and And I think you said it really well is,
00:10:31
Speaker
start by crawling by just having a page with these things on it, the purchases on it, right? Direct the consumer away from the store or the iOS store and more to either the FastSpring or whatever you're using store. From there, you'll start to see how your ecosystem can expand, what tools you want to integrate as well to make it more seamless, more more to straightforward. Maybe you want to integrate support eventually into there, maybe trust and safety, maybe just a feedback form them directly in there. I think There's so much possibility, especially when you can start controlling that data and not manipulating it, but kind of creating those workflows for those users.
00:11:05
Speaker
I think it's really cool. And I think... You know, my my first thing that comes to mind is, you know, Epic also announced that day there they were launching a web store, right? And I don't know what implications, that's the word i'm looking for.
00:11:20
Speaker
Sorry, English is not my first. ah Yeah. um So ah it makes me think, how do you take a look at something like Epic coming into there? And is it more the merrier?
00:11:31
Speaker
Is it just introducing people to other solutions out there? Or is it a risk? score Yeah, I think ah um I'm not that familiar with the Epic solution yet. I'll need to read up on that. But I would say when it comes to the other players we're seeing in this space, um I think it's necessary. like this is Direct-to-consumer is no longer optional for games. right Over the last several years, it's been, OK, that might be nice to have. It might drive more profit for my business, but I have other priorities maybe. and
00:12:02
Speaker
We've heard that from some companies. and so Some invest heavily and succeed and others maybe are more on the fence. And now with this recent ruling, i think it's become more of a necessity and more and more gaming companies are saying we need a direct-to-consumer platform and therefore we need a merchant of record.
Purchasing Behaviors and Player Motivations
00:12:18
Speaker
And so as more ah merchants enter the space, there won't be one merchant to rule them all. I feel pretty confident in saying that. And so I think it's good that we have other merchants in place, too. And that that also has to do with the scale, right? The scale of this business when a company like Bassspring or Epic or any of the others are handling payments and as those companies drive more payments through their webshop and more companies are creating web shops, right, it's exponentially growing the volume that we're processing.
00:12:49
Speaker
um And so I don't think it would be feasible for one company to to be able to handle all of that. So I think it's great that we have multiple ah companies out there. And also it gives companies options too, right? Like what Fastspring does will be different from what Epic does will be different from what another company does.
00:13:05
Speaker
So yeah, i think it's it's the natural evolution we're seeing of the Merchant of Records space. Yeah, and it builds into something just cooler. And i mean I'd love to touch on your time at Scopely. In one of my my previous jobs, right we had visibility on Scopely wanting to build out a player-facing kind of storefront. right And same with Zynga. And we see all these...
00:13:32
Speaker
all these studios, big studios, right? Starting to think, how do I create my own store, my own player profile, my own shop, right? Did this kind of first concept come to you while you were at SciPlay or Scopely? Like, how did you look at this problem before there was external places you can make these purchases and start thinking, hey, there's something here?
00:13:54
Speaker
Yeah, for me, my my journey was kind of funny because I was at Scopely and I joined Scopely to manage LiveOps on ah one of our casual games on Yahtzee with Buddies.
00:14:06
Speaker
And I was managing the the team of product managers around that really just focused on day-to-day events and revenue and forecasting and and everything with the day-to-day operations of the game.
00:14:17
Speaker
And then... um we had our web shop and I wasn't involved with it when it was created. But then there was a point where it was at this inflection point saying like, are we going to invest more in this?
00:14:29
Speaker
We weren't seeing as much success with it on Yahtzee as we were on maybe some other titles at Scopely. And so it was a big question mark. And they said, hey, Chip, can you come in and basically run this, like help us decide if it's worth investing in and what the roadmap would be and what the future potential could be?
00:14:47
Speaker
And so that was when I just went all in on the direct-to-consumer space and really familiarized myself with it a few years back and came away with the conclusion that like if we try to do on casual what we've seen succeed on mid-core, well, it's not going to work. We can't just copy-paste over from mid-core into casual, right? There are different games, different audiences, different reasons.
00:15:13
Speaker
Happy to go more into that if it's helpful, but... At the end of the day, we had to redefine the strategy. And for us in that case, it meant pivoting a lot of the ah decision making and like what content we were building out and how we were migrating players over to the store.
