When two technology giants announce subscription gaming services within a week of each other, you know something’s up.
Of course, there are plenty of differences between Google Stadia and Apple Arcade. (Though technically Google has yet to officially announce a subscription, it's expected to adopt such a model for its new streaming service).
But, as with any subscription model, the core business proposition for both is the assumed ability they can offer their customers the opportunity to receive much more value than is priced within the recurring monthly cost.
Pricing is a multi-facet subject, typically anchored to the a la carte value of the particular service or content being offered or bundled.
When it comes to a mass market consumer media subscription, however, the sweet spot looks pretty clear: $9.99 a month and/or $99.99 a year.
That’s not to say Apple or (more likely) Google couldn’t start higher than similar gaming services such as EA Origin Premium ($14.99 a month/$99.99 a year) or PlayStation Now ($19.99 month/$99.99 a year). As Netflix is now finding, it’s better to start high and discount (or re-bundle) than attempt to increase the price of an existing subscription.
Anyhow, price is just a lever to drive the key performance measure for any subscription service; capturing the largest proportion of your total addressable market.
Paid games are often critically acclaimed but competing with free is hard, so even the best have only reached a smaller audience.Apple press release
After all, once a company has committed to and invested in operating such a service, every additional customer signed up and retained post-breakeven is pure recurring profit, month-on-month. That’s why companies (and shareholders) love successful subscription businesses.
And this is where the individual dynamics of Apple Arcade and Google Stadia as they relate to scale and vision need to be considered.
The Apple take on gaming
Despite games generating the largest category share of the App Store’s much-touted $120 billion in lifetime revenue for developers, Apple has never been very enthusiastic. And it’s an attitude that’s only hardened since the free-to-play business model become predominant.
Instead, ongoing changes to the App Store, such as more curation, have always highlighted the quality and value of paid games. In that context, the announcement of Apple Arcade is the continuation of a now decade-old attitude.
The big concern with this approach is it’s more of a top-down imposition of how Apple would like App Store gaming to be, than meeting the unfulfilled needs of consumers.
Most mobile players seem very happy to play games ranging from Candy Crush Saga, Brawl Stars and Pokemon Go, ignoring those pesky in-app purchases and ads.
There will be some gems within the 100 exclusive titles Apple Arcade promises, certainly.
But even the inclusion of the likes of Ustwo (Monument Valley), LEGO and Will Wright isn’t likely to generate widespread excitement, and certainly not amongst the kids/family audience with which some commentators think Arcade will play well. And the less said about fillers such as Sonic Racing and Frogger in Toy Town the better.
The deals being offered to developers to support Apple Arcade are fantastic. But they’ll need to be to ensure the service offers the content that will convince gamers to subscribe.
Similarly, no doubt, the deals being offered to developers to support Apple Arcade are fantastic, once-in-a-generation fantastic. But they’ll need to be to ensure the service offers the sort of content that will convince gamers to subscribe.
It’s also interesting to note these will all be exclusive new games “not available on any other mobile platform or in any other subscription service”.
This could enable Apple to promote Arcade as the place to play large-form, high profile PC and console games on your Apple TV, Mac or iPad, alongside more bite-sized mobile games without ads or IAPs. It would also make the business case stronger in terms of the financial value offered by Apple Arcade as subscribers would be getting access to games priced up to $50.
It would only require the inclusion of a couple of such ‘big hits’ for Apple Arcade to be said to have ‘paid for itself’, albeit at the potential cost for developers of cannibalising some PC/console sales if this mode of adoption takes off.
Nice idea, wrong market?
Yet it’s not clear whether Apple Arcade will appeal to mobile gamers, who even on Apple devices have proven themselves highly adverse to spending a couple of dollars on games.
Remember the fuss surrounding Nintendo’s $10 paywall for Super Mario Run? Conversely, an Apple-Nintendo agreement, however unlikely, to offer Mario Kart World etcetera exclusively through Apple Arcade would be a different proposition.
But back in the real world, “paid games are often critically acclaimed and beloved by the people who play them, but competing with free is hard, so even the best of these games have only reached a smaller audience,” commented Apple in its Arcade press release.
“With the simplicity of a single subscription, Apple Arcade will bring games like these to the App Store’s more than one billion gaming customers.”
The concern with Arcade is it’s more of a top-down imposition of how Apple would like App Store gaming to be, than meeting the unfulfilled needs of consumers.
The first part of the argument is not controversial. Ustwo’s Monument Valley - the most popular paid mobile game of recent years - generated a mere $25 million in lifetime revenue. Some F2P mobile games do that every month.
The issue comes with the phrase “simplicity of a single subscription”. Yes, it is more simple to click through one payment box but when that decision is going to cost $100 a year, it seems logical most people will think harder about it than a one-off $5 purchase.
Brutally put, subscriptions work for some media but it’s not clear it works to connect games and non-core gaming audiences.
Still, for Apple it is clear how it can influence that decision; it can price lower and ensure it highlights a lot of new, pretty-looking games every month. Throw into the mix a regular selection of decent PC/console games and it could fairly hope to entice some of the five million or so people who bought a Monument Valley game into a subscription.
What’s harder to see is Apple Arcade breaking into double-digit millions user numbers; at least not unless the service eventually finds its home as a subscription that’s actually used to encourage users to buy the latest Apple hardware.
“Upgrade to the new iPhone and get Apple Arcade free for six months,” may be its ultimate sweet spot.
The bigger picture
In every respect, Google Stadia is a very different beast.
It’s a highly disruptive replacement service that looks to persuade gamers to sign up for a subscription that will remove the need to spend hundreds of dollars on a console and $50 per game.
On that basis, the value proposition is much clearer than with Apple Arcade, which isn’t a replacement service, rather a bundling service of content Apple believes gamers could (or should) care about.
Hence, assuming the streaming service actually works at scale, Google Stadia could easily be priced at $30 a month/$250 a year.
What’s harder to consider, however, is whether Stadia will work as a channel for existing games or whether it’s actually a service, not for new games per se, but for a new style of gaming.
The clue here seems to be the name. Stadia is about performance and spectating; sometimes being part of the crowd and sometimes the star. Of course, in this, it reflects how gaming continues to disrupt itself from an origin of premium solitary single-player content to free, always-on, always-available, streaming and esports.
If Stadia’s potential is ever fulfilled, games will be exploded into a stream of possibilities, smeared across all screens.
No doubt, Stadia will technically be able to handle anything from Fortnite to PUBG and FIFA to Apex Legends.
But even business and legal issues aside, it feels as if it’s designed for something more - the next wave of games, which will be highly nonlinear and mass participatory, persistent and ephemeral, at times synchronous, at other times asynchronous, sitting somewhere between current co-op modes, battle royale and classic MMOs.
So, forget the ideal that the data centre becomes the console. If Stadia’s potential is ever fulfilled - and it may be a decade away - games will be exploded into a stream of possibilities, smeared across all screens, the way signposted by a nest of deep links from friends, influencers and a new generation of dungeon masters.
Journalistic hyperbole perhaps, but - to me at least - that’s the very real difference between Apple Arcade and Google Stadia, despite their shared business model.
One seeks to turn back time to recreate a golden age of mobile games that never really existed for a niche audience. The other isn’t about gaming at all but looks forward to where gaming could go; vapourising the hardware and the game, and leaving us with communities - that’s everyone with a screen and an internet connection.
I know which vision I’ll be signing up for.
Find out more about the business of games at Pocket Gamer Connects Seattle on May 13th to 14th.