FTT Galaxy
Mar 3, 20232 min
Apple may not develop or release games, but it is still the most profitable player in the gaming industry. The company's operating income from its App Store games was $8.5 billion in fiscal 2019, which is more than the combined operating profit of major gaming companies such as Sony, Activision, Nintendo, and Microsoft. This impressive performance is a result of the commissions Apple receives from games available on the App Store.
App Store's Revenue from Games
The App Store is the largest platform for mobile gaming, and Apple's share of the revenue from games is significant. The company's total operating profit from services in 2019 was $46.3 billion. If we estimate that games contributed around 20% of this revenue, then Apple generated about $9.9 billion solely from games in fiscal 2020.
Apple's Denial of the Calculations
During the trial with Epic Games, Apple's CEO, Tim Cook, denied that Apple had ever tried to determine the profit of the App Store as a whole, let alone the gaming direction. He claimed that the practice of not tracking business unit profitability dates back to Steve Jobs's desire to foster collaboration between the various divisions of the company. However, Cook did acknowledge that most of the App Store's revenue comes from games.
The Revenue Contribution of Top Gamers
It is reported that only 6% of App Store gamers brought 88% of all revenue in the gaming segment in 2017. On average, these people spent about $750 a year on games. The top 1% of gamers brought Apple 64% of all revenue in the gaming segment, spending an average of $2,700 a year.
The Dominance of Apple in the Gaming Industry
Apple's dominance in the gaming industry is a result of the popularity of its App Store, which has a vast selection of games available for download. The company's focus on user experience and its investment in technology have also contributed to its success in the gaming industry. Apple has also been successful in securing exclusive deals with game developers, allowing it to offer unique games that are not available on other platforms.
The Future of Apple's Dominance in the Gaming Industry
Apple's dominance in the gaming industry is likely to continue in the future. The popularity of mobile gaming is increasing, and Apple's App Store remains the largest platform for mobile gaming. The company's investment in technology and user experience will also continue to attract more gamers to its platform.