Facebook is dominating the VR space right now. They have the cheapest all in one headset with the Oculus Quest and besides the gaming focused PS VR, they have the largest market share. Any developer that wants to make money creating apps and games for the Oculus have to opt in Facebook’s payment and transaction systems.
Facebook takes a 30% transaction fee for any payments made on their system, that means apps, games, and even in-app purchases. It’s rare for many indie developers or small start-ups to operate with a lower than 30% margin.
Darshan Shankar, the CEO of Bigscreen (a VR movie rental app), has voiced his concerns many times about the issues facing small developers selling their products on the Facebook marketplace. In August of this year he tweeted that “It is financially impossible” to make money with Oculus and when he voiced his concerns to Facebook, they said “Facebook told us to find a better business model like games.”
After John Carmack, the consulting CTO for Oculus, spoke about the recent deal between Facebook and another streaming service, Fandango, at the recent Facebook Connect, Darshan took to Twitter again.
The special deals afforded to large companies like Fandango and Netflix ensure that they remain profitable, but the smaller developers are pushed to the wayside.
Facebook isn’t the first big company to cause concern over their heavy handed transaction fees, Apple has also come under fire about their similar fee structure, only recently Epic Games openly defied the transaction fees by allowing customers to make in-app purchases using their Epic account, bypassing the Apple ecosystem.
Apple, like Facebook, aren’t changing their position any time soon. The only other options for developers is to use unofficial app stores like Sidequest to distribute their products, but these under the table methods have a much smaller audience size and less security. Until Facebook reverses their decision on transaction fees, small developers may not have much room to grow.