The news that Apple is shelling out a total of more than half a billion dollars to launch Apple Arcade comes via a report from The Financial Times, which makes it clear how important the new games offering is to Apple in spite of the splashiness surrounding the rollout of Apple TV+.
It also reflects the increasing competition in Silicon Valley for exclusive rights to the best content, as the iPhone maker bids against other new games platforms from Google and Tencent, as well as the console makers Nintendo, Sony and Microsoft.
The company also announced some titles for the service, including Beneath a Steel Sky, Sonic the Hedgehog, and games from Giant Squid, Cartoon Network, Snowman, Konami, Lego, as well as several titles from independent developers such as Boosa Studios Ltd, Annapurna Interactive and ustwo. While some were concerned that Apple was going to simply hand-pick its own exclusive development partners by invitation only, the company began inviting developers to apply for Apple Arcade a few days after the announcement, but the "application" process is really just an opportunity for game developers to put their titles up for Apple's consideration. This budget is lower compared to Apple's investment on the TV+ subscription which reached $1 billion.
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To ensure its launch is successful, the company is apparently spending $500 million Dollars.
As for the revenue model, it's believed developers will receive an ongoing stream based on how much time users spend playing their games. People aren't willing to pay good money for mobile games when there about a million free-to-play games available. All games on Apple Arcade are handpicked by the company and the option to play and access these will be limited to the company's devices.
The service is slated to launch later this year, with game titles expected to be announced this summer. Nevertheless, analysts at HSBC think Apple stands to generate nearly $400 million in Arcade revenue next year - and nearly $3 billion ($2.7B, to be exact) by 2022.