Apple Arcade puts the world's biggest game market in play

The unique elements of the iOS app market present a distinct set of opportunities and tradeoffs for Apple Arcade. The result may be a service that does more to create a consistent Apple cross-media experience than fundamentally change mobile gaming.
Written by Ross Rubin, Contributor

Along with a number of other services that Apple announced at its (mostly) media services event this week, Apple Arcade was announced without any associated prices. But while the subscription game bundle may neither represent Apple's greatest investment among its new services nor attract the star power of Big Bird, it does reflect the company's willingness to experiment with its most significant current content revenue stream.

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Apple Arcade enters what has become a dynamic field of game subscription services. Rather than take a game streaming approach such as Google's recently announced Stadia service or the Shadow service I wrote about last year, it uses toward a more traditional "pass" model that has matured on consoles. Services such as Xbox Game Pass, which offers more than 100 titles just as Apple expects to, and PlayStation Plus , which bundled together access to games that would ordinarily be purchased and are still downloaded.

But there are several differences between Apple Arcade and the console-based services, including the scale of the market, the exclusivity of the games, the diversity of the platforms supported, the nature of the subscription content, particularly in place in the platform marketplace. Xbox Game Pass, which offers more than 100 titles just as Apple expects to, includes a range of popular titles within proven franchises, although it not surprisingly skews toward titles from Microsoft's own game studios. Indeed, adding to the Game Pass lineup is likely one of the motivations Microsoft has had in beefing up its game studio activities.

In contrast, Apple was unusually frank in describing some of the rationale behind Apple Arcade. Unlike in the console world, where most of the market is driven by title-specific purchases, the mobile gaming market is driven by games that are free to download and are supported by advertising or in-app purchases. The latter in particular have been a scourge in terms of compromised gameplay. However, it is difficult for paid titles to compete with attention with free downloads. That's where Apple Arcade comes in. The company hopes to drive exposure for high-quality titles that would otherwise get lost in the crowded app store. Its beacon: A new button in that app store that brings up a section devoted to those games.

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Apple's pastiche of games that will populate Arcade showed off their diversity and visual allure, and included developers expressing enthusiasm that Arcade will enable them to produce profitable experiences that might otherwise falter commercially. But that exposes a paradox. Apple has lined up Tier 1 iOS game publishers to support arcade. But Apple Arcade cannot reach critical mass if it becomes an Island of Misfit Games. As a contrast, Xbox Game Pass includes proven franchises such as Gears of War, Halo, and PlayerUnknown's Battlegrounds. Arcade was presented as more of a collection of critically acclaimed art house films than box office smashes.

There are other business model issues to resolve. Apple has said that games on Arcade will be exclusive. That certainly helps with the incentive to sign up for Arcade, but it also means that developers will be foregoing not only the revenue they might have been able to acquire by going it alone but that they may be forfeiting the right to port to Android, the Nintendo Switch, and other platforms.

As Oprah Winfrey noted as she addressed a crowd that once thrilled to another legend wearing round spectacles, the billion devices that Apple has in people's pockets make for a compelling draw. Even with the disadvantage of having to pay for a game upfront, iOS developers understand the power of the platform for paid games. Arcade exclusivity, plus the requirement that Arcade games be playable offline, could put a dent in multiplayer experiences. But Arcade games will be able to tap into different Apple platforms, beyond the iPhone, including Apple TV and, perhaps, one day, the Mac. In contrast, Microsoft will likely seek to extend the playability of Game Pass games with platform-independent game streaming via its Project xCloud technology, but that will require a constant and robust connection to the Internet.

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Ultimately, Arcade may not do much to shift the lion's share of revenue away from in-app purchase. Not only does that model lower the barriers to try, but it can include far greater upside from the so-called "whales" who spend heavily. However, Arcade could provide many benefits to Apple consumers, developers, and, of course, Apple itself. For one, it could make the difference for a developer on the fence about deciding whether a game that doesn't work well for in-app purchase gets published. It could also provide a strong alternative for parents who want to avoid exposing kids to more ads but who want predictable spending. And, consistent with Apple's other services, it provides a premium content experience that doesn't doesn't entail compromising experience or privacy via advertising.

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