Despite the fact that Apple does not make video games or manufacture consoles, it made more in profits from games distributed through its Apple Store in 2019 than competitions Nintendo Co, Activision Blizzard Inc., Xbox maker Microsoft Corp., and Playstation maker Sony Corp combined.
Apple’s gaming profits through App Store topped competitors in 2019
As per the Wall Street Journal, the reason the tech giant is able to rake in more profits than actual game developers is the App Store. Since sideloading apps across Apple’s ecosystem is impossible, the App Store is the only marketplace game developers can use to publish games and process in-game transactions for iPhones and iPads. Apple takes a 30% cut of all app sales and in-game purchases made through its platform.
In 2019, the tech giant raked in $8.5 billion USD in profits from games than Nintendo Co., Activision Blizzard Inc., Microsoft Corp., and Sony Corp.’s combined operating incomes, according to the WSJ.
Apple said Friday the disputed operating margins come from an analysis that doesn’t include many joint costs for the App Store and results in margins that it describes as being too high because it includes all revenue but only a fraction of the costs. During the trial, Apple vehemently denied the accuracy and during public court testimony Mr. Cook took issue with the margins as well.
Even though Apple is not a video game developer, its position as the gatekeeper to the gaming economy has made it one of the largest video game companies around the globe. However, the company’s position of dominance is under threat. Apple’s legal battle against Fornite developer Epic Games recently ended with a verdict in its favor. However, federal judge Yvonne Gonzalez Rogers also ruled that Apple must allow developers to inform users of alternative payment methods and even link to their own transaction systems within apps.
The risk for Apple is that its role as the gatekeeper between the gaming world and its more than 1 billion iPhone users as well as the fee it collects as the middleman could be disrupted—whether by legislation, court order or regulatory action.
Even though Apple and Epic’s year-long legal battle has reached a conclusion, the tech giant’s alleged problematic behavior regarding its App Store has prompted a number of antitrust probes and increased scrutiny from lawmakers and regulators worldwide who are seeking to limits its power.