Is Apple entering the on-demand cloud gaming arena?

Giving the gamers away?

It’s the question everyone is asking: is Apple entering the on-demand cloud gaming arena? Or did they just force gamers to ditch iPhone and iPad for Android?

I write this as an Apple user of more than 20 years, with a passion for the games industry which spans a lifetime. There is much to be said for a desktop, laptop, tablet, phone and even a watch that work seamlessly together, take significant steps to look after user data, and allow access not just to Apple’s selection of software and services but also to those developed by third parties. In the days when I was co-developing and testing apps, it was also significantly easier to release a stable product on iOS, because the majority of Apple’s devices share a unified interface. Android, Windows Phone and Blackberry were a minefield of differing screens, button layouts and processors. So, if you’d asked me any time before last week whether I’d move from iOS to Android, the answer would have been an unequivocal ‘No.’

A lot can change in a week…

There is no denying Apple has always had a rocky relationship with the games industry. Xbox’s system-selling Halo franchise may have started life on the mac, but if you were even moderately interested in games, you looked elsewhere. Things began changing with the birth of iOS, even though in its infancy, developers’ calls for better tools and more RAM to run their games seemingly fell on deaf ears.

Fast forward to 2019 and Apple was not only producing some of the most powerful handsets and tablets on the market, it also launched its own games service, Apple Arcade. Finally, Apple seemed to be taking the industry seriously and, with more than 2.5 billion gamers across the world, a purported $152.1 billion spent on games in 2019 and the mobile games market growing +10.2% year on year to $68.5 billion last year, so they should.

However, whilst Apple Arcade features some excellent games, there is very little to rival the games available on Xbox, PlayStation, Switch or PC. Enter Google and Microsoft…. and this is where it’s all gone horribly wrong.

Streaming games in the cloud is now becoming a reality. Google Stadia, whilst experiencing well-publicised teething problems at launch, is live. Microsoft’s xCloud has been in trials for months and – renamed as Xbox Game Pass cloud gaming (because that rolls so easily off the tongue) – will be available in beta to all Game Pass Ultimate subscribers from September 15th 2020. Both promise console-quality games and AAA-Blockbusters, via the mobile and tablet you already own. That is as long as they aren’t an Apple device. Because Apple doesn’t want to play. Or does it?

When pressed on its position, Apple told Business Insider “Our customers enjoy great apps and games from millions of developers, and gaming services can absolutely launch on the App Store as long as they follow the same set of guidelines applicable to all developers, including submitting games individually for review, and appearing in charts and search…In addition to the App Store, developers can choose to reach all iPhone and iPad users over the web through Safari and other browsers on the App Store.”

It’s a strange response, which unfairly seems to apply exclusively to games, not to music or TV/film, and has caused a huge backlash from the industry.

This all comes at a time when Epic Games has also gone to war with Apple for removing its hugely popular game Fortnite from the App Store, after Epic introduced a new in-game payment system which circumvented the 30% fee certain developers are required to pay Apple for in-app purchases. Incidentally Apple isn’t alone in this instance, with Google also removing the app from its Play Store on Android. The key difference is Android allows for apps to be purchased and installed via other means, whereas Apple does not, effectively locking out the 350 million registered Fortnite players from playing on iOS.

So, why is Apple treating games developers and its own game-loving customers this way?

A patent revealed at the end of last week may hold the answer. Published in Europe, the patent was entitled “Enabling Interactive Service for Cloud Rendering Gaming in 5G Systems.” It seems to point to Apple preparing its own form of 5G cloud games service for its upcoming 5G iPhones. A service which would prove highly lucrative if it follows in the footsteps of its other huge success story, Apple’s App Store, which is said to have supported $519 billion in billings and sales globally in 2019. Apple has also already invested hundreds of millions in its own Apple Arcade games platform. If gamers are allowed to bypass the App Store, Apple Arcade and its possibly-forthcoming 5G cloud rendering game platform in preference for using their phones to stream games via services which are paid for elsewhere, the potential for lost revenue for Apple is significant.

In 2019, Apple reported there were 900 million active iPhones in use. That is a lot of potential customers for Apple’s own games services. However, that is also a lot of potentially unhappy customers who, in the short term at least, are locked out of Fortnite, Stadia, Xbox Game Pass Cloud Gaming and the like. Xbox Game Pass alone has 10m subscribers, come upgrade time, how many of those will now ditch Apple in favour of something compatible with their favourite pastime and the subscription they are already paying? And what of potential loss to developers? Is Apple’s stance throttling the sector?

At this moment in time, without an alternative for gamers in place, it’s a risky move on Apple’s part. There are four possible outcomes: that the aforementioned 5G cloud rendering service is comparable to the competition, and so Apple sails on undamaged; that the various anti-trust cases against Apple will force them to allow the services on their devices; that consumer lethargy means that their business will remain relatively unaffected; or that this is the beginning of the end of their dominance in the market.

And if that last point turns out to be the decision of the masses, I no longer own an iPhone and can no-longer benefit from my key pieces of hardware working seamlessly together, will it really be worth me sticking with Apple for my desktop, laptop, tablet and watch?

James Dodd

James@trippassociates.co.uk

Martin Tripp Associates is a London-based executive search consultancy. While we are best-known for our work across the mediainformationtechnologycommunications and entertainment sectors, we have also worked with some of the world’s biggest brands on challenging senior positions. Feel free to contact us to discuss any of the issues raised in this blog.