Apple’s game operating profit is higher than that of Microsoft, Sony and Nintendo combined

Although Apple does not manufacture game consoles such as the PlayStation 5 and Nintendo Switch, or develop popular games such as Fortnite and Apex Legends, it is becoming the world’s largest gaming company. It is said that the revenue the Apple App Store earns from game apps was higher than the combined operating profit of famous game-related companies such as Microsoft, Nintendo, Activision, and Sony in the game sector in 2019.

Various important documents related to the game industry have been disclosed in accordance with the evidence disclosure procedure in the court battle between Apple and Epic Games, revealing details about Apple’s business. As a result of analyzing some of this publicly available information, it is said that the operating profit of Apple’s game sector in 2019 reached an estimated $8.5 billion, exceeding the combined operating profit of the game sector of Microsoft, Nintendo, Activision, and Sony during the same period.

However, Apple said the figures revealed during the discovery process were incorrect and too high. Specifically, it is a number that does not take into account the cost of developing and maintaining the App Store.

The reason Apple makes a huge profit in the game field is that it collects 30% of sales from third-party apps provided in the App Store as delivery fees. According to Sensor Tower, which conducted a mobile app market research, Oneshin, an open world RPG, surpassed $1 billion in sales on the App Store and Google Play within six months of its release, with 60% of this being sold through the App Store. In other words, as 60% of the $1 billion, or $600 million, is sold on the App Store, 30%, or $180 million, is paid as a fee to Apple.

According to Sensor Tower, global users will spend $45 billion on mobile games on app stores in 2020, of which 31% are from China and 26% from the US. Apple’s profit from this is estimated at $13.5 billion, or 5% of Apple’s revenue.

According to documents filed with the court, in 2017, only 6% of App Store game developers accounted for 88% of App Store game-related revenue this year. The top 6% of gaming users spend more than $750 per person per year on mobile gaming.

Activate, a technology consulting firm, forecasts that the global game market’s cumulative sales will double from 2016 and reach $198 billion in 2024. Most of this growth is driven by mobile games, with $103 billion of $198 billion in revenue coming from mobile games. Such advances in mobile games are expected to support Apple’s growth going forward.

However, Apple is not only attracting attention due to various regulations for violating antitrust laws, it is also facing a legal battle with Epic Games, and there is a good chance that it will face a situation in which it will have to revise its original stance on the App Store.

In addition, in China, which has recently led the game industry, strict regulations related to games, such as the rule limiting online play time for young people to three hours a week, are also considered as one of the concerns that will slow Apple’s game revenue. Related information can be found here.