Apple investing more than $500M on Apple Arcade launch, report says

Posted:
in General Discussion edited April 14
Apple is reportedly investing heavily to get its upcoming Apple Arcade game subscription service off the ground, with the tech giant sinking upwards of $500 million into the more than 100 titles expected at launch.




Citing sources familiar with the matter, the Financial Times reports Apple is spending or has spent several million dollars to secure and develop each launch title, likely bringing the total outlay for Arcade to well over half a billion dollars.

Apple is offering publishers extra incentives if they agree to exclusivity windows, the report said, restricting new releases to Arcade for a few months before wide distribution on rival platforms. The strategy should continue once Arcade launches, as Apple promised the platform will net new and exclusive games on a regular basis.

Apple announced Apple Arcade at a special event in March. When the subscription-based service is made available on iOS and macOS later this year, customers will pay a monthly fee for access to a host of premium titles developed by both well-established publishers and independent studios.

Big-name brands like Cartoon Network, Disney, Konami and Sega are offering access to titles on Arcade, and up and coming studios with successful App Store track records, like ustwo and Annapurna, are taking part in the project with Apple's assistance. According to today's report, the iPhone maker is advancing to developers funds that exceed the cost of creating a typical indie game.

Apple appears to be front-loading Arcade in an attempt to make a splash in the market. Gaming is a well-established industry, with iPhone responsible for a boom in mobile development and distribution, but Apple is joining a relatively recent push into subscription platforms. Google, for example, revealed the cloud-based, cross-platform streaming service Stadia last month. Similar first- and third-party subscription hubs have been available on PC and console for years.

Apple's $500 million investment in Arcade stands in contrast to a reported $1 billion outlay -- likely more at this point -- for original TV shows and specials slated to arrive on the upcoming Apple TV+ service.

Analysts at HSBC predict Apple to reap $370 million in Arcade revenue by 2020, a figure expected to grow to $2.7 billon by 2022 and $4.5 billion by 2024, the report said. The firm estimates Arcade to boast 29 million subscribers paying $12.99 per month in 2024. HSBC believes Arcade has higher earnings potential than Apple TV+, which is anticipated to generate $2.6 billion in revenue by 2022 and $4.1 billion by 2024. Apple News+, Apple's newly launched news and magazine subscription service, is predicted to bring in $1.7 billion and $2.7 billion in 2022 and 2024, respectively.

Apple has not revealed pricing for either Apple Arcade or Apple TV+, both of which are due to launch this fall.
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Comments

  • Reply 1 of 26
    Honestly given how much developing a good game costs, they should be investing as much as they're putting into video.
    n2itivguy1STnTENDERBITSAppleExposedboltsfan17
  • Reply 2 of 26
    entropysentropys Posts: 1,617member
    As long as at least one of them is a must have game like Halo was for the Xbox it would be good.
  • Reply 3 of 26
    FatmanFatman Posts: 262member
    With a budget that high, maybe we can expect to see an Apple branded controller?

    I use the Steele Nimbus controller with AppleTV, and for certain games it is a MUCH better experience than using either the AppleTV remote or iPhone touch screen. However, currently not all games are designed to support it.
    macpluspluscurtis hannahrepressthis
  • Reply 4 of 26
    I'm excited to see what it is going to be like. 
    AppleExposed
  • Reply 5 of 26
    mjtomlinmjtomlin Posts: 1,819member
    Some of the games look graphically rich and complex.. makes me wonder if they will only be playable on a new Apple TV with beefier specs than an A8?
    repressthis
  • Reply 6 of 26
    schlackschlack Posts: 686member
    I have a hard time seeing how this succeeds. Mobile games are cheap. And most people don’t buy them that often. Hope to be proven wrong. 
  • Reply 7 of 26
    supadav03supadav03 Posts: 437member
    I hope this performs well because I’m an Apple fan and know there are people who enjoy iOS gaming. Having said that, as someone who is a gamer, I have ZERO interest in this. 
  • Reply 8 of 26
    macguimacgui Posts: 1,155member
    I'm not a gamer, don't do much with iOS games, and no nothing about game developing. Is Duke Nuke 'em still vaporware?

    But somehow, given that this is Apple, 'more than $500M' just doesn't seem like a lot of money.
  • Reply 9 of 26
    NotsofastNotsofast Posts: 349member
    schlack said:
    I have a hard time seeing how this succeeds. Mobile games are cheap. And most people don’t buy them that often. Hope to be proven wrong. 
    It will be a huge hit just from parents buying it for their kids.  Parents won't have to worry about advertising, the nightmarish expense of in app purchases, and of course, curated content that is safer for kids.  All of that plus kids begging for it.  Yep, parents alone will make this a huge success.  

