I think you may be overestimating how much money there is in this space. People don't want to pay for things if they can avoid it. The biggest app for the biggest forum in the world apparently had 50k paying users. The author was complaining about the cost of icons, which to me suggests that he is not terribly wealthy.

But there's a lot about this story that I don't understand:

* How can the Apollo guy be perceived as "threatening" Reddit? He has no leverage.

* Why does he suggest that they buy his app for $10m, when they can just terminate his API access at a cost of $0 - "I have altered the deal; pray that I do not alter it any further"

250k is just the cost of refund of subscriptions. There is further costs related to new business model and all the risk associated with a continued work relationship with a partner that just done you dirty. He can pay the refund, he understands it as not worth it and decided to not delay the inevitable and close shop. The thought is that it will not be profitable and any service offered after 30 days will only benefit reddit at his expense. It's the right call.