Gaming revenue is on an uptrend and is reportedly set to top $200 billion in 2022 after fetching $192.7 billion in 2021. The lockdowns that were in place during the pandemic and consumer spending served as positive catalysts for the sector.
Apple's Windfall From Gaming: Apple, Inc. AAPL was ranked third on the list of public companies with big revenue contributions from gaming.
Cupertino's gaming revenue stood at $15.3 billion in 2021, up 17.7% year-over-year, Statista said, citing Newzoo. Incidentally, Xbox console manufacturer Microsoft Corporation MSFT took home $12.9 billion in gaming revenues in the year.
Chinese tech behemoth Tencent Holdings Limited TCEHY and Japanese consumer electronics giant Sony Group CorporationSONY took the first and second positions, respectively. While Tencent increased its revenues by 9.9%, Sony's fell 2.3%.
Source: Newzoo via Statista
Tencent's international titles "Clash Royale" update and "League of Legends" saw strong engagement and revenue, with the latter benefiting from cross-promotion through the Netflix Inc. NFLX show "Arcane."
Source Of Apple's Gaming Revenue: Apple's strong market position in gaming should come as a surprise, as it neither manufactures a gaming console nor makes games.
Apple launched a video game subscription service called Apple Arcade in September 2019. It is the closest the company has come to gaming. Through the 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 come with no ads and can be purchased in-app.
Apple takes a 30% share of all the in-app purchases made on the App Store. In 2021, mobile gaming revenue increased 12.5%, according to Newzoo data.
From a profit perspective, Apple's position in the gaming market is enviable. In 2019, Apple generated $2 billion more operating profit from gaming than the combined operating profit of Nintendo Company Limited NTDOY, Microsoft, Sony and Activision Blizzard, Inc. ATVI, according to Visual Capitalist.
This is quite easy to comprehend because as opposed to game developers which need to foot the bill for creating the game, most of what Apple makes as App Store commission goes straight into its bottom line.
This is precisely why Epic Games, the developer of Fortnite, has been at loggerheads with Apple. The Fortnite developer has sought for Apple to either allow payments out of the app 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 gaming market.
Apple closed Friday's session 4.08% higher at $149.64, according to Benzinga Pro.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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