    The other aspect most people don't understand is the same reason why Apple Music has been such a huge success.  Like many or most people I didn't buy music very regularly because of discovery and expense.  Once I tried Apple Music I was hooked as for about $7 a month I can get access to unlimited music, new and old, and there is easy discovery.  I am sitting here reading while listening to Apple Music on my fantastic sounding Homepod.  SIri works fantastic on the Homepod, and I just asked Siri to play some new music for me.  Whenever she plays something I like/dislike I don't have to even stop typing to ask her to mark it as such or add it to one of my playlists.  
    edited April 14 fred steinAppleExposed
  • Reply 10 of 26
    matrix077matrix077 Posts: 602member
    I still think this is one of most interesting things announced at the last Keynote. Personally I think the most successful to the least successful will be in this order
    -Apple Card
    -Arcade
    -TV+
    -News+

    To be able to plays a hundred of games you won’t be able to play somewhere else, that’s a huge huge draw. Like someone said above, it only needs a few must play game for the platform to be successful.  
    edited April 14
  • Reply 11 of 26
    Great idea and thanks for all the other comments. Apple already leads in mobile games, or more accurately, games built on either iOS or Android. iOS will remain the first platform for most mobile game developers. iOS will remain the best investment by ROI for mobile game developers. And even in China, where WeChat as the de facto platform reduces the OS preference, games on iOS will drive loyalty to iPhone
  • Reply 12 of 26
    apple ][apple ][ Posts: 8,428member
    If they have a bunch of killer exclusive content, and the price is right, then I can see this as being interesting.

    I guess we'll see what happens in the future when we hear more details about it.
  • Reply 13 of 26
    Who is going to pay for Apple Arcade?

    Kids? Nope
    Parents for kids? Nope
    Gamers? Nope
    Casual Gamers? Nope

    Sadly freemium games will still dominate. Maybe if Apple could sign up a major gaming company and develop something like Diablo IV...
    It’s going to be difficult get a big budget game built with Apple’s shotgun approach to spending on games...

    Apple will do well with News.  They need something like Kindle Unlimited.  I have zero interest in Apple TV, but I might sign up for Disney’s offering in chunks.  For example, spend $10 on HBO then cancel, spend $10 on Netflix then cancel, spend $10 on Disney then cancel.  Month to month then repeat...
  • Reply 14 of 26
    AppleExposedAppleExposed Posts: 623unconfirmed, member
    All that money but no acquisitions.

    Who is going to pay for Apple Arcade?

    Kids? Nope
    Parents for kids? Nope
    Gamers? Nope
    Casual Gamers? Nope


    Of course! no one is gonna buy this!! 0 subscribers in Arcades first year! DOOOOMED!

    macgui said:
    I'm not a gamer, don't do much with iOS games, and no nothing about game developing. Is Duke Nuke 'em still vaporware?

    But somehow, given that this is Apple, 'more than $500M' just doesn't seem like a lot of money.

    I agree they should be spending more but if this is a yearly cash pump, then it's a whole lot. I believe game companies don't even spend half of this in a year.
    Soli
  • Reply 15 of 26
    arlorarlor Posts: 490member
    AppleExposed said:

    I agree they should be spending more but if this is a yearly cash pump, then it's a whole lot. I believe game companies don't even spend half of this in a year.
    I'm not so sure about that. Costs for AAA games are well into the tens of millions, sometimes nine figures, nowadays, even before marketing costs. 

    Some sources: https://en.wikipedia.org/wiki/List_of_most_expensive_video_games_to_develophttps://kotaku.com/how-much-does-it-cost-to-make-a-big-video-game-1501413649
  • Reply 16 of 26
    wizard69wizard69 Posts: 12,719member
    I’ve never been a big gamer, in fact I have a hard time understanding the mentality of people that will spend several hours a day in front of a computer screen playing games.  So i can’t really understand why People would sign up for this.    Thus I don’t see a huge success in the near future.  

    However what I do see is Apple releasing new hardware that can leverage these games.  The new Mini IPad is a start here as their lowest end game platform.  What I’m expecting is a new SoC for iPad and an Apple TV variant, possibly even more hardware.  I’m not sure if that chip will be limited to iPad Pro or if a gaming tablet is in the future.    The gaming tablet would need a few features to set it apart from the other iPads.  A rugged case being high priority but also novel input devices.  

