Japanese smartphone game developers are staging a quiet rebellion against tech giants Apple and Google by implementing external payment systems that bypass the traditional app store fees. This shift comes as Japan prepares to enforce new regulations requiring these platforms to open their payment systems in December 2024.
The move represents a significant challenge to the long-established app store business model that has generated billions in revenue for both companies through their standard 30% commission on in-app purchases.
Timeline:
- August 2023: Mixi Inc. introduced external payments for Monster Strike
- December 2024: New Japanese law requiring open payment systems takes full effect
- Current status: 70% of popular Japanese smartphone games using external payments
The Economics Behind the Exodus
The financial incentives driving this change are substantial. While Apple and Google charge up to 30% commission on in-app purchases, external payment providers like Digital Garage Inc. and GMO Tech Inc. typically charge only around 5% commission. This dramatic difference has prompted nearly 70% of popular Japanese smartphone games to adopt alternative payment methods.
The impact extends beyond just cost savings for developers. Companies like Mixi Inc., which introduced external payments for their hit game Monster Strike in August 2023, now offer players approximately 5% more in-game items compared to traditional app store purchases. This creates a win-win situation where developers save money and players get better value.
Commission Fee Comparison:
- Apple App Store: Up to 30%
- Google Play Store: Up to 30%
- External payment providers (Digital Garage, GMO Tech): ~5%
- Epic Games Store break-even point: ~9%
Community Concerns About the Broader Gaming Landscape
The tech community has expressed mixed feelings about these developments. While many support breaking up what they see as monopolistic control by Apple and Google, others worry about the underlying issues with mobile gaming itself. Critics point out that reducing payment processing costs might make predatory monetization tactics even more profitable for game developers.
The debate has also highlighted the historical context of platform fees in gaming. The 30% commission rate didn't originate with mobile app stores - it has been the standard in video game distribution since the Nintendo Entertainment System era, spanning over 40 years of console gaming history.
Security and User Experience Trade-offs
One significant concern raised by users involves the security implications of external payment systems. Apple's app store provides robust refund processes and payment protection that many users have come to rely on. External payment systems may not offer the same level of consumer protection, potentially leaving players vulnerable to billing issues or fraudulent charges.
Apple provides an almost-always guaranteed refund process for purchases made through the App Store, usually no questions asked. No way do I want to trust randoms with my payment info.
This tension between cost savings and security highlights the complex trade-offs involved in dismantling established platform ecosystems.
Market Impact Data:
- Japanese in-app purchase market size: Over 1 trillion yen (6.8 billion USD)
- Survey sample: Top 30 best-selling Japanese games in 2024
- External payment adoption: 11 out of 16 domestic company titles (69%)
- Player benefit example: Monster Strike users get ~5% more items with external payments
Regulatory Pressure and Market Response
Japan's upcoming legislation requiring Apple and Google to open their payment systems reflects a global trend toward regulating big tech platforms. The law aims to increase competition in the estimated 1 trillion yen (6.8 billion USD) Japanese in-app purchase market.
However, the effectiveness of these measures remains to be seen. While third-party app stores exist as alternatives, they have failed to gain significant market share, suggesting that the real power of Apple and Google lies not just in payment processing but in their massive user bases and distribution networks.
The Japanese gaming industry's response demonstrates how developers are finding creative ways to work within existing systems while reducing their dependence on platform holders. As this trend spreads globally, it could fundamentally reshape the relationship between app stores and content creators, potentially leading to more competitive pricing and better deals for consumers.
Reference: 70% of Japan smartphone games bypass in-app payments to avoid IT giants