Alternative App Stores: The Post-DMA Opportunity

In the world of alternative app stores, all eyes have been on the Digital Markets Act (DMA). Last week marked the deadline for compliance by @Google’s Play Store and Apple’s App Store. However, predictably, no substantial changes have been made, and the status quo persists. While pressure from the European Commission or other governments may eventually force some movement like in Brazil recently, Google and Apple have historically found ways to implement half-measures that prolong their dominance.

A prime example is Apple, which introduced a “core technology fee” on every download (among other dissuasive measures), making alternative app stores financially unviable for both the app store and the developers. Another example is Korea’s mandate requiring Play Store to allow third-party billing. Google complied “technically” by allowing and reducing its revenue share from 30% to 26% (!?), rendering third-party payment adoption not profitable.

What Are They Afraid Of?

For Google and Apple, alternative app stores are less threatening than losing control over in-app payments. Ensuring fair conditions for alternative stores would require significant structural changes. Given their inherent advantages such as pre-installation, catalog size, customer habits, economies of scale, and many others, third-party app stores are already at a disadvantage. Goog-App-le may tolerate some loosening of control over app distribution to safeguard its in-app payment ecosystem.

In-app payment freedom is the real threat to both Google and Apple. Unlike alternative stores, which can be handicapped in various ways, in-app payment providers could operate under fairer competition, making it difficult for Google and Apple to impose artificial friction. Third-party payment providers typically charge fees that are at least 10 times lower than Apple and Google. The biggest beneficiaries of this shift would be large-scale developers, who can afford to lose organic traffic advantages in favor of increasing their revenue share by 30%. These top developers, who generate around 80% of revenue in the game section of Google or Apple, could redirect their earnings directly to themselves, leading to significant losses for Google and Apple.

Payment companies like Xsolla, Coda, AppCharge, Adyen, Terminal 3 and others stand to gain the most, emerging as the primary threat to Google and Apple. Unlike app stores, they do not bear the infrastructure burden and simply enable developers to channel revenue through their payment services.

The Future of Alternative App Stores

Alternative stores such as Galaxy Store, Huawei AppGallery, Epic Games Store etc. have largely followed the strategy that was pioneered at Amazon and Samsung: targeting top-grossing games and offering exclusive perks. While this was a necessary early step, it has proven unsustainable. Relying solely on discounts and promotions as a primary USP is financially draining, especially when margins are already thin.

To build a profitable and viable alternative store, a strategy that provides long-term revenue value must be developed. A mileage reward system offering better incentives than Google and Apple is a foundational step to encourage users to spend regularly, but additional differentiation is crucial. China provides a compelling example. Without Google Play, more than 10 competing app stores thrive. Users there actively explore different stores to discover new games, whereas in the West, alternative stores merely replicate Play Store’s experience by promoting the same top games (just missing at least half of them). There is no real point in using them except to cherry-pick benefits.

Yet, there are many untapped opportunities. Research shows that users are not just looking for benefits, they crave discovery. More than 1,000 games are released daily on Play Store, yet its interface can only effectively promote a fraction of them. The overwhelming majority remain invisible. Alternative app stores keep focusing on the Top 100 grossing titles, even though these drain BD teams as they are extremely hard to source. These top games don’t need alternative app stores because they already have millions of organic traffic and almost unlimited UA budgets. Bringing them something beyond discount-seeking users is nearly impossible and they know it.

Meanwhile, the Top 1000+ developers are much more numerous, have strong games that monetize well, and are easier to source. They have relatively smaller organic traffic and/or limited UA budgets. Bringing them new users who do not require discounts to make purchases is a far more achievable goal.

Furthermore, Google Play and the App Store were designed over 15 years ago, in an era when mobile gaming was vastly different. For example, their category structures such as “Arcade,” “Action,” “Adventure” etc are outdated, rooted in the 8-bit and 16-bit console era. Modern mobile gamers think in terms of “4X Battle,” “Match-3,” “Tower Defense” etc. Google and Apple have little incentive to overhaul their generic design, but this presents a prime opportunity for third-party stores to specialize.

An alternative store optimized for mobile gamers could provide:

• Gameplay-related metadata: modern game categories, average session time per play, data usage while playing, average player spend, skill vs. pay-to-progress balance, game element ratings (graphics quality, music, etc.), ad frequency, etc.
• Community and engagement features: SNS integration, competitions, etc.
• New business models: ad-watching rewards for in-game currencies, game progress mileage, etc.
• And why not use AI to reduce operational costs while improving user experience? (See the other article)

The post-DMA landscape presents a rare opportunity for third-party payments and alternative app stores to redefine their value propositions and unique selling points to generate profit. Instead of replicating Play Store, they must innovate, offering dedicated experiences and a true gaming ecosystem. If done right, they won’t just be an alternative. They’ll be the future.