Apple may not be the conventional gaming company as most know it. But Apple is really ahead of the pack on securing its future by double downing on gaming. This WWDC, Apple finally shows its true color. Let’s extrapolate how.
An unconventional gaming company
Even though it’s not obvious, Apple’s business is tightly connected to gaming. Only instead of creating games, Apple’s App Store is more of a digital version of GameStop for mobile. In 2021, Apple is the #3 games company by revenues, which grew 18% to $15B according to newzoo’s global games market report. MS may soon be #2 when Activision Blizzard acquisition completes. And, Apple may exceed Sony to stay on #3 in 2–3 years. Sure, $15B is not a big deal at the Apple scale Which is only 4% of Apple’s $369B revenue in 2021. Nevertheless, without games iPhone & iPad will be much less appealing as about 67% of apps in App Store are games. Besides, it’s not like every Apple business can offer a 78% operating margin. So, as Apple vs MS continues on a new frontier, how will one stay ahead of the game?
To rule them all
“We ask ourselves if this is a product that we would want to use ourselves…we love to work on are those where there’s a requirement for hardware, software, and services to come together because we believe that the magic really occurs at that intersection.” — Tim Cook on Apple Earning Call, Q1 2021 on deciding if to enter new markets.
The war of the mass-market gaming platform & ecosystem has long settled. Whereas, the “Netflix of games” is still everyone’s game. It’ll be huge in the long run for sure. But when is a billion-dollar question. In the meantime, what may be a good land-grabbing strategy?
There is no secret that Apple’s secret sauce has always been vertical integration. In 2020, Apple started a phase change to unify its app empire based on a new ARM64 SoC architecture. The last piece puzzle: Apple silicon/M1 in place & rolling. Which also makes Mac even more popular. This year, Apple finally reveal the huge & fast-growing opportunity to call the next big game developer for action.
Apple’s ecosystem is very valuable because the latest & greatest is a billion big every 3–4 years. The innovation scale & pace are the best in any class today. These structure characteristics allow Apple to create or capture value its rivals can not, aka competitive advantage. For example, games can be built once, and run “everywhere” with the best experience & lowest power & development cost. It’ll still take years for others to catch up if they can. Only, Apple will not stand still.
Another walled garden
It’s not just about the HW nor any app, it’s “Games, Games & Games”. Now that Apple has full control of the next generation of Heterogeneous Computing from the chip to the SW stack across devices. Apple’s walled garden for gaming will be eating more lunch of gaming incumbents.
Now, Apple developers can choose both in making their games in rich experience, and also scale to reach a billion users. Later, Apple may figure out a way to make “a hybrid circle” to make gaming local or streaming transparent to users & developers. And when it does, there are a few more dinosaurs who struggle to catch up.
For example, Apple announces Metal 3, not only making it easier to scale game graphic performance & power from iPhone to Mac, but also accelerating Machine Learning natively, such as Metal backend for PyTorch. Metal may be Apple’s “Direct X”. The new question is if MS is open enough to fully embrace the Direct X killer: Vulkan to fight the right battle before it’s too late.
Full Disclosure
The opinions stated here are my own, not those of my company. They are mostly extrapolations from public information. I don’t have insider knowledge of those companies, nor a whatever expert.