00:15:27
Speaker
um And so at the end of the day, for me, it was a tremendous learning experience, but something that was really exciting and something where I personally could look at it and say, oh, wow, like this space is amazing.
00:15:39
Speaker
ah just a tremendous growth opportunity for mobile games. And it seems to be the direction a lot of this industry is going. And then that's really borne out over the years since. And then as I migrated over to mid-core title and my time at Scopely and got more involved in the web shop there, and then of course transitioned now over to FastSpring on the Merchant of Records side, I've seen that really play out on just the the scope of direct-to-consumer adoption in gaming.
00:16:06
Speaker
That's super cool. And I want to ask, why why is there a difference between mid-core and casual, right? Is it just the persona, the player, someone maybe casual, may or may not be willing to make a purchase more, or may not want to bounce out of the app? Like, well, what's the reason that it's not the same?
00:16:24
Speaker
Yeah, I think the biggest reason is the ah purchase ah in motivator. So when I think about mid-core, it's a very engaged audience and purchases are somewhat premeditated.
00:16:41
Speaker
and If I'm playing a mid-core game, I say, okay, I know this big event is coming up or this new character is getting released or this new feature will drop. And I have a general idea that I'll be spending money around that.
00:16:54
Speaker
And I know about how much I'll be spending. And so it there's a healthy rhythm to those mid-core titles. And also on mid-core, I want to get the most of it. Like I'm seeking that competitive advantage. And so anything I can do to get a competitive advantage in a mid-core game, I'll do.
00:17:09
Speaker
And that means if I'm spending money, i want to get the most back for wherever I'm spending that money, which means webshop. right so um and the The other benefit actually of MidCore, which we should talk more about, is community.
00:17:20
Speaker
ah the the If I'm in a guild on a MidCore game and I learn, oh, I can get more by spending my money on the web shop instead of the mobile shop, I'm going to go make my purchases on web, but I'm also going to tell my entire guild, hey, everybody, go go make your purchases there so our guild can do even better ah instead of purchasing on mobile. and so though That word of mouth can become really uh strong on mid core and that's not really the case on casual um most casual games don't have that breadth of communication inside the game and certainly not outside of the game um and so that's just one less growth vector that you have there
00:17:59
Speaker
But then circling back to my first point on purchase motivator, um whereas it's premeditated on mid-core, on casual, it's much more impulsive, right? It's more, okay, I'm playing this level and I need a little bit more currency and I'm going to make a purchase just to try to beat this level, right? Like I failed and I can spend $2 and get more get more turns or whatever to try to beat this level. And that's a big purchase motivator.
00:18:28
Speaker
Or maybe I'll go into the store and make a purchase, but it's much there's much less forethought in that. It's just kind of jump over, make the purchase, get back to playing when I'm playing. ah And so the friction that comes with a web shop is much more significant for the casual audience than it is for the mid-core audience. And so I think there were just significantly more obstacles. That's not to say there was a...
00:18:52
Speaker
ah lack of opportunity on casual like the opportunity was still there we just had to think about it in a very different way yeah i want to just kind of reiterate that just to make sure because i think that was so well put right and i just want to make sure it all digested properly so casual game is more of a hey i can't beat this level i'm going to purchase extra gems get extra lives get extra power-ups and then i'm probably going to go another 20 levels and go through that same thing again yeah, every once in a while the Halloween event will drop and that's predictable by you and you'll know, hey, there's going more purchases at the Halloween event, but it's still very trigger-driven or event-driven. Whereas mid-core, it's a serious game where this new monster is going to come out next week and we know people are wondering why I buy armor and the horse sword and whatever, right? I'm clearly just making crap up here, but with that, it's a little more strategic to know that, all right, there's going to be an influx of purchases here because our mid-core players that like to play
00:19:46
Speaker
mages are going to want to make purchases here and we're going see an influx and it's much more ah driven, I'm like purpose driven, like we know this is coming and you're creating that. Does that seem like I'm following all right?
00:20:00
Speaker
Yeah, yeah, that was a great summary. And you have me thinking it really comes down to like almost predictability. and Like we we know how players will react to certain things much more in a mid-core game. um And we can kind of forecast that out. And on casual, it it may not quite be as predictable or or as engineered as it is on mid-core.
