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Visualizing Apple’s Rise to the Top of the Gaming Business

Published

3 years ago

March 2, 2022

Omri Wallach

Article/Editing:

Visualizing Apple Dominance in Gaming

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The Briefing

Apple generates more operating profit from gaming than many of the most reputable gaming companies combined
Gaming revenues are driven by App Store fees

Visualizing Apple’s Rising Gaming Revenue

In 2020, Apple generated an estimated $13.5 billion dollars in gaming revenue—even though the tech giant doesn’t actually make any games or gaming consoles.

So how does Apple generate all this money from gaming? A key driver of Apple’s gaming revenue is the 30% fee it collects from all app spending, including in-app purchases, subscriptions, and premium app fees.

Through this significant fee structure, Apple has seen its gaming revenue steadily increase over the last few years. Here’s a look at the company’s estimated gaming revenue from 2018 to 2020:

Year	Apple’s Estimated App Revenue from Gaming	% of Total App Revenue
2018	$9.5B	71.7%
2019	$11.0B	69.0%
2020	$13.5B	66.7%

Note: For fiscal years ending in September

As the data above shows, a majority of Apple’s App Store revenue comes from games. And because of hefty fees, Apple made more profits off of games than some of the most reputable gaming companies who designed them.

For example, in 2019, Apple generated $2 billion more in operating profit than Nintendo, Microsoft, Sony, and Activision Blizzard—combined.

Why Apple’s Dominance is a Problem

The 30% fee is a financial burden for game developers who sell large volumes of in-app purchases. So, in an attempt to bypass Apple’s in-app payment systems, some developers have tried to redirect users to external payment platforms (a competitive tactic called envelopment).

Epic Games tried a version of this by integrating their own payment system into Fortnite. However, Apple then removed Fornite from the App Store, citing violations to the terms of their agreement. In response, Epic Games countered