Mobile Game Income
With mobile operating system (OS) developers such as Apple and Google, mobile carriers, and channeling platform operators accounting for 80% of the total profits in the Korean mobile content market, there is not a reasonable profit left for mobile content developers.
According to industry sources on January 19, Google, mobile carriers, Kakao, and mobile content distributors are said to collect 51% to 80% of the total mobile content sales revenue in the name of “toll charges.” Because of their domination in the mobile content market, there are a lot of cases where mobile content developers cannot recover the cost of development at all, even with big hits.
The vulnerability of the mobile content distribution network can be ascertained by analyzing the game business platform of KakaoTalk. When paying for mobile games on the Kakao platform, Google takes away 30% of the total cost as a “distribution fee.” 90% of Google’s fee is paid to mobile carriers, and Google gets the remaining 10%. Kakao, which provides the KakaoTalk game platform, takes away 21%. In other words, Google, mobile carriers, and Kakao take more than 51% of the total game revenue as a toll charge.
The remaining 49% revenue, however, does not directly go to mobile game developers. Marketing and service agencies usually promote mobile games: distributors in charge of marketing take 60% of the remaining revenue, while developers take 40%. Accordingly, Google occupies 30% of mobile game sales, followed by mobile carriers (27%), Kakao (21%), distributors (29.4%), and game developers (19.6%).
However, the Google Play Store offers better conditions than Apple’s App Store. Like Google, Apple takes away 30% of the total income of mobile content distributed through its App Store. But Apple does not share its profits with mobile carriers at all.
Since the ecosystem of the smartphone industry consisting of mobile OS platform developers, mobile carriers, and marketplaces get paid so much for distribution, mobile game developers are struggling with running their companies. Thus, an increasing number of online gaming companies are calling for an improvement in the exploitive distribution structure as quickly as possible. In the feature phone era, broadly defined as the years 1994 to 2003, game developers obtained 85% of total sales, while mobile carriers took only 15%.
Recently, mobile content distributors are competing fiercely to monopolize distribution costs. At first, Google provided 90% of the total mobile content sales to mobile carriers, as it moved forward with a partnership between mobile carriers and handset makers. Nonetheless, with the recent expansion of the mobile games market, Google informed mobile carriers that it would lower the proportion to 50%. But mobile carriers immediately rejected Google’s plan.
Currently, the possibility that Google and Apple will voluntarily reduce the 30% distribution fee appears to be slim. KaKao does not seem to be willing to change their current commission rate, either, unless Google and mobile carriers do the same. As a result, mobile content developers, which occupy the lowest part of the mobile ecosystem, cannot help grappling with managing their businesses.