Apple Arcade to swell online gaming ranks

Apple CEO Tim Cook speaks during a product launch event at Apple’s headquarters in Cupertino, California, on September 10
Apple CEO Tim Cook speaks during a product launch event at Apple’s headquarters in Cupertino, California, on September 10
Image: JOSH EDELSON/ AFP

Apple’s entry into online games with a low-cost subscription plan is expected to bring a fresh set of consumers into gaming and potentially reshape the multibillion-dollar market.

Apple Arcade, which launched on Thursday, rides a trend of video games played by subscribers instead of purchased as downloads or disks, and its $4.99 (R73) monthly price could wind up boosting the ranks of players.

“My hunch is that it’s a good thing for the market overall,” NPD Group games executive director Mat Piscatella said.

“Apple Arcade might eat into free-to-play titles, or it might expand the market overall and attract many new players who haven’t yet been drawn to paying for content on mobile.”

Apple Arcade differs from rivals by offering unlimited access for a flat monthly price to more than 100 exclusive games uninterrupted by ads or the hawking of virtual goods.

“The games themselves don’t have in-game purchase mechanics; instead, there is a beginning, middle and end,” Wedbush Securities equity research managing director Michael Pachter said.

“That’s a different type of game than free-to-play, so there is definitely an audience.”

Arcade fits into a subscription model that is gaining traction, according to analysts.

Subscription services are offered by console rivals Xbox and PlayStation, while Google is set to launch a Stadia streaming play service in November.

“The old model was paid download, but that died when free-to-play was invented,” Pachter said.

“Arcade is not much of a threat to the conventional games business, and will likely convert some mobile phone owners to gamers over time.”

The US video game industry generated a record $43.4bn (R634bn) in revenue in 2018, according to the Entertainment Software Association.

A drawback for Arcade is that it does not support games playable on popular consoles or Windows-powered personal computers, analyst Patrick Moorhead, of Moor Insights & Strategy, said.

Gamemakers also face the challenge of tailoring each title to play equally well on Apple’s various devices, which is tougher than crafting software for one type of hardware such as a popular console.

Details of incentives or revenue shares for game developers have not been disclosed.

“Apple is taking advantage of the power of its devices to attract developers for a share of the monthly fee, and the early providers are going to make good coin by participating,” Pachter said.

Alexandre de Rochefort, of Gameloft, a studio producing games for Apple Arcade, declined to discuss revenue share, but said it would be “a valuable initiative for Gameloft, our partners, and our players” as the economics of gaming shift.

Apple promised new, exclusive Arcade games will be playable across iPhone, iPad, iPod touch, Mac and Apple TV.

“I think the service will appeal to parents and to a new wave of Gen Z consumers who identify with authentic content experiences on smartphones,” IHS Markit Technology head of games research Piers HardingRolls said. 

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