When Apple debuted its Apple Arcade gaming service last year, it was with the promise of a utopian future for mobile gaming — a service that would provide some of the best games that iOS developers could come up with, bankrolled and curated by Apple, and, best of all, entirely free of the kind of ads, in-app purchases, and “freemium” models that have otherwise been plaguing mobile gaming in recent years.
While not everybody has been completely sold on the idea, for many paying $5 per month for a collection of over 100 ad-free and IAP-free games has been like a breath of fresh air in the midst of the nickel-and-diming that even mainstream game developers are engaging in, and not only did Apple Arcade promise to bring a collection of unique new games to subscribers, but it also helped indie game developers flourish in an environment where it was becoming harder and harder to get noticed and get any kind of meaningful return on investment from the App Store.
A big part of this is the fact that Apple has invested big bucks in supporting game developers who were invited to participate in its Apple Arcade program, effectively setting itself up in many ways as a game publisher. The monetization strategy for developers became clear and was in fact almost too good to be true — let Apple pay for the development of their games up front, subject to certain rules and restrictions, and then let Apple worry about how to make this money back from its own Apple Arcade subscriptions.
In other words, unlike other services like Apple Music and Apple News+, Apple Arcade wasn’t built on a revenue-sharing model where publishers are paid based on engagement. Instead, Apple handed developers a bag of money upfront to build their games, and then released them under its own Apple Arcade banner, recouping that investment directly from the $5/month that subscribers pay.
Not ‘Engaging’ Enough
Of course, what Apple giveth, Apple can taketh away, and while admission to Apple Arcade for developers was by invitation only in the first place, it seems like the company is now reworking its strategy a bit to make sure that it’s supporting game titles that will actually make subscribers want to stick around for more than a month or two.
According to Bloomberg, Apple has actually begun cancelling contracts that it had previously signed with developers, abruptly halting some games that are already in development while looking for other titles that it hopes will be more “engaging.”
Multiple sources have told Bloomberg that several game studios found their contracts with Apple terminated earlier this year as Apple informed them of its new approach, suggesting that the game titles they were developing no longer aligned with the company’s goals.
During calls back in April, an Apple Arcade creative producer told more than one developer that their upcoming games didn’t have the level of “engagement” that Apple is looking for, since it wants to make sure it can keep users “hooked” and continuing to pay for the service, rather than signing up, playing a few games to kick the tires, and then moving on, possibly even before they’re out of their free trial.
‘No Huge Hits’
As Bloomberg notes, Apple Arcade has been getting a steady stream of new games each month, and is up to 120 titles now, however none of them have really been a huge hit.
Although it isn’t clear if that’s what Apple was originally looking for when it debuted Apple Arcade, since its initial approach to the service was to provide a wide breadth of games so that there’d be something for everybody, it could also simply have been testing the waters to see what was going to stick.
Regardless, the strategy change suggests that Apple hasn’t been seeing the kind of subscriber growth that it had hoped for. Apple doesn’t release Apple Arcade subscriber numbers — revenue from the gaming service is bundled into its extremely broad “services” category that includes everything from its Apple Music to its multi-billion-dollar search placement deal with Google — but this recent shift along with the fact that Apple has started offering a second free trial month suggests that many users aren’t sticking around.
In a statement to Bloomberg, Apple of course touted the strength of Apple Arcade, but also added that it always expected it to be something of a work in progress, adjusting its lineup as it went along based on subscriber feedback.
The vision has always been to grow and evolve the Apple Arcade catalog, and we can’t wait for our users to try the games developers are working on now.Apple
Apple has also obviously built escape clauses into its contracts to allow them to be cancelled on relatively short notice, although this is par for the course in the publishing industry in general, from books and magazines to music, TV shows, and video games, and while some developers found themselves facing financial difficulties after suddenly finding their projects dropped by Apple, the company has paid studios based on the development milestones they’ve already hit, and has also told them that it would be very happy to work with them on future titles that do align with Apple’s new goals.
As great as Apple Arcade is in principle, it’s still a very new way of approaching mobile gaming, so it’s understandable that some course corrections may be required to help the service flourish, however at the end of the day it’s clear that Apple remains committed to its success, having not only already spent hundreds of millions of dollars on game development, but continuing to drive forward new gaming features in iOS 14, tvOS 14, and macOS Big Sur, including multiuser play on the Apple TV, the return of Apple Game Center and support for even more advanced third-party game controllers.