Online gaming companies on edge as Google’s service fee looms

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Online real-money gaming (RMG) companies are monitoring the impending battle between Google and start-ups over service fees, as they await being the next group of app developers subject to the 15-30% levy starting June this year.

The prospect of absorbing a 30% service fee alongside a 28% goods and services tax poses a significant challenge for these companies, potentially this could make their business models unsustainable. In response, they are exploring various strategies to ease the impact. While Google had previously permitted a select few RMG apps to list on the Play Store for free under a pilot program, the tech company recently announced plans to impose commissions from June and open the marketplace to all RMG apps.

Despite the option to delist from Play Store to avoid these charges, industry executives highlight the dilemma faced by apps considering the platform’s vast reach, which grants access to India’s 568 million mobile gaming population. A gaming company executive expressed his concerns to the Economic Times and emphasized the strain of additional service fees on an industry already dealing with high taxes. He questioned the fairness of extracting further revenue from a growing sector under pressure.

Internationally, betting apps like DraftKings and Bet365 continue to operate on the Google Play Store without service fees, raising questions about the platform’s approach to emerging sectors. As Google prepares to extend its service fee model to RMG operators, uncertainty looms over the potential tax, which could range from 15% to 30% of revenue.

Despite the challenges, listing on the Google Play Store has facilitated significant growth for RMG apps, with top platforms like Dream11 Fantasy boasting 50 million downloads. However, responses from key players, including Dream11, MPL, and Google India, were unavailable at the time of press.

While the move to allow more skill gaming apps on Play Store is seen as a positive step by the All India Gaming Federation, concerns continue regarding the impact of service fees on new developers and consumer choice. Chief of federation Roland Landers said, “We believe that Google should employ supportive policy around fee structures as well as onboarding process, making the process equitable while resulting in greater competition and consumer choice”.

Nevertheless, some industry insiders speculate that the imposition of service fees may prompt large platforms to explore distribution outside Google’s Play Store, redirecting resources from user acquisition to alternative channels for improved economic viability.