    By rugged case I mean industrial strength, sort of like scan tools mechanics have.   Something that is inherently rugged and can take abuse. A rugged plastic with a beefy rubber over-mold would do.    The case ought to be able to hold a larger battery but not so large that it can’t be taken on airplanes.    Frankly Apple has an opportunity here to open up the platform a bit with a device specifically designed for hard users. 
  • Reply 17 of 26
    SoliSoli Posts: 8,678member
    arlor said:
    AppleExposed said:

    I agree they should be spending more but if this is a yearly cash pump, then it's a whole lot. I believe game companies don't even spend half of this in a year.
    I'm not so sure about that. Costs for AAA games are well into the tens of millions, sometimes nine figures, nowadays, even before marketing costs. 

    Some sources: https://en.wikipedia.org/wiki/List_of_most_expensive_video_games_to_develophttps://kotaku.com/how-much-does-it-cost-to-make-a-big-video-game-1501413649
    I'm not sure what part of his comment you're disagreeing with. It sounds like you're disagreeing with his comment about "game companies don't even spend half of this in a year" but the links you posted back up @AppleExposed's comments. 
    edited April 15 AppleExposed
  • Reply 18 of 26
    boltsfan17boltsfan17 Posts: 2,157member
    Soli said:
    arlor said:
    AppleExposed said:

    I agree they should be spending more but if this is a yearly cash pump, then it's a whole lot. I believe game companies don't even spend half of this in a year.
    I'm not so sure about that. Costs for AAA games are well into the tens of millions, sometimes nine figures, nowadays, even before marketing costs. 

    Some sources: https://en.wikipedia.org/wiki/List_of_most_expensive_video_games_to_develophttps://kotaku.com/how-much-does-it-cost-to-make-a-big-video-game-1501413649
    I'm not sure what part of his comment you're disagreeing with. It sounds like you're disagreeing with his comment about "game companies don't even spend half of this in a year" but the links you posted back up @AppleExposed's comments. 
    Actually those figures don't back up @AppleExposed's comment. Those links show the cost of one video game. The top game developers such as EA, Ubisoft, Sony, etc are releasing more than one game a year. EA's spends more than a billion a year. Rockstar spent over $200 million just on Red Dead Redemption 2. Ubisoft spends a fortune a year as well. So Apple spending $500 million is nothing compared to what the big game developers spend. I highly doubt Apple will be spending that much per year anyway. If it's true the $500 million is for 100's of titles, these games definitely won't be AAA titles. 
    muthuk_vanalingam
  • Reply 19 of 26
    A $12.99 monthly subscription to Arcade is not going to fly.  A $12.99 monthly subscription that nets Arcade, TV+, News+ & Music would do the trick.  Sorta the Amazon Prime model where it’s about $10 a month for the free shipping, Amazon Music and Prime Video + the occasional kindle promo.  Apple should be able to do this.  I hope they go this route and not the Comcast, AT&T way of finding every possible way to make you pay a boatload each month.  But, hey, it’s Apple - home of the terribly priced SSD and memory upgrades, so I’m not holding my breath.  But I’ll dream for awhile.
  • Reply 20 of 26
    crowleycrowley Posts: 5,771member
    wizard69 said:
    I’ve never been a big gamer, in fact I have a hard time understanding the mentality of people that will spend several hours a day in front of a computer screen playing games.  So i can’t really understand why People would sign up for this.    Thus I don’t see a huge success in the near future.  

    However what I do see is Apple releasing new hardware that can leverage these games.  The new Mini IPad is a start here as their lowest end game platform.  What I’m expecting is a new SoC for iPad and an Apple TV variant, possibly even more hardware.  I’m not sure if that chip will be limited to iPad Pro or if a gaming tablet is in the future.    The gaming tablet would need a few features to set it apart from the other iPads.  A rugged case being high priority but also novel input devices.  

    By rugged case I mean industrial strength, sort of like scan tools mechanics have.   Something that is inherently rugged and can take abuse. A rugged plastic with a beefy rubber over-mold would do.    The case ought to be able to hold a larger battery but not so large that it can’t be taken on airplanes.    Frankly Apple has an opportunity here to open up the platform a bit with a device specifically designed for hard users. 
    Why would Apple add another gaming SKU when the regular iPads do so well for gaming anyway?  There's no real hardware limitation here.  Ruggedness can be delivered by third party cases.
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