Why would the app store model stop working? Paying through the app store has a direct benefit to usability. Before in app purchases the app store model worked fine.
Even if the Epic lawsuit goes completely off the rails and Apple is forced to allow external app stores on iOS, they can still maintain a profitable app store if they provide the best experience to end users. Building an app store is very hard, and convincing people to install an alternative store is even harder, so I doubt they'll lose much there.
The app store is so ludicrously profitable that the exclusivity they enjoy can't possibly be the only reason it's making them money. This cut into Apple's (and Google's) profits, but it certainly won't mean the end of app stores as we know them.
> if they provide the best experience to end users
I don't think they can. Their DNA on this evolved as a monopoly. They won't be able to compete, they will be slow and boring while clever people will overpower them.
I think they will find a way. The Mac App Store is far from a monopoly yet it still remains profitable as far as I know.
My grandma isn't going to use any alternative store, she probably doesn't even understand the concept of different app stores. I think Apple will be fine, at least until competitors somehow gain a MASSIVE usability advantage.
It doesn't kill it much more then it killed the android store in the past when it wasn't (roughly, in practice) enforcing the same thing.
It's a revenue cut, but at least for the beginning it won't be a problem at all for apple, this might change at some point, but stocks have no reason to majorly drop now they still can do so in the future if it makes sense.
Even if the Epic lawsuit goes completely off the rails and Apple is forced to allow external app stores on iOS, they can still maintain a profitable app store if they provide the best experience to end users. Building an app store is very hard, and convincing people to install an alternative store is even harder, so I doubt they'll lose much there.
The app store is so ludicrously profitable that the exclusivity they enjoy can't possibly be the only reason it's making them money. This cut into Apple's (and Google's) profits, but it certainly won't mean the end of app stores as we know them.