Apple, aiming to move beyond the iPhone to drive sales, is reportedly spending millions of dollars to acquire new video games to be part of the subscription gaming service it will roll out later this year.
The Financial Times, citing several people familiar with the deals, reported the fact that Apple is spending so much money shows developers it is serious about the new Arcade game subscription service. The big price tag to acquire new video games also highlights the fact that competition is fierce to land exclusive rights to top content. Apple has stiff rivals in the gaming market. Google and Tencent — as well as Nintendo, Sony and Microsoft — are operating in the same area.
Apple announced Apple Arcade in March at a celebrity-filled event that included Oprah Winfrey and Steven Spielberg. The event was focused on showing off its TV+ platform. The aim is to drive more recurring revenue from online services. It comes as iPhone demand is starting to slow, particularly in China. Apple has been forced to cut prices in China and has seen sales plummet in one of the world's biggest mobile phone markets. To compensate, it has set its sights on services.
While some Wall Street watchers think Apple will become a serious contender in the gaming market, to kick it off it has to spend considerably now. The sources told The Financial Times Apple is spending several million dollars on each of the more than 100 games it will have in Arcade when it launches later in 2019. The budget for the games is expected to surpass $500 million, noted the report. In 2017 Apple spent $1 billion on original content for its TV platform. If developers agree to list their games exclusively on Apple they get more of an incentive, noted the report. After the games are exclusive on Apple Arcade for a few months, developers will be able to release their games to other game consoles and for the PC, noted the report.