Community Influence on Game Revenue
00:20:19
Speaker
I feel like I'm becoming a live ops rookie right here, amateur as we're talking. I also love the concept of community, right Because that's huge. When I was into Clash of Clans, and this was the example you told me on our pre-call, like I agreed, like every time someone came in and made a purchase and you say, hey, yeah everyone got 20 extra gems in the group because someone purchased this package, like,
00:20:39
Speaker
Yeah, no, no doubt. I'm going to do the same thing. Like why just purchase 20 gems for me when it could share the wealth amongst everyone. So with that community concept, to do you or have you whether it be at Fastspring today or Scopely? Well, let's focus on Fastspring, right?
00:20:54
Speaker
Do you encourage community? Do you have tools to incorporate community as a thing that you just talk to when people are talking about it? Yeah, i think I think of it more as a growth vector for studios to make sure they're aware of and taking advantage of, right? And taking advantage has a negative connotation, but something that they're leveraging ah to say, make sure that you you have the tools to, like you said, where and when there's a purchase ah made and that purchase can benefit other members in the community.
00:21:27
Speaker
ah Maybe that's a value you only put on your web shop instead of having it in both mobile and web. And the more you can have that exclusive value on your web shop, then the more you'll you'll migrate revenue over there.
00:21:40
Speaker
And when you tether it to community, like in that example you just gave, and you're creating a wonderful synergy of that, where you're saying like, oh, it's the exclusivity of being on web, but it's also the community-driven aspect of being on web where this will make the broader community even more aware.
00:21:58
Speaker
So um to answer your question on tools, no, we we really focus on the checkout experience at Fastspring. And so we're we're primarily here to handle checkout and, like I said, risk management and payment, currency conversion, global enablement and all that.
00:22:13
Speaker
um But we do work with our customers to say like, okay, let's make sure you know how to maximize your direct to consumer revenue. Like maybe what are the best practices out there? And how how can you make the most of that to migrate that revenue over?
00:22:27
Speaker
Fantastic. um I want to quickly jump into my fireball round where I'm just going throw some lollipop questions to you for some my answers and we can go. Let's do it. All right. Well, lollipops and fireballs. What is the last game you played?
00:22:42
Speaker
Oh, the last game, you know, I have a seven year old kiddo here. So we've been playing a lot on the switch and we're doing, ah we're in our Mario phase right now. So super Mario Odyssey has been a big game. Wonderful. You should check out Kirby. My six year old loves Kirby. If you haven't checked that out yet, what was the last song you listened to?
00:23:02
Speaker
Oh, wow. see play Is that a CD player behind you? Oh, no. I was going to say, it looks like an antique. It's like an old boombox we got back there. I know it's there. need to ask my wife about that.
00:23:14
Speaker
um The last song I listened to, man, it was probably, again, I'm going into total dad mode here. um Some Disney hits, you know, probably some Moana songs from the Moana 2 as we were on that Disney radio on our way to school, so.
00:23:31
Speaker
i get Can I get a Cheehoo stuck in my mind way too often? It's not even a great song, but it's great. No, that's the thing. of something These songs are not good. Moana One had clearly a better soundtrack. I don't know. maybe Maybe these are some hot takes here. but ah That is the least hot take at all. It is the better soundtrack,
Global Transactions and Merchants of Record
00:23:50
Speaker
the first one. But but there's some bangers on number two.
00:23:53
Speaker
There are. There are. They're still very catchy. Number three is what is your dream vacation? Ooh. ah You know, I would love to go to, i think, Tokyo.
00:24:07
Speaker
Never been. and I'm even considering going later this year, maybe for Tokyo Game Show or something like that. So I'm excited for that. But yeah, anywhere I haven't been, i just love the the variety of going and seeing different places.
00:24:21
Speaker
If I'm coming to Austin for the first time and I need to find a restaurant to eat at, where should I be going? All right, I'm going to go a little off the beaten path here. i think most people will say barbecue, right? Definitely you should get barbecue. like so Don't ignore the barbecue.
00:24:38
Speaker
ah And there's Franklin's barbecue. there's There's Terry Black's barbecue, both great. I'm going to recommend Quantos Tacos. it's a ah It's a truck. like It's in this little food truck court. It's very nondescript.
00:24:53
Speaker
But... um best tacos in Austin, in my opinion. And it's one of those very authentic places where it's a true cuisine. And think they have six different tacos. And what you can do when you go up there is you say, I want one of each. They give you this little platter of these six tacos. And they're small, so it's not like...
