The Financial Times is reporting that Apple’s coming Arcade gaming service could generate more revenues than its TV or news subscriptions. So perhaps its not surprising that the consumer electronics firm is spending hundreds of millions of dollars secure new games for the service.

“Several people involved in the project’s development say Apple is spending several million dollars each on most of the more than 100 games that have been selected to launch on Arcade,” the publication reports. “Its total budget is likely to exceed $500 million.”

That gaming would be important to Apple isn’t surprising—the annual market for video games is bigger than that of any other content type, including Hollywood movies—but the firm’s preview of its Arcade service was, if anything, lackluster and lacking in details. And Apple is entering a crowded field: Established video game giants like Nintendo, Sony, and Microsoft are all working on their own services, and new competitors like Amazon and Google will complicate things further.

My guess for Apple is that it will see the most success with the casual gamers who choose the iPhone, and that its reach with the more serious gamers who prefer consoles or PCs will be modest at best. But that mainstream audience is inarguably the biggest part of the market. The only question is how you monetize people who aren’t attuned to paying a monthly fee to do something that is now free.

Getting some good games is one possibility. And while Apple provided little evidence of good games, important partnerships, or even a basic grasp of this market during its recent press event, it certainly has the money to spend its way into this world. And part of Apple’s strategy, the Financial Times says, is to give developers more money when they create games exclusively for Arcade and forego rival platforms like Google Play. Developers who go this route can choose to bring their games to other platforms after a months-long exclusivity period.

And on the topic of spending money, it’s unclear what Apple will charge subscribers for Arcade. But that hasn’t stopped the analysts at HSBC, quoted by the Financial Times, from predicting that “Arcade revenues will grow from $370 million in 2020 to $2.7 billion by 2022 and $4.5 billion by 2024, by which time HSBC predicts it will have 29 million users paying $12.99 each month.” At that rate—a bit of a stretch, in my opinion—Apple will be earning more from video gaming than it does from its TV and news subscriptions.

We’ll see. The video game market is certainly big enough to warrant this attention. But it’s unclear if Apple will emerge as one of the key players or just an also-ran.

Tagged with Apple Arcade