Apple Arcade might give Chinese gaming companies a way to promote themselves abroad
Publishers suggest the potential for exposure through Apple’s new subscription service is greater than the revenue
Tuesday’s big Apple event wasn’t just about iPhones. The company took the wraps off Apple Arcade, a subscription service that costs just US$4.99 per month to play more than 100 new games with no in-game purchases, ads or tracking.
But Apple’s new gaming service won’t be available in the world’s largest mobile gaming market, China, when it launches in 150 countries on September 19.
That might not matter to developers. For some, the service could be a way to gain attention overseas in an increasingly crowded market. But others question whether it will be a lucrative endeavor.
Johnson Siau, from Hong Kong game studio Pixio, said he was concerned about Apple Arcade’s revenue-sharing model, but he was optimistic about it in the long run. And games that get on the platform now might get better exposure and maybe even a direct feature from Apple, he said.
“With more subscriptions at first, it'll drive more money into the developer program and that should build a positive feedback into more great Apple Arcade titles, thus maintaining the great lineup they have already,” Siau said.
Apple hasn’t made public how the revenue will be divvied up among developers. One industry watcher suggested it could go the Spotify route, doling out money proportionally based on time spent on each game. But at just US$5 per month per user, some developers are concerned how much will be left for them after Apple takes its cut.
“The numbers don't add up,” said Charlie Moseley, founder of Chengdu Gaming Federation. “It's not a good deal for developers, which is why I don't expect to see this library go past being a safe way for parents to restrict their kids to casual apps with in-app purchases disabled.”
The other numbers that don’t add up? The number of games in Apple Arcade. Apple already boasts 300,000 free and paid games in the App Store and 1 billion gaming customers (among 1.4 billion active Apple devices). There’s some concern that there’s just not enough incentive to get people to pay a monthly fee when there are already so many free games available on iOS.
“For mass market mobile gamers, there are essentially infinite free games for them to consume on mobile already, such that a US$4.99 monthly price point for content likely won't resonate as well… as they are satisfied with what is already available for them right now,” said Josh Burns, founder of games consultancy DigitalDevConnect.
This is the big difference between Apple Arcade and Apple’s other subscription services for music and video, he said.
Apple Arcade will likely appeal more to gamers who abhor free-to-play games, Burns noted. The problem with these games is in-app purchases, an important revenue source for free-to-play games, but one that can come across as intrusive and predatory, especially when children are involved.
Burns seemed more apprehensive about the appeal of Apple Arcade to the broader gaming market, saying he wasn’t sure gamers who usually play on PC or consoles would flock to the new service.
One big problem in Apple’s pivot to services is that it’s much harder to crack the China market in this area. Industry watchers say the tight content restrictions in the country is the likely culprit keeping the service out of the country.
But China also has a huge talent pool from which Apple can draw. In fact, Apple’s keynote event even had a Chinese game developer from a Shanghai-based studio unveil a new game on stage. The game was used to show off the GPU in Apple’s new A13 Bionic chipset.
Notably, it was not part of the Apple Arcade announcement.
To Burns, Apple Arcade has yet to make a compelling business case for developers. He points to similar services in the past such as Amazon Underground and KDDI in Japan. Both services struggled with their revenue model and, in the case of KDDI, a few games ended up capturing the majority of users’ time.
However, industry watchers agree that Apple Arcade, as the new kid on the block, offers opportunities for games get promoted and discovered. Games that can get on Apple Arcade now might enjoy long-term “favorable” treatment as launch partners in this new initiative, Burns said. Such indirect benefits can include future games being more prominently featured than others.
“For a premium mobile game developer, there's no better place to be right now considering the lackluster market interest in premium mobile games as a standalone download,” Burns said.
He also said the upfront payment from Apple in its pursuit of exclusive content could be significant given rumors that the company was spending hundreds of millions of dollars on Apple Arcade.
So maybe Apple Arcade isn’t what all developers are looking for right now. The service is still launching with more than 100 games, though. Will Chinese gamers ever get to enjoy this gaming buffet for one monthly price? Don’t bet on it.
“While it is not available today, we would like to bring the service to all App Store markets in the future,” Apple told Abacus in a statement.
Some think that’s an optimistic view.
“Considering all the logistics required to coordinate with more than 100 developers to secure the required approvals, I wouldn't be surprised if Arcade is never available in China,” Burns said.
And that’s just one of the hurdles. Even if the service were available in China as it exists today, there’s no guarantee of success.
“I doubt it will be successful in China, because the games offered through Apple Arcade are likely to not be the ones that China is interested in,” Moseley said. “Looking at the top games in China and in the West, you'll notice a large thematic discrepancy between them.”