Opportunities and challenges facing alternative app stores

As a result of the DMA, Apple's iron grip on app distribution has loosened in Europe.

You know what it means?

We’re about to see what an app store ecosystem could look like without monopoly app marketplaces.

For now, it’s only the EU app market that will be affected by the new legislation.

What's coming for iPhone users in the EU:

??AltStore has become the first Apple-approved alternative app store to appear on the EU market.

??We’ll see Epic Games Store make its debut on both platforms by the end of 2024.

?? Setapp is opening its subscription-only iOS app store, offering a careful selection of third-party apps for a monthly subscription.

?? From March 2024, EU companies can distribute their iOS apps on the mobivention app marketplace, which is geared towards small and medium-sized enterprises as well as large companies.

And just like that, the walled garden has crumbled. But despite this blowing wind of change, the future of third-party app stores remains a mixed bag, and here’s why.

Lower fees, innovation, and other shiny opportunities

Alternative app stores feel like a breath of fresh air amidst untenable commissions charged by major app stores and their strict guidelines for accepting apps.?

Although app owners might have different perspectives on the long-term success of third-party stores, everyone agrees on one thing — alternative app stores are essentially a boon to developers due to the following benefits:

• Lower commissions — Epic Games Store will offer 88/12 revenue share (plus additional no-cost services) on both iOS and Android, breaking away from traditional 70/30. Alternative app marketplaces also mean more ways to process internal payments, giving both users and developers a greater choice of payment methods for and in apps.??
• Reduced competition — to be put on the users’ radar, your app needs to rank within the top 25 to 50 positions, which can’t happen without substantial marketing investment. Alternative app stores are less crowded, helping your app to stand out through native placements.
• Access to niche markets — third-party app marketplaces like Tencent App Store and Anzhi Market can be your entry point to local markets and audiences.
• Increased exposure — bringing your app to alternative app marketplaces is a great marketing move that can generate more buzz for your digital product.
• Easier user growth — 80% of app developers cite overall user or player growth as the main reason for investing in alternative app distribution.

Overall, more contestability in the mobile system leads to improvements in price, quality, and innovation — triple value that benefits both app owners and end users.?

But if it’s all rainbows and unicorns, why does it feel like we’re opening Pandora's box with alternative app stores?

The road ahead is bumpy for underdogs

App Store and Google Play have been the default way to discover new titles for years, controlling over 95% of the app store market share. Changing this status quo requires significant effort from alternative app stores and the Digital Markets Act alone might not do the job without customer buy-in.

?? The greatest hurdle. Alternative app marketplaces tend to have a bad rep because of their relatively low level of protection. Breaking this stigma and building user trust by providing a safe environment will be a crucial success factor for underdog app stores (and let us say, Apple throwing shade at alternative app stores is not helping ??).

?? The nemesis. Incumbent app stores won’t go down without a fight. Apple has shown some teeth already, outlining that developers will have to pay a fee to the company for downloading outside the App Store. This is a low blow for smaller apps, while bigger apps will have to find a way to offset download fees. And let’s not forget that Apple still has to do a baseline review and notarize all apps on third-party app stores in order to ensure their security is up to the mark.

?? The enabler. Partnerships between alternative app stores and telecoms can spur the growth of the former, as third-party app marketplaces will be able to accelerate user acquisition through notification systems, devices, and other assets. Also, app downloads outside the App Store will become more mainstream after this spring when Apple greenlights web distribution for large developers.

What types of apps need to plan for an app store move?

With the DMA coming into law in the European Union and the US Open Markets Acts allegedly making a comeback, alternative app stores may be poised for a quick takeoff in the EU and US markets. So it may be worth it to get your ducks in a row early.

Based on our experience, here’s when your app can benefit from additional exposure on third-party app marketplaces:

• You need a testing area to experiment with user acquisition tools, monetization, and marketing strategies without alienating a bigger audience.?
• Along the same lines, you can foray into alternative app stores as a lean and cost-effective method to test an MVP.
• Your app falls into a highly competitive category and it’s challenging (and/or expensive) to get featured on bigger app stores.?
• You’re targeting a local market and need an easy and authentic way to reach a niche audience.

Uphill battle that might be worth to fight

It’s premature to draw conclusions or make bold claims as the brave new world of third-party app stores was unleashed just a little while ago. There’s still an air of uncertainty, unsustainable fees, and security scares surrounding alternative app stores. But one thing is sure: it’ll be exciting to watch new business models unfold as these may trigger the next era of app distribution.

Recommended reads:

1. List of alternative app stores for 2024

2. Why Google and Apple may remove your app and how to deal with that? [+free pre-publish checklist]

3. 27 steps to a successful mobile app launch