00:25:12
Speaker
tremendous uh uh indulgence or anything and i honestly don't know what the six different meats i'm eating are and i don't want to think too much about it but they are just delicious and incredible so that would be my recommendation i'll have that with like a beer flight of different beers i feel like that is ah a good last meal there you go the taco flight we'll call it there go all right you're off the hot seat easy peasy right We can all breathe easy now.
00:25:39
Speaker
um What I'm curious, and we kind of already talked about this, but let's go down is, ah you know, one of the beauty of using iOS or Google is that you don't have to worry about compliance when it comes to different areas of the world when it comes to payments, right? And now, is this something that someone's going to worry about? Or when you're with a company like FastSpring or whoever you use, like, is that typically covered? Yeah.
00:26:00
Speaker
Sorry, can you ah clarify a little bit about what you mean by the compliance? I guess I'm thinking compliance, but it's also like taxes and the different areas that you're in, the different forms of payment you can use and localization. I guess compliance, just the laws of where you are and what you are allowed to purchase. um ah Yeah, in our case, the payments compliance is a tax compliance is a major part of what FastBring does. so I would say what any merchant of record does.
00:26:24
Speaker
um That's actually a good ah point to call out is one pitfall I've seen for game developers is misunderstanding the difference between a payment service provider or a PSP and a merchant of record.
00:26:39
Speaker
So a PSP could be like Stripe or Square, PayPal, and those have definitely have a great function in terms of enabling payment methods. um But if I were to bring in a PSP, I'm still the merchant, meaning I'm still accountable for taxes on a global scale. I'm still accountable for the risk management on a global scale.
00:27:00
Speaker
um When I bring in a merchant of record, they're the ones actually handling the processing and the transaction and the revenue. And therefore, they're the ones handling taxes and compliance on a global scale.
00:27:13
Speaker
So for example, if I want to sell in Brazil and I'm based in North America, and I need a physical business entity in Brazil to be able to transact in that country.
00:27:26
Speaker
right So I need to have some some physical presence and in that country. um And then I need to understand the tax rules. like what what are the What is the tax policy in Brazil? And then if there's an audit coming from baza Brazil, I need to have my tax records ready to be able to handle that audit.
00:27:41
Speaker
When I have a merchant of record like Fastbrain, we say, we'll put you, set you live in Brazil. Like we'll handle that. If audits come up, we'll handle it. um Any risk management, any presence there, like that's all done by FastSpring. And so it tremendously reduces the complexity and brings in a true partner to handle all that for you.
00:28:00
Speaker
So in a different term, a merchant of record is kind of like an all-in-one solution. They'll do it all for you. You're paying a premium most likely because they're handling a lot of this dirty work that you'll have to do if you don't think about it, if you're with a ah payment processor.
Preparing for Future Direct-to-Consumer Changes
00:28:17
Speaker
Yeah, yeah. I would call it the the clean work, but yeah, it's... a No, i I think there's a key part you touched on there, which is the premium, right? Like a payment service provider will have a lower rate, like a lower fee than a merchant of record will.
00:28:32
Speaker
um And that can be like a very appealing on surface value of like, oh, wow. OK, well, I will use that lower rate. Not realizing that um you're getting a lot less in return and you're introducing a lot more risk into your business as a result.
00:28:47
Speaker
And so, ah yeah, I think having that understanding is is pretty important, especially as companies are getting more involved in direct to consumer revenue. When you were at Scopely and now when while you're at Fastspring, right? you At Scopely, you inherited the platform, right? and you want And you made improvements to that. And then you came to Fastspring. And I imagine Fastspring was already operating, maybe not in gaming yet, but they already had a platform. But what...
00:29:17
Speaker
what solution is a fast spring offer that would have saved you time at scopely or what is missing that you used at scopely that you're like this would be really cool if we could integrate something like this into the platform yeah i think i i'll think of that in a slightly different way of like what would i do today ah to equip myself for the future um because i i don't
00:29:46
Speaker
When I think about the current ruling and how that benefits game publishers, the companies that are able to benefit the most from this ruling are the ones who already have direct-to-consumer strategy in place.
00:29:57
Speaker
They already have a web shop or they already have a merchant of record in place, and they can act quickly to act on this new ruling and what what these new norms are.
