Will Google Reduce Commission on Google Play Revenue?

Although unconfirmed, I think this report is potentially very interesting;

Google is also reportedly playing hardball with device manufacturers who previously got a cut of Google Play revenue from phones and tablets they sold. Some partners have seen their commission reduced from 25 percent to 15 percent, with one partner’s cut being eliminated entirely, apparently because “Google wasn’t generating enough money from Google Play.”

It suggests two things;

  1. Google Play is not generating enough revenue.
  2. Google is playing hardball with OEMs.

None of these is a surprise.

In this blog, I have constantly mentioned that Google Play revenue is actually having a hard time, despite favorable comments from both Google itself and App Annie. It is also very well known that Google is playing hardball with OEMs.

What I do find interesting is how this might adversely affect high-end Android OEMs but not affect the low-end. As I have mentioned in my past posts, Google Play revenue is highly skewed towards Japan, South Korea and the US. These are the same countries which mainly purchase high-end Android phones from Samsung, HTC and LG (and some local manufacturers in the case of Japan). This commission reduction is going to hurt these OEMs and these OEMs only.

If this report is true, this will only affect high-end manufacturers. None of the new cheap Android entrants like Micromax will be significantly affected, because owners of these devices don’t buy much from Google Play to begin with.

Google seems to be trying really hard to make Android unattractive to high-end smartphone manufacturers, while making it look better for low-end OEMs. I am baffled as to why they might want to do that.

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