Shares of app and game developers such as Match Group (MTCH), Bumble (BMBL), Roblox (RBLX), Spotify (SPOT) and Zynga (ZNGA) are on the rise on Thursday after Google (GOOGL) announced that it is lowering its service fees on subscriptions to 15%. The company's previous structure was similar to Apple's (AAPL), namely 30% in the first year and 15% thereafter. Now Google is offering 15% from day one. E-books and on-demand music streaming services will be eligible for a few "as low as 10%," the company stated.
SERVICE FEES ON SUBSCRIPTIONS: In a blog post, Sameer Samat, vice-president of product management at Android and Google Play, explained that, "To help support the specific needs of developers offering subscriptions, starting on January 1, 2022, we're decreasing the service fee for all subscriptions on Google Play from 30% to 15%, starting from day one. For developers offering subscriptions, this means that first-year subscription fees will be cut in half."
"Today, we’re also making changes to the service fee in the Media Experience program, to better accommodate differences in these categories. Ebooks and on-demand music streaming services, where content costs account for the majority of sales, will now be eligible for a service fee as low as 10%," the executive continued. "We will continue to engage with developers to understand their challenges and opportunities — and how we can best support them in building sustainable businesses. It’s a theme that will be front and center at the Android Developer Summit on October 27-28, where you’ll hear more about our latest tools, application programming interfaces (APIs) and technologies designed to help developers be more productive and create better apps."
WHAT'S NOTABLE: Google is currently in a legal battle with Epic Games over Fortnite and is also facing a lawsuit filed by a coalition of 36 state attorneys general regarding antitrust concerns with the Google Play store. Jefferies analyst Brent Thill previously said his analysis suggested that the recent ruling in the fight between Apple (AAPL) and gamemaker Epic could could serve as another upside driver to EBITDA estimates for both Match Group and Bumble.
PRICE ACTION: In Thursday afternoon trading, shares of Match Group and Bumble have jumped about 8% apiece to $171.41 and $56.74, respectively, while Roblox's stock has gained more than 3% to $81.17. Also higher, Spotify has advanced almost 3% to $258.09 and Zynga is up a little over 1% to $7.83.
Apple
-0.49 (-0.33%)
Alphabet
-12.02 (-0.42%)
Alphabet
-3.13 (-0.11%)
Zynga
+0.075 (+0.97%)
Roblox
+2.34 (+2.97%)
Spotify
+7.44 (+2.96%)
Bumble
+4.04 (+7.72%)
Match Group
+9.38 (+5.90%)