Apple Working on Games Service Subscription for the App Store: Report

Apple is working on a games service subscription for the App Store. This planned service would function like a 'Netflix for games', allowing users to pay a regular subscription fee for a host of titles. It seems that Apple has been talking to game developers since the second half of 2018 regarding the service and it's unknown how much it would cost or what games Apple would have. It has also considered working as a publisher for certain developers, which could mean the company would want to take on distribution, marketing, and other costs for certain titles.

A report from Cheddar citing "five people familiar with the matter" states that the service is in the early stages of development and Apple may decide against it. With iPhone sales slowing down, the company is looking at other ways to continue growing what with plans for a video streaming service, partnering carriers for Apple Music, and a news subscription service as well. 

"The vast majority of revenue coming out of the App Store is games," said Brandon Ross, an analyst at BTIG that covers the video game industry, in conversation with Cheddar. "Subscription has proven to be a successful way of monetising on mobile. It is completely unproven in games except for some minor success from Microsoft, Sony, and Electronic Arts."

Through this service, it could be possible for Apple to give developers more than the standard 70 percent cut from revenues. It takes a 30 percent cut of all App Store purchases though it lowers that amount by half after the first year of subscription, putting it in striking distance of the Epic Games Store's 88 percent, it's currently on PC with plans for an Android launch this year.

At the moment though, subscription services on mobile have been limited to local efforts that required partnerships with telcos. Mumbai-based Indiagames for example, ran its own games subscription service for feature phones called Games on Demand as did Nazara with Nazara Club while Android phones had the likes of Zapak and Gamesbond. With Apple possibly doing the same for iOS, it will be interesting to see how it works at the scale the company is known for. Particularly when big publishers like Ubisoft have voiced their concerns with existing subscription services like Xbox Game Pass and PS Now.

"I actually view subscription gaming as inhibiting our progress, and I'll give you two examples. One is with PS Now. I think that's a great technology for getting streaming content to people, but we don't make the money as a publisher — we don't make the same amount of money as we would even just putting stuff on sale. So why bother, from a publisher's standpoint?," asked Ubisoft's Chris Early in conversation with GamesBeat.

"The technology is great for a player. I can play anything anywhere instantly! It's awesome technology, which is inhibited by the business model. So charge a PlayStation Plus add-on to be able to stream any game you own to any device you own. That's a great service for the player. It's going to start people adopting that streaming concept in more places. You'll be able to get to a place where you have more people focused on streaming.

There's a similar challenge with your business model. We see it works. We're believers. You've capped it with a subscription plan, where publishers aren't able to make money. On the other hand, you could just sell the game and let people have the five-minute experience while it downloads, or pay you an add-on price to be able to continue to have fast access in many more places. With subscription it's just giving it away."

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