Analysis: Apple's operating profits from games in FY 2019 totaled $8.5B, $2B more than the combined profits of Sony, Activision, Nintendo, and Microsoft
The analysis puts Apple’s FY2019 game operating profit at $8.5B, above the combined total attributed to Sony, Activision, Nintendo, and Microsoft, elevating Apple from a major games distributor to the most profitable named player in the comparison.
Sony, Microsoft, Nintendo, and Activision face a profitability benchmark that is materially different from the market-size rankings in the 2018 public-company games leaderboard.
Second-order effects
The comparison makes platform economics a more consequential competitive measure for Sony and Microsoft alongside their game-content and hardware strategies, because Apple’s reported profit lead comes without being grouped with a single console ecosystem.
Game publishers such as Activision gain a sharper view of the value captured by the platforms that distribute games, strengthening the commercial importance of access to large platform audiences.
Third-order effects
If this profit pattern persists, gaming industry power will be measured increasingly by the ability of platform operators to capture transaction and distribution economics, not only by ownership of hit games or hardware.
The concentration highlighted in the public-company games market data would then extend from revenue share to profit capture, increasing the strategic divide between platform owners and content suppliers.
The trend: Gaming is becoming a platform-profit business in which distribution owners can capture more value than individual console makers and publishers.
The key difference is that Sony, Microsoft, Nintendo and Activision make games. Making games is hard, risky, and requires investment. It's much more profitable to just put up a toll both in front of the creative work of others, which is Apple's “innovation” here. https://twitter.…
Hmmm...does that work in reverse? “Epic didn't build a game engine. They built a toll booth in front of developers' creative work and called it innovation.” (I'd argue that both are wrong.) https://twitter.com/...
@thomukas1 I think Apple is still too bound to fingers on a surface, which has been their saving grace for almost 2 decades now. Check @HandPhysicsLab on Oculus Quest to see some such interfaces today with hand tracking...
apple's vr solution is going to have awesome hardware to be sure, but the way they dominate the market will be in software + media. none of the major media players have native oculus apps and the app library is nice, but not robust enough for mass market adoption
In 2021: The biggest hotel in the world owns no hotels. The largest taxi company owns no taxis. And the most profitable gaming company makes no games. https://twitter.com/...
@MiklosMahanahan My advice is to set up your own pillow store and compete with them. This depends on there not being a global pillow monopoly that prevents anybody from opening competing pillow stores. For legal advice, contact a pillow antitrust attorney.
@TimSweeneyEpic When a great game that is using Unreal engine is released, we appreciate the “developers' creative work” and also the engine it is running on. Apple also built, marketed, sold and protected the hardware and software environment the “developers' creative work” is r…
@Adzwings That's circular. Nobody goes to the App Store because they just like hanging out there like mall kids. People go there solely to get apps and games. Apple doesn't make games. They're just a middleman and prevent all other stores from competing.
@TimSweeneyEpic Hello Timothy. I am in need of advice on forcing Costco to carry a product I have developed without paying them a cut of my profits. You and the My Pillow Guy seem to be my only hopes, but for some reason his Twitter appears down. Please advise. @TimSweeneyEpic #m…
Apple didn't build a videogame business. They built a toll booth in front of developers' creative work and called it innovation. https://twitter.com/...
Apple is “one of the world's largest videogame companies.” It makes a profit of $8.5 billion on games, more than Microsoft, Sony, Activision Blizzard, and Nintendo combined. That's with a margin of nearly 80%. https://www.wsj.com/...
Apple makes more profit on video games ($8.5 billion a year in 2019) than Sony, Activision, Nintendo and Microsoft combined. It's profit margin on its own App Store, where it charges developers fees it claims are necessary to run the store, is nearly 80% https://www.wsj.com/...
As Judge Gonzalez Rogers accurately noted, Apple is charging the gamers (70% or so of its App Store commissions) to subsidize Wells Fargo (and other makers of apps that aren't subject to Apple's commission, such as Amazon, Uber...). Courts won't change it quickly, lawmakers might…
You can crap on mobile games all you like and some for good reason, but facts are facts. They are the largest gaming industry out there. Wow. “Do you guys not have phones?” https://twitter.com/...