Apple Spending $500 Million+ to Fund Apple Arcade Game Development

Amidst Apple’s unveiling of new premium video and news services last month, one announcement that came as a bit more of a surprise was the unveiling of Apple Arcade — a new subscription-based gaming service that promises to provide over 100 new and exclusive games for a single monthly fee without forcing users to endure the pain points of in-app purchases and advertising.

While Apple hasn’t yet said much about the service — it doesn’t even have a price tag yet — we do know that it’s supposed to launch in the fall, and will include exclusive, never-before-seen games from legendary creators like Hironobu Sakaguchi of Final Fantasy fame and Will Wright, the developer behind the SimCity franchise.

We also know that Apple isn’t just creating a new tier of the App Store here that any developer can simply submit an app to. Apple has made it clear that it plans to not merely curate games for Apple Arcade, but actually actively participate in their development. 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.

Now a new report by The Financial Times provides additional insights on exactly how much Apple is willing to commit to the success of Apple Arcade — over $500 million, or several million dollars for each of the 100+ games that the company has selected for the initial launch of the service this fall. By comparison, this is more than half of the budget that Apple originally committed to producing original content for its Apple TV+ service — although most analysts agree that Apple has since exceeded that amount. Of course, with Apple TV+, the company is also funding only “dozens” of shows, as opposed to the “hundreds” of game titles that it’s hoping to release with Apple Arcade.

Although Apple Arcade is a bit of a moonshot on Apple’s part, many industry analysts have been predicting that subscriptions are the future of mobile gaming. In fact, as gamers become more fatigued by the inordinate advertising and demands for in-app purchases, Apple is uniquely positioned to offer a breath of fresh air in the form of quality games that make no financial demands on users other than a flat monthly subscription fee for the service as a whole.

That said, as subscription gaming on mobile gains steam, it’s also going to be critically important for Apple to secure the kind of exclusive deals that will be needed to make Apple Arcade a success, and that means pouring money at developers to get them on board and help them build quality titles.

Interestingly, however, sources say that Apple isn’t demanding complete exclusivity in the longer term. While developers are being asked to release their games initially on Apple Arcade only, “after a few months of exclusivity” they will be free to release their games on non-competing platforms like PCs and consoles, although it appears that their agreements will still preclude them from releasing on the Google Play Store or within other subscription gaming bundles like Microsoft’s Xbox game pass.

Although Apple is committing a lot of financial resources to developing premium titles for Apple Arcade, it doesn’t seem to be taking any major risks in terms of the developers themselves. The partnerships announced so far all come from developers with established track records in mobile gaming, many of whom have already released hit titles on the App Store. Sources also say that the advance money that Apple is paying developers “more than cover the cost of developing a typical indie game.”

While it’s mostly speculation right now, since Apple has yet to even announce pricing for Apple Arcade, analysts at HSBC have estimated that Apple Arcade could be pulling in $4.5 billion in annual revenue by 2024, exceeding predictions for Apple TV+ and Apple News+.

[The information provided in this article has NOT been confirmed by Apple and may be speculation. Provided details may not be factual. Take all rumors, tech or otherwise, with a grain of salt.]