A new hope for the future of newspapers has emerged from a video game of all places. Epic Games, the maker of the monumentally popular video game Fortnite, has filed antitrust lawsuits against Apple and Google. If Epic prevails, publishers of all sorts might get to keep much more of their subscription revenue.
Apple and Google both take a cut of sales on their respective iOS and Android devices. For example, when someone buys an app on an iPhone, Apple takes 30% and the developer keeps 70%. The same is true with subscriptions and in-app purchases. Subscribe to your favorite newspaper or buy some gems in a game, and Apple keeps its share.
That’s a huge hit for news organizations that operate on thin margins. They must pay up, give away their content for free or not have access to billions of people with phones. They can’t even suggest that readers go to the website to subscribe so that all of the money goes to support local journalism.
Enter Epic and Fortnite.
For those who don’t play video games or follow the industry, a brief primer. Epic released Fortnite in 2017. In the game, players control cartoonish avatars who shoot each other during team and solo competitions. Most of its millions of players are teens or young adults who play on PlayStation, Xbox, Nintendo, PCs, Macs and their phones.
The game is free, at least insofar as one can install the base game and jump into a battle for free. In-app purchases are another matter. Players buy in-game currency called V-Bucks and other virtual goodies for real dollars. Epic makes hundreds of millions per month. It’s little wonder that Apple and Google want a slice.
But Epic doesn’t want to pay them just to have access to customers. The company therefore bided its time, put all the pieces in place and pulled the trigger.
The whole thing went down quickly. Epic put out an update to its iOS and Android users that encouraged people to buy V-Bucks directly from Epic for a discount. That violated Apple’s and Google’s rules, so the two companies kicked Fortnite out of their respective app stores.
Epic immediately filed lawsuits in response. The company also released a spot-on remake of Apple’s iconic “1984” Macintosh commercial. Apple became the oppressor, and a Fortnite character wielding a rainbow-unicorn hammer smashed the screen. The reference probably was lost on most of the game’s players, who were born a decade or two after the original ad ran. The #FreeFortnite hashtag certainly was not.
Epic alleges that Apple and Google are behaving as illegal monopolies. I’ll spare you the details of things like ecosystem lock-in, family and user lock-in, switching costs, marginal user costs and side-loading. There are plenty of great analyses, and you can read Epic’s Apple and Google filings yourself. Short version: Epic might be onto something.
So what does all this mean for newspapers? It’s not as if The Seattle Times or any other local free press will launch a virtual Fortnite edition anytime soon.
If the courts or federal regulators agree that Apple and Google have not been operating in good faith, they could curtail that hefty 30% fee on apps and subscriptions. That would make delivering news to readers’ phones much more financially attractive.
A couple of decades ago, subscriptions were a smaller portion of the typical local newspaper’s revenue. Back then, advertising made the huge portion. Now, internet advertising behemoths like Google and Facebook have gobbled up the advertising marketplace and at the same time co-opted locally generated journalism. In this new world, subscription revenue matters tremendously.
A dream solution would be for Apple and Google to recognize the value of local reporting to communities and to democracy. Nothing prevents them tomorrow from waiving fees for local newspapers. Nothing, that is, except profits.
That leaves the Fortnite lawsuits. They won’t solve everything. Even under an optimal outcome, they would only be a welcome revenue boost. But even that probably won’t happen for years. These sorts of lawsuits tend to take a long time to play out in the courts.
Newspapers will need to hang on until then. Keep reading The Seattle Times’ Save the Free Press coverage for ways that can happen.