The International Game Developers’ Association (IGDA) issued an “important advisory” highlighting its concerns with the terms and conditions of Amazon’s recently launched Appstore. It said that “the IGDA has significant concerns about Amazon’s current Appstore distribution terms and the negative impact they may have on the game development community,” and therefore it “urges developers to educate themselves on the pros and cons of submitting content to Amazon.” In its note, IGDA warned that “under Amazon’s current terms, Amazon has little incentive not to use a developer’s content as a weapon with which to capture marketshare from competing app stores.”

IGDA’s concern centres on Amazon’s ability to modify the pricing of products without requiring agreement from developers, which could potentially be detrimental to their business. Under the terms of the Amazon Appstore, developers are paid “greater of 70% of the purchase price or 20% of the List Price.” The Association said that “while many other retailers, both physical and digital, also exert control over the price of products in their markets, we are not aware of any other retailer having a formal policy of paying a supplier just 20% of the supplier’s minimum list price without the supplier’s permission.” It also notes that Amazon states that developers cannot set their list price higher than the lowest list price offered on any other store at any time, meaning that if a developer wants to cut the price elsewhere as part of a promotion, the Amazon Appstore price must be lowered to match this – permanently.

The IGDA said it has formally communicated its views to Amazon, and while Amazon has been “very willing” to enagage with IGDA, “it has thus far expressed zero willingness to adjust its distribution terms.” It notes that while the management of the Amazon Appstore may have the best intentions for developers, “things tend to change when a marketplace achieves any degree of dominance,” and the terms of the developer agreement give it “significant flexibility” to undertake actions which may be detrimental in the long term. “It would be foolish to assume that because Amazon’s Appstore is small today, it will not become the Walmart of the Android ecosystem tomorrow,” the Association said.

IGDA identified five issues related to the Amazon regime: if Amazon “steeply discounts” a large chunk of its Appstore catalogue, developers of less popular titles will see their potential earnings cut, while being unlikely to benefit from a big enough volume uplift to offset this; by stipulating that content cannot be offered cheaper elsewhere, “Amazon has presented developers with a stark choice – abandon Amazon’s market or agree never to give another distributor an exclusive promotional window”; other app stores may now “feel compelled to duplicate Amazon’s terms,” creating a “slippery slope” in which the developer’s minimum list price “ceases to be a meaningful thing”; by discounting niche content, Amazon may limit the potential income of a developer as this limited customer base buys at the lower rate; and Amazon may cut the price of a game that is already selling well in order to lure customers from alternative app stores, again reducing the amount of income for the developer.

The Association said that “a developer’s permission should be required by any retailer seeking to pay less than the standard percentage of a developer’s minimum price,” and that “developers should have the freedom to set a minimum list price of whatever amount they see fit, without regarding to pricing in other app stores.”