Gaming revenue is on an uptrend and is expected to top 200 billion dollars in 2022 after recovering $192.7 billion in 2021. Lockdowns that were in place during the pandemic and consumer spending served as positive catalysts for the sector.
Apple’s in-game boon: Apple Inc. AAPL was ranked third on the list of public companies with large contributions to gaming revenue.
Cupertino’s gaming revenue was $15.3 billion in 2021, up 17.7% year-over-year, Statista said, citing Newzoo. Incidentally, the console manufacturer Xbox Microsoft Corporation MSFT earned $12.9 billion in gaming revenue during the year.
The Chinese tech giant Tencent Holdings Limited TCEHY and Japanese consumer electronics giant Sony group companySONY took first and second place respectively. While Tencent increased its revenue by 9.9%, Sony’s fell by 2.3%.
Source: Newzoo via Statista
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Tencent’s international title update “Clash Royale” and “League of Legends” saw strong engagement and revenue, with the latter being cross-promoted through the Netflix Inc.. NFLX show “Arcane”.
Source of Apple’s gaming revenue: Apple’s strong position in the games market should come as a surprise, as it doesn’t make game consoles or make games.
Apple launched a video game subscription service called Apple Arcade in September 2019. It’s the closest the company has come to gaming. Through this service, the company offers a collection of mobile games, including Arcade originals, classics, and App Store favorites. The subscription costs $4.99 per month, and games available through the service are ad-free and can be purchased through the app.
Apple takes a 30% share of all in-app purchases made on the App Store. In 2021, mobile gaming revenue grew by 12.5%, according to data from Newzoo.
From an earnings perspective, Apple’s position in the gaming market is enviable. In 2019, Apple generated $2 billion in incremental operating profit from games that the combined operating profit of Nintendo Corporation Limited NTDOYMicrosoft, Sony and Activision Blizzard, Inc. ATVIaccording to Visual Capitalist.
This is easy enough to understand because unlike game developers who have to foot the bill for creating the game, most of what Apple does as App Store commission goes straight into its bottom line.
This is precisely why Epic Games, the developer of Fortnite, is at odds with Apple. The Fortnite developer has asked Apple to allow out-of-app payments or reduce the commission it charges game developers.
Microsoft’s proposed deal to buy Activision also poses a threat to Apple’s positioning in the games market.
Apple closed Friday’s session up 4.08% at $149.64, according to Benzinga Pro.