The Financial Times is reporting that Appleās coming Arcade gaming service could generate more revenues than its TV or news subscriptions. So perhaps its not surprising that the consumer electronics firm is spending hundreds of millions of dollars secure new games for the service.
āSeveral people involved in the projectās development say Apple is spending several million dollars each on most of the more than 100 games that have been selected to launch on Arcade,ā the publication reports. āIts total budget is likely to exceed $500 million.ā
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That gaming would be important to Apple isnāt surprising—the annual market for video games is bigger than that of any other content type, including Hollywood movies—but the firmās preview of its Arcade service was, if anything, lackluster and lacking in details. And Apple is entering a crowded field: Established video game giants like Nintendo, Sony, and Microsoft are all working on their own services, and new competitors like Amazon and Google will complicate things further.
My guess for Apple is that it will see the most success with the casual gamers who choose the iPhone, and that its reach with the more serious gamers who prefer consoles or PCs will be modest at best. But that mainstream audience is inarguably the biggest part of the market. The only question is how you monetize people who arenāt attuned to paying a monthly fee to do something that is now free.
Getting some good games is one possibility. And while Apple provided little evidence of good games, important partnerships, or even a basic grasp of this market during its recent press event, it certainly has the money to spend its way into this world. And part of Appleās strategy, the Financial Times says, is to give developers more money when they create games exclusively for Arcade and forego rival platforms like Google Play. Developers who go this route can choose to bring their games to other platforms after a months-long exclusivity period.
And on the topic of spending money, itās unclear what Apple will charge subscribers for Arcade. But that hasnāt stopped the analysts at HSBC, quoted by the Financial Times, from predicting that āArcade revenues will grow from $370 million in 2020 to $2.7 billion by 2022 and $4.5 billion by 2024, by which time HSBC predicts it will have 29 million users paying $12.99 each month.ā At that rate—a bit of a stretch, in my opinion—Apple will be earning more from video gaming than it does from its TV and news subscriptions.
Weāll see. The video game market is certainly big enough to warrant this attention. But itās unclear if Apple will emerge as one of the key players or just an also-ran.
skane2600
<p>"The video game market is certainly big enough to warrant this attention."</p><p><br></p><p>As a victim of the great video game crash of the 1980's I believe one should not assume that the video game market can continue to grow indefinitely. </p>
skane2600
<blockquote><em><a href="#420526">In reply to Ugur:</a></em></blockquote><p>Game studios may have come and gone since then, but that's nothing compared to an industry revenue drop of more than 95%. </p><p><br></p><p>But you're right about the impact of "free" both "as in beer" and "as in anthropomorphic" (i.e. the GPL) . Digital formats along with the Internet has made most content no-cost either legally or illegally and open source software has greatly diminished the economic value of software across the board.</p>
skane2600
<blockquote><em><a href="#420642">In reply to nbplopes:</a></em></blockquote><p>Some people just want to be in the software development business, not in the advertising business. With the increase in privacy regulations the people-driven tech bubble may finally burst exposing the billions of wasted money.</p><p><br></p><p>Of course VCs are in the pie in the sky realm where they switch back and forth between being con men and being conned themselves.</p>
dontbe evil
<p>apple fans will love to be milked even more from their beloved company</p>