IGDA warns Android game developers about Amazon's Appstore terms

Games industry body the IGDA has sent an "important advisory" to its members warning them to "educate themselves on the pros and cons of submitting content to Amazon", for its new Android-focused mobile apps store.

Its main concern in the letter – a copy of which has been passed to the Guardian's Apps Blog (update: and now published online by IGDA) – is the way Amazon reserves the right to pay developers either 70% of the purchase price for their games, or 20% of the developer's List Price, whichever is the greater.

"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," explains the IGDA's advisory.

It also outlines five possible scenarios which it thinks should worry Android game developers. That includes a situation in which Amazon cuts the price of its 100 most popular games by as much as 75%. "Some developers will probably win in this scenario, but some developers – most likely, those near the bottom of the list – will lose, not gaining enough sales to offset the loss in revenue per sale."

The second concern is over a stipulation that developers can only set a minimum list price that matches their lowest price on any rival app store. "Amazon has presented developers with a stark choice: abandon Amazon's market or agree never to give another distributor an exclusive promotional window," claims the email.

The IGDA also worries that those other app stores may feel compelled to match Amazon's terms, leading to "a slippery slope in which a developer's 'minimum list price' ceases to be a meaningful thing", and expresses concern over the prospect that Amazon could steeply discount or make free a game with a "well-defined, well-connected niche audience", thus robbing the developer of revenues from those people who might buy its game at a higher price.

The fifth scenario outlined in the letter focuses on Amazon being able to discount or make free a game that is already selling well. "This sort of promotional activity may attract consumers away from competing markets and into Amazon's arms. But it might actually represent a net loss for the developer, which was already doing quite well and didn't need to firesale its game at that moment in time."

The IGDA wants Amazon to change its terms, requiring permission from a developer before it offers their games at a discount, and also to give them the freedom to set whatever minimum list price they want – regardless of how much their games are selling for in other stores. However, it admits that "while Amazon has been very willing to engage with the IGDA, it has thus far expressed zero willingness to adjust its distribution terms".

The IGDA letter also warns developers against seeing Amazon as a plucky upstart in the apps world. "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."

We approached Amazon for comment on the letter, but the company had not provided a response at the time of publication.

Developers have broadly welcomed the launch of Amazon's Appstore for Android, since it ties into Amazon's powerful recommendation engine, and also because it's making games playable in emulated form so people can try before they buy. There has been relatively little public criticism of the store's terms, but the IGDA clearly feels developers need to pay more attention to the small print.