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At the beginning of August Apple (NASDAQ: AAPL) announced that new cloud gaming platforms such as Microsoftit is (NASDAQ: MSFT) XCloud project and Alphabet’s (NASDAQ: GOOG) (NASDAQ: GOOGL) Google Stadia would not work on iOS because it violated the rules of the App Store.
At the time, Apple claimed that in their current forms, xCloud and Stadia offered access to games that Apple could not directly review and approve. But after Microsoft publicly protested the decision, Apple recently softened its stance and revised its App Store guidelines.
Apple’s revised rules will allow Microsoft and Google to offer cloud-based games on the App Store, but each game must be approved and listed individually. Therefore, each cloud-based game must be installed from the App Store before adding it to the cloud-based gaming platform library.
Image source: Getty Images.
This structure could make sense for Apple as it allows it to approve each game and retain a portion of the in-game transactions for each title, but it is much less convenient for gamers. More importantly, Apple could take advantage of these rules to accelerate the progress of Microsoft and Google as it expands its own gaming ecosystem.
Following up on Apple’s own gaming ambitions
Last year, Apple launched Apple Arcade, a platform that offered unlimited downloads and installations of more than 100 games for $ 4.99 a month. Games can be played on iPhones, iPads, and Macs, and a player’s progress can be saved on one device and resumed on another.
Apple Arcade is not a cloud gaming platform, but a recent patent application suggests that you are interested in expanding your library with cloud-based games. That expansion would closely mirror Microsoft’s latest moves.
In its current form, Apple Arcade resembles Microsoft’s Xbox Game Pass. However, Microsoft recently included Game Pass with xCloud in its new Xbox Game Pass Ultimate plans, blurring the distinction between local installations and cloud-based games. In that context, it would make sense for Apple to expand the Apple Arcade library with cloud-based games.
Apple probably can’t directly ban xCloud and Stadia from the App Store without generating antitrust complaints, especially because of its conflict with Fortnite publisher Epic Games on in-app payments remains unresolved. But it can still hamper your progress by forcing players to download separate apps for each cloud-based game, which would make xCloud and Stadia seem less cohesive platforms than Apple Arcade.
Image source: Apple.
Expanding your walled garden
Apple’s long-term plan is to expand its services segment, which generated 19% of its revenue in the first three quarters of 2020, to reduce its dependence on iPhone sales, which accounted for 53% of its revenue. The expansion of that ecosystem, which includes Apple Music, Apple Pay, Apple TV +, Apple Arcade, the App Store and other services, will also attract users through each cycle of hardware updates.
The App Store generates the bulk of Apple’s service revenue, but the platform faces rebellions from high-profile companies like Epic, Spotify (NYSE: SPOT)and Rakuten (OTC: RKUN.Y) – who claim that their 30% cut of in-app transactions is too high. Spotify and Rakuten’s e-book unit Kobo also claim that Apple’s fees give their own services, specifically Apple Music and Apple Books, unfair pricing advantages over their apps.
Apple claims that its fees are fair and cover the costs of reviewing, approving, hosting and promoting apps from developers. However, mini-ecosystems for music, videos and video games are also emerging within the App Store, and it is likely that Apple wants to control those ecosystems with its own applications. Allowing Microsoft and Google to launch their full cloud gaming platforms on iOS would undermine that long-term strategy by driving gamers away from Apple Arcade.
What does this mean for Microsoft and Google?
Apple’s new offer to Microsoft, Google and other cloud gaming players is arguably better than a total ban, but it could still cripple its plans to reach iOS gamers, who make up 14% of the global smartphone market. , according to Counterpoint Research.
Meanwhile, Apple could launch its own cloud-based games on Apple Arcade, which could make it even more difficult for xCloud or Stadia to gain ground on iOS devices. Microsoft and Google can probably make up for their loss of iOS players with the growth of their Windows and Android-based platforms, but Apple’s reluctance to host its full-cloud gaming platforms highlights some weak points in the giant’s service ecosystem. technological.
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