00:30:08
Speaker
And so what I would say is there's this ah ah potential for different ways this could go in the future. We don't know how Apple will respond to this new ruling yet. They've already appealed the ruling and motioned for a stay on the ruling, so things could change pretty quickly here.
00:30:26
Speaker
And so I think it's a very fluid situation. And so what I would look to do is ah establish the framework to be able to react to that fluidity. And that means like have that basic web shop in place, have that merchant of record in place, have that ability to ramp up or ramp down as needed.
00:30:45
Speaker
And so if things become more ah open in the future in terms of how i can promote and steer players from my game to my web shop, I'm able to accommodate that. If it's on a geographic scale, I have the ability to do that differently geographically. For example, if something this current ruling is in the United States, if there's a new ruling that's only in Europe or in Japan, um as we've heard, there's there's a momentum there.
00:31:09
Speaker
um We're ready. And then if those rulings do materialize, we're able to say, all right, we have the tools in place to accelerate from day one instead of scrambling to try to react. Right. And so it's more ah investing, I think, in the knowledge of the current landscape, and then what tools we can develop such that we can really capitalize on any rulings that come up.
00:31:33
Speaker
Yeah, you're almost investing in a best practice, right? Because things, again, will change. That was the first thing we said. Things will change again, right? ah And if you're with a platform, right, the platform can adjust as a whole, right? Instead of you having to change everything every three months, you can just go with this platform and the platform will evolve with whatever the rulings are. And to your point, it might be different in Europe versus America versus Asia versus Africa, right? So how do you how do you globally scale for something like that, especially if you're on a smaller team, right? You don't want someone to have to go learn all the laws of what's going on somewhere else, right? Why not just follow a leader in the space?
00:32:10
Speaker
Yeah, yeah, exactly. And I think the key part there too is like what happens in Europe, like is gonna look different than what the current rulings are in the United States. And so i feel pretty optimistic that it will be more open at some point in the future in terms of how we can promote web shops and and market web shops and direct to consumer strategy in Europe.
00:32:34
Speaker
at some point, ah but I don't know exactly what that will look like. And so that's where I think having that nuanced understanding of like, okay, what exactly is doable? like What exactly does this new ruling mean?
00:32:46
Speaker
And how can we act on that? And how how is our strategy going to be different now in Europe versus in this hypothetical situation um versus what it was in the United States versus what it could be in Japan or Brazil or these other places?
Engagement Over Webshops for Revenue
00:33:00
Speaker
And so I think it could get Pretty complicated in the near future as we have these different rulings roll out kind of piecemeal on a geographic basis.
00:33:10
Speaker
This is a silly question, but what were when you had the web store at Scopely, what were you doing if it wasn't, I'm not going to authorized, right? But if it wasn't in Apple's terms of services?
00:33:23
Speaker
Yeah, the the great thing about Scoply was that we were able to invest in a way that was never against Apple and Google's policies.
00:33:34
Speaker
It was always in in partnership and recognizing that the relationship with them is very important. And this is something I told all of our customers, too, is like, it's never about going to war with Apple and Google. Like, I don't want to go to war with Apple and Google.
00:33:46
Speaker
um I think Epic Games on their crusade has been, but ah ah not every company is Epic Games, right? So um no, it's about understanding the policies that are in place and being respectful of them and saying like, okay, Apple and Google have established what have come to be known as these anti-steering policies.
00:34:04
Speaker
Let's make sure we understand them and operate with those. And so, for example, the rule is you can't go from mobile game directly into webshop. That's pretty clear from these anti-steering policies.
00:34:15
Speaker
um But what if we create a truly complimentary experience to our mobile game on our website? And we have a news page there where a new feature launches in our game. And we have a couple of bullets in the game. We say, hey, if you want to learn more, like click here.
00:34:31
Speaker
And it's a button that takes them to the news page. And there's nowhere to monetize on this page. right It's just the news and a full update, like paragraphs of content about this new feature or this new character in the game. Um, but now they're on our website and now that they're on our website, we can try to navigate them from that news page into the store and get revenue that way.
00:34:48
Speaker
Um, but it's a very genuine, like let's direct them from the mobile game into this website, whether it's news or like some tips and tricks page, or maybe it's a support page. Like there's all sorts of different, um, complimentary pieces of content that we could add on a website.
00:35:07
Speaker
And then, uh, we're, we're migrating players over, over time, just by virtue of having that content there. Yeah. That's so cool. I mean, you, you're, building a webpage that complements the app where players are going to want to go to figure out the news. They're going to want to learn more.
00:35:24
Speaker
yeah We always talked about this in my old company. was like, how do you get people to con from console games to console support? And no one ever does that. They want to go to Reddit. They want to go to Twitter. They want to go to whatever to figure out support. and it's just like, why don't they want to go to? Well, I know the answer. No one wants to go to the the publisher or the studio for support when there's more people somewhere else. But if you create an engaging site where it's almost, I mean, it goes back to the community that you mentioned, right? you're You're creating a community hub where people could come and learn more information, right? You're you're basically feeding the ecosystem with more news and more content. And I love how you kind of position that stuff and say, hey, we're just going to offer best services, best practices, best stuff like that, updates, and then they're there.
00:36:03
Speaker
Once they're there, right, you can kind of play with the workflows on how did we get them to go there? How did we get them to go there? Right? And you can kind of build that into it And I think that's genius in the way to look at it, right? Because you get to educate these users, you get them to learn more, you keep them updated, and they want to come back and keep doing it more and more.
00:36:19
Speaker
Yeah, yeah. The revenue almost becomes a byproduct of that point is you're you're expanding your engagement with this player and giving them more places to engage with your game outside of the game itself.
00:36:30
Speaker
And there's a lot of value in that just inherently, even if at the direct to consumer revenue side of it is almost secondary at that point. Yeah, it can't be stated enough that engagement leads to revenue. You can't force a revenue out of people when there's no engagement. They're just not going to want to pay. Right. But once they're excited, they're happy to be there.
00:36:49
Speaker
um They'll happily put a couple of dollars here or there or depending on who you are ah when they're playing those games.
Navigating Regulatory Changes
00:36:55
Speaker
And I'm curious if if when you're at Fastspring, are you looking at console games as well and other platforms? Are you strictly focused on the mobile experience right now?
00:37:04
Speaker
I would say mobile and PC primarily right now. So we do have a few premium PC games in our portfolio um and we we explore that. The consoles are a bit more challenging in terms of driving off platform revenue.
00:37:18
Speaker
um That's another, I think, area that could evolve at some point in the future. But as of now, that's not as ah not commonplace. And so, yeah, I think mobile certainly is where we're seeing a lot of movement um and a little bit more on the PC side. And the part i would also add is um it's outside of gaming.
00:37:38
Speaker
Like if we look at just mobile apps in general, ah there's a lot of movement toward direct-to-consumer. In fact, the the first app that I saw, not not a FastBrain customer to be clear, but I saw Spotify put out their update, basically the essentially the day after this ruling materialized of we can route payments off platform in the United States, at Spotify was like, cool, we're ready to go. And they they launched their update and started running things off platform. So I do think we'll see more and more adoption. And so as you engage in more apps yourself on mobile, you might notice more of those payments going off platform. And I think that will just be the standard moving forward.
00:38:18
Speaker
If I'm ah a studio that's looking to launch a game in the next six months, when's the right time to start thinking about web shops? Yeah, I think at this point it's it's from day one. um And that's not to say you need to have a web shop from day one. Like it doesn't need to be live day one when your game is live.
00:38:37
Speaker
That's certainly great if you can do that. But I think we've reached a point where direct to consumer users Like i said earlier, it's it's not optional anymore. This Apple ruling proves that we game developers need to be ready to react.
00:38:50
Speaker
um Otherwise, we're putting ourselves at a competitive disadvantage. We're making ourselves less profitable by not having the shop that we can direct ah direct traffic and revenue through.
00:39:02
Speaker
And so um just being aware of that, and that ah can mean anything from how your store is set up and how you're accommodating multiple purchase points. um to actually having that store exist on web, maybe from day one. And you say, like, we'll worry about the promotion later. Like, there's multiple ways you could go about it.
00:39:22
Speaker
But I think it is ah ah critical at this point, just with all the momentum and all the rulings moving in this direction, to have that in mind. Yeah. So from from the start, start scoping out what a web store could look like, how it would look.
00:39:35
Speaker
um What are the size studios that should be considering stuff like this? I think it's at this point, um any size, like i I guess that's the easy answer. the The real thought is like, of course you need to be successful, right? Like priority one is have a successful game and drive that revenue um just overall, right? And so that should absolutely be the primary focus and I'm not suggesting otherwise.
00:40:04
Speaker
um But as as your game materializes, even if you're a smaller game, um if you can shift your profit margin from 70%, where all of your revenue is coming through Apple or Google, to 80% plus, okay, well, that's really significant. That can be especially impactful if you are that smaller studio, right? That every dollar of profit is really critical.
00:40:29
Speaker
And so I think it's important to keep that in mind, that like the way a Merchant of Record is set up is that we make revenue when our customers make revenue, right? Like it's ah it's a revenue share model. And so um it really is just a shift in player behavior and a shift in profit. And yes, there is some investment in the webshop and being able to build that.
00:40:52
Speaker
ah But the model is built in a way that it will be able to scale as your game scales and really help you grow through being more profitable. So I'm going to ask this question. It may be just a malignation of everything I've asked already, right?
00:41:06
Speaker
Chip, if you were going to start your own studio and with the experience you've learned at Scopely and what you've learned at FastSpring, what would you prioritize from a webshop perspective when you're first setting things up?
00:41:21
Speaker
i i I would think of it through future proofing for direct-to-consumer growth. And so what that would look like for me is a few basic things. Like one, have a webshop as soon as we could.
00:41:37
Speaker
Two, have regional detection. Like that's something that's pretty common for bigger games. But like if I'm building a game from day one, I would make sure I have the ability to say, OK, we'll treat these players differently in the United States versus these players in Europe versus these players in Japan. And how we promote the webshop could be different in all three regions.
00:41:58
Speaker
um And so just having that degree of control would be really important to recognize like these roles very geographically. Um, and I think I would also be like, I want to make sure we have a trusted source to help us stay on top of these regulations.
00:42:15
Speaker
Like, well, who's, who's that person who can help us know what these rulings mean, and when they go into effect and if it means I should act today or if I should keep my guard up and and see, um,
00:42:28
Speaker
I think it it can get kind of tricky ah to know when to act versus when it would be overreacting to just go full speed ahead. And so that's, I think, a possible pitfall too that I would be really cognizant of.
00:42:42
Speaker
Cool. There's been a lot of information here, Chip, and I appreciate it. I think it's going to be an interesting few months here with with how Apple is going to react. um They will react, but I think no matter how they react, it's looking positive for studios to be able to control their purchase data or purchase purchases, who can who where they can purchase.
00:43:05
Speaker
And I think it's an exciting space to be in. ah Before we do end today's conversation, is there anything else you want to talk about or or mention? I think we touched on most everything. the The part I would add is one theme we talked about today is the uncertainty of the current moment.
00:43:21
Speaker
and like We don't know how Apple's going to react. And um we don't know maybe when other regions will have similar rulings materialize. And so for me, that uncertainty means there's urgency.
00:43:34
Speaker
Right? Like the current moment is this unprecedented opportunity to steer players from mobile games into webshops, but we don't know how long this current moment will last. It could last indefinitely. This could just be the new normal, or if this could end pretty shortly if some other ruling materializes in the United States. And so um that's where I would say like,
00:43:55
Speaker
It's important to have a caution and yeah due due diligence, absolutely. ah But it's also important to recognize that like sometimes these windows are opening and closing pretty quickly. And so I think finding that balance is is pretty critical of knowing knowing when to act and when to act with urgency.
00:44:15
Speaker
um Again, before we do end tonight, let us know where we can find more information about either yourself, Chip, or FastSpring. Yeah, yeah. You can find us at fastspring.gg. have all of our gaming offerings there, so please do reach out if you want to learn more about
Conclusion and Call to Action
00:44:30
Speaker
Fastspring. Otherwise, you can find me on LinkedIn. Probably the best place to find me.
00:44:33
Speaker
Cool. We'll have information about Chip. We'll information about Fastspring on our player-driven blog, and you'll see about it all week on social. So, Chip, thank you so much for joining us today and educating on us ah on what actually this means between Apple and Epic and how studios can take advantage of this. I think it's Really important information that people need to be able to wrap their heads around because it's a lot of money that can be left on the table if you're not utilizing stuff like this. So thank you for breaking this down for us, educating us and joining us today.
00:45:03
Speaker
Yeah, well said. And thank you, Greg. It it was a pleasure. Cheers.