Sep 12, 2019

Here's Why Apple Will Charge Arcade And TV+ Unusually Competitive

After six months of anticipating, Apple has finally revealed Apple TV+ and Apple Arcade at its special event on Tuesday, where the company announced that its game subscription service will be launched on September 19th next week, whilst the TV+ will not become available until November 1. However, unlike Apple Music and News+ for $9.99 a month, TV+ and Arcade are trading at a discount of $4.99 a month.


So why the heck would Apple charge the two services unusually competitive.

For companies like Apple that have more capital reserves than many second world countries, it's not impossible to attract some game developers. Apple is believed to have spent $500 million on the Apple Arcade project as a guaranteed income, ensuring that the first game developers participating in the project will receive enough revenue, which is equivalent to buying game exclusive rights in another way.

There is not much of income in the $5 per month business model. Ideally, even if Apple Arcade has effectively reached 10 million subscription rates, its quarterly income for Apple would only be $1-2 billion. Compared to Apple's service revenue of more than 10 billion dollars in a quarter, this revenue really isn't that much.

So, "exclusive" is very essential to Apple. Apple isn't prepared to create cash from Apple Arcade. It needs to use Apple Arcade to create customers who like gaming and give them a reason to stay in the Apple ecosystem, therefore, Apple Arcade played a more "stabilizing" role, helping the iPhone maker maintain more customers. The same logic can be used for Apple TV+ streaming video service, making exclusive tv shows and movies for Apple device owners, and keep them locked in the ecosystem.

This is certainly a genius move If Apple really aims to fill the gap created by slower iPhone sales growth and persuade more consumers to try Apple TV+ or other services.

Nonetheless, it's not known if Apple's new trick is going to work. Global sales of smartphones have stagnated, and the trend towards more software automation, artificial intelligence, and technology globalization are not at all regulated by Apple. However, Apple's shift in this manner to cope with the new tendency is true to be commended.

Image Via Mikeshouts

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