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| DATE | 2020-08-24 |
| FROM | Ruben Safir
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| SUBJECT | Subject: [Hangout - NYLXS] closed platform means closed!
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wsj.com
Fortnite Makers Apple Fight Leaves Some Developers Wary
Sarah E. Needleman
8-10 minutes
The battle between Apple Inc. AAPL +1.15% and the creator of Fortnite
is fraying a nearly decadelong relationship, but could also upend
business at some makers of videogames, Hollywood productions and
virtual-reality simulations.
Apple, the worlds most valuable company, threatened to pull Epic Games
Inc.s developer credentialswhich are required to release software on
Apple devicesafter Epic introduced a way to buy virtual goods within
the popular videogame that skirts the tech giants 30% commission on
in-app purchases. The restriction would leave Epic unable to update
Fortnite on iPhones and iPadsas well as its Unreal Engine, a software
suite used to build mobile games among other apps and to create complex
video effects and animations.
This week, a federal judge in California is expected to rule on Epics
motion that seeks to prevent Apple from pulling its credentials. The
outcome would be an early test in a lawsuit Epic filed Aug. 13 after
Apple pulled Fortnite from the App Store. Epic claimed the iPhone
makers operations violate antitrust rules.
Unreal, Epics flagship product, has been used to make videogames such
as Tencent Holdings Ltd. s PUBG Mobile and Warner Bros. Interactive
Entertainments Mortal Kombat 11. The Third Floor Inc., a studio based
in Los Angeles, has used Unreal to produce shows such as HBOs Game of
Thrones.
The Unreal Engine software suite has been used to make the PUBG Mobile
game.
Photo: Soumyabrata Roy/Zuma Press
On Sunday, Microsoft Corp. threw its support behind Epics motion,
saying it uses Unreals tools for making the mobile game Forza Street
and that Apples move could hamper its game-development business.
Its a gun with a barrel at both ends, said Cowen analyst Doug Cruetz,
of the dispute between Epic and Apple. A lot of people who use Unreal
for game development and other purposes might choose to walk away from
Epic, but they might instead choose to walk away from Apple.
Like their namesake car part, engines such as Unreal are software
workhorses that help games and special effects run. Unreal has more
than 11 million licensees across videogame, movie production,
architecture, aerospace and other industries, according to Epic.
Most games made with Unreal are for consoles and computers, rather than
mobile devices. But the fight with Apple has put some Unreal customers
in a precarious position. If Epic can no longer update the software
toolkit within Apples product ecosystem, some developers say they would
have to decide whether to abandon their apps, maintain them with
limited ability to make changes, or recreate them using a different
toolsettasks that would be costly and time-consuming.
A handful of other companies make game-development software, including
Unity Technologies Inc. and Amazon.com Inc. Unity and Amazon declined
to comment.
That said, not every game developer depends on Apples ecosystem to make
a buck. A game-studio executive whose firm is close to completing a
game using Unreal for multiple platforms said the company would
probably skip the App Store if the software engine couldnt be updated.
For us, iOS [Apples mobile operating system] is additional, but if
thats your bread and butter, youre potentially completely out in the
cold, this executive said. You just dont want to put a target on
yourself.
In its response to the lawsuit, Apple said Friday that Epic is seeking
relief from the court to fix a self-inflicted wound and that it is
treating the company no different than any other developer. It also
disputed Epics characterization of the App Store as a monopoly, citing
in part the popularity of Fortnite across several platforms.
Epic has put customers and developers in this position, not Apple,
Apple said in a court filing.
The Third Floor studio used Unreal Engine to make HBOs Game of Thrones.
Photo: /Associated Press
Epic Chief Executive Tim Sweeney in a tweet Friday described Apples
statements as misleading.
Epic also sued Google after the Alphabet Inc. unit pulled Fortnite from
its app store. While the app cant be downloaded or updated from Google
Play, it remains available on Samsungs Android app store and through
Epics website; Apple devices only allow downloads through its own app
marketplaces. To garner support in its fight, Epic launched a
social-media campaign around #FreeFortnite.
Apple and Google have said they would return Fortnite to their app
stores if Epic removes the in-app payment system. Google hasnt
commented on the lawsuit, but said it has consistent policies that are
fair to developers and keep the store safe for users. According to
Epic, Fortnite has more than 350 million players world-wide.
Epic has said developers shouldnt have to exclusively rely on Apples or
Googles systems to process financial transactions in apps. Both
companies charge a 30% commission on sales from paid apps as well as
in-app payments, amounts that Epic considers excessive. A group of
companies including Spotify Technology SA and Facebook Inc. have
complained in recent years about app marketplace fees, though the
Cupertino, Calif., company has barely blinked. Major news organizations
are also joining the chorus of companies pushing Apple for more
favorable terms, The Wall Street Journal reported Thursday.
Apple and Google have both defended their policies, stating that they
are intended to maintain security as well as consumer privacy. Based on
research it commissioned, Apple said last month the app fees it
collects are in line with what other digital marketplaces charge.
Unreal is free to license, and publishers pay Epic a 5% royalty if
their product using the toolkit generates more than $1 million in
lifetime revenue. The company also offers custom licenses.
The Mandalorian was created using Unreal Engines software tools.
Photo: /Associated Press
A spokesman for Epic declined to specify how many customers could be
hurt if Apple were to cut off its developer credentials. In a court
filing, Epic described the move as potentially devastating to its
business. Epic is planning to debut its Unreal Engine 5, featuring
upgrades to development tools and content libraries, next year.
The general sentiment at Epic, a closely held company based in Cary,
N.C., is a mixture of concern for its customers and confidence in its
mission to defeat Apple, according to a person familiar with the
companys thinking. Apples threat to cancel Epics developer credentials
could make our partners lives more difficult, this person said. Its
definitely troublesome.
Mr. Sweeney, Epics CEO, declined to comment when asked about the
companys operations as litigation proceeds.
R.T. Watson contributed to this article.
Write to Sarah E. Needleman at sarah.needleman-at-wsj.com
--
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