Is Apple Arcade a Foolproof Game Plan?



Apple (APPL) finally made a dashing entry into the video gaming industry. Apple Arcade, a gaming subscription service, was released on Thursday. Notably, Apple Arcade will be found at the bottom of the App Store on the latest iPhones with iOS13. Later this month, Apple Arcade will be available on iPads and Apple TV. In October, the services will be available on Mac. With a launch price of $4.99 per month, you can play 70 brand new games on a free trial for the first month. Soon, there will be 100 games available.

Apple is betting big time on the services revenues and positions that the addition should achieve. So, what’s Apple’s strategy behind the game? Let’s find out.

Article continues below advertisement

What’s so unique?

Apple is synonymous with exclusivity. Apple Arcade offers a bunch of games developed by top names in the video gaming industry. Some of the top-notch developers on board are Watchmen co-creator Dave Gibbons, The Sims designer Will Wright, Monument Valley designer Ken Wong, and Final Fantasy developer Hironobu Sakaguchi. The third-party developers include Disney, Konami, Cartoon Network, Sega, Annapurna, Blowfish, Finji, Klei, Cornfox & Bros, Mountains, and Platinum Games.

Apple Arcade will only be available on Apple devices. You can even play games offline after downloading. However, you can’t find the service on the Google Play Store or any Andriod device. There’s also a separate section for Apple Arcade on the App Store.

Candice Mudrick, head of market analysis at Newzoo, said that Apple understands that there’s a market for premium gaming services. The company wants to address the market through Apple Arcade. She said that the absence of in-app purchases also enables game developers to focus on the game’s quality instead of inserting forced monetization tools.

Apple Arcade won’t feature any in-app purchases or transactions. The unique service could single-handedly alter the gaming landscape. User privacy is a hot topic, but Apple has control systems in place to tackle any potential misuse. There are also parental control settings to monitor kids’ activities on Apple Arcade. You can also add up to five family members through Apple’s family sharing plan.

Article continues below advertisement

Apple Arcade’s initial hiccups

Amir Ghodrati, of App Annie, said, “You’re going to have to get people out of the mindset that all games on mobile should be free to download. That might take a bit longer.” While the pricing is attractive, it’s going to take a while for Apple to see more players warming up to the concept of paid games. The premium gaming segment is a niche and has few takers. Most people usually expect mobile gaming to have free downloads. If the download is free, gamers don’t even seem to mind the annoying in-app purchases. Apple will have to work to convince gamers to pay for a premium experience.

Video-gaming is a crowded place with established names like Sony (SNE), Microsoft (MSFT) and Nintendo. Amazon (AMZN) and Google’s (GOOG) presence will likely make the sector complicated for Apple.

Apple needs aggressive marketing to get more players on board. The one-month free trial period is a step in the right direction. However, the company still has more work ahead. Just like other Apple products, it will be challenging for the company to capture a significant market and uphold its premium image. I think that Apple Arcade has to be unique with tailor-made games.

Article continues below advertisement

Gaming space is competitive

Apple is also reportedly offering lucrative incentives to developers designing exclusive games for Apple Arcade and relinquishing competing platforms. Gaming is a highly competitive space. As a result, there has to be a line up of exciting games at all times.

Mobile gamers are casual gamers. They like to play games in short bursts. However, Apple Arcade offers longer-form games. Some gamers might find the longer games less appealing. Console or PC gamers have their game preferences like The Last of Us, Grand Theft Auto, Halo, or Super Mario Bros. Apple Arcade will have to work to lure players towards their titles. The video games-as-a-service model for gaming is in nascent stages. The model will need time to become popular.

Apple Arcade’s future

Apple Arcade is a trump card for the company to up its game. The broader aim is to boost the services revenues. The June quarter results indicated that Apple generated 21% of its revenues from the services segment. The Financial Times reported that the company spent close to $500 million on Apple Arcade. The service’s core strength lies in its pricing and the immersive gaming experience it offers. GlobalData projects the global video game industry to grow to $300 billion by 2025. Apple is betting heavily on the video gaming industry. Apple Arcade’s early reviews are encouraging. However, we’ll have to see how the service fares in the next few months.

Apple stock has risen 41.7% YTD (year-to-date) as of Thursday, while Sony has gained 23% YTD. Microsoft followed Apple and posted a 40% YTD return.


More From Market Realist