Apple is reported to be launching its own gaming app at this year’s Worldwide Developers Conference (WWDC). This app is expected to be an integrated game launcher that combines in-game achievements, leaderboards, social features, and may be pre-installed on several of Apple’s hardware devices.
In recent years, due to opposition from game companies and pressure from regulators, Apple’s App Store and its commission model have been restricted in regions such as Europe and the United States. The App Store has gradually lost its monopoly position in iOS and other systems and now faces competition from third-party platforms.
Against this backdrop, there are reports that Apple will introduce its own gaming channel, possibly as a response to these changes. Analysts suggest that, with the App Store being under siege, Apple is focusing on gaming, specifically operating this category of content, and adding social elements to increase user engagement in order to break out under the pressure from regulations and third-party platforms.
Will Apple Launch Its Own Gaming App?
This app is a game launcher integrating in-game achievements, social features, and more, which is expected to be pre-installed on iPhones, iPads, Macs, and Apple TVs by the end of this year.
The app will reportedly feature new game content recommendations written by Apple’s editorial team, provide access to game categories in the App Store, and promote Apple’s subscription service, Apple Arcade. It will also replace the Game Center, a social network launched in 2010 that failed to make a significant impact.
I reached out to Apple for confirmation of the above information, but did not receive a response by the time of publication.
Apple Arcade is a game subscription service launched in 2019, aimed at providing ad-free, in-app purchase-free, high-quality gaming experiences for iPhone, iPad, Mac, and Apple TV users. Players can pay a monthly fee to play all the games on the platform without restrictions.
Earlier, in 2010, Apple launched the Game Center, a social platform for games that included features such as friend lists, leaderboards, achievements, and multiplayer matching. However, due to a lack of community activity and slow updates, its influence gradually waned.
Additionally, publicly available information shows that Apple recently acquired the independent game studio RAC7, marking its first acquisition of a game development studio. RAC7, which only has two members, previously released the indie games “Dark Echo” and “Splitter Critters,” with its most recent work, “Sneaky Sasquatch,” being an exclusive game for Apple Arcade. Going forward, this studio will become an internal Apple team.
Apple responded to foreign media by stating that this acquisition was a special case and that the company believes it will help the team further develop on Apple Arcade, while continuing to collaborate with third-party game studios of all sizes.
Platform Monopoly Controversy
Before these plans were revealed, Apple had just lost its lawsuit against Epic Games. The California court ruled that Apple could no longer charge fees for transactions made outside of the App Store.
Due to the closed nature of iOS, Apple requires all apps on its platform to be distributed through the App Store, prohibiting direct downloads from developers or third-party app stores. All apps distributed through the App Store must be approved by Apple and must comply with its billing policies. Based on this, Apple takes a commission, typically 30%, on all paid transactions on the platform.
In 2020, U.S. game company Epic tried to bypass Apple’s 30% commission by allowing players to pay directly within the “Fortnite” game, leading to its removal from the App Store. This sparked a nearly five-year-long lawsuit between Epic and Apple.
Epic CEO Tim Sweeney revealed in an interview that the legal fees in the Epic v. Apple case had surpassed $100 million, and when considering the revenue losses from the game’s removal, the impact on Epic over the five years amounted to $1 billion or more.
The cross-platform battle royale game “Fortnite,” which was removed from the App Store, was a cash cow for Epic, contributing 97% of its revenue in 2018 and 88% in 2019.
In response to the dispute, a U.S. court ruled that Apple could not prohibit developers from providing links or other information to guide users to make purchases outside the Apple App Store. Apple subsequently started charging a commission of 12% to 27% on external purchase links.
On April 30, a U.S. district court judge ruled that Apple could not charge a commission on purchases made through iOS app channels outside the App Store, nor could it block users from making external purchases by warning about the risks of external links or other means.
Apple submitted an emergency motion to the appellate court to suspend the new rules until it could complete a full appeal. On June 4, the court rejected this motion.
In January 2024, Apple announced that, in compliance with the European Union’s Digital Markets Act, it would open third-party app stores to European iOS users and allow them to set third-party browsers as the default. It also reduced its commission rate from the original 30% to 17%.
The Significance of a Proprietary Gaming Channel
Although Apple continues to appeal, the monopoly advantage of tech giants in their own platforms has been weakened in recent years, forcing them back to the starting line, competing alongside third-party platforms.
For Apple, losing its platform exclusivity is undoubtedly a blow.
According to Apple’s Q4 fiscal results for 2024, its services revenue was $96.17 billion, a 13% year-on-year increase, accounting for 25% of total revenue. In comparison, its hardware revenue (iPhones, iPads, Macs, wearables, etc.) saw only slight increases or declines, with overall revenue rising by only 2%.
The restrictions on the App Store and its commissions in Europe, the U.S., and other regions have undoubtedly throttled the growth of Apple’s most significant services business. Against this backdrop, it was reported that Apple is preparing to launch its own gaming channel.
The writer thinks that in many countries and regions, Apple needs to relax restrictions on third-party app stores, meaning that the App Store is no longer an exclusive marketplace. At this point, Apple’s self-built gaming channel would separate gaming, an area with strong in-app purchase potential and significant revenue, into its own section in the App Store. Moreover, the platform is exploring the possibility of adding more social elements, transforming the store into a social space to enhance user engagement, and resisting the entry of third-party app stores. From a long-term perspective, such a social space could retain mid-level users who frequently switch between Android and iOS due to a lack of disruptive innovation.
“A gaming app store with high popularity, strong user engagement, and high download conversion rates can effectively attract game developers and indie game creators,” the writer believes.
He also thinks that the 30% “Apple tax” will not disappear, stating, “At least before the new app store monetization model emerges, the ‘Apple tax’ will remain. Moreover, there is also a more fragmented and expensive ‘Android tax.’ The reason why the ‘Apple tax’ is targeted is simply because Apple is the main player, while the ‘Android tax’ involves various phone manufacturers and app stores, which are harder to complain about or sue collectively.”
It is understood that, for a long time, the revenue-sharing ratio on domestic Android channels has typically been around 50%, with only a few top products able to negotiate separate deals. However, with the rise of third-party app stores and the increased influence of content creators, hardware channels are beginning to wane.
It is worth noting that the gaming channel Apple is rumored to launch will also cover the Mac system. The writer believes, “If this gaming channel is also introduced on Mac, it could indeed increase engagement for Mac games, but the effect would not be significant. To truly apply pressure on the PC gaming market, Apple may need to implement cross-platform data synchronization between Mac and iOS and promote games that are launched and updated simultaneously on both systems, allowing players to seamlessly switch devices based on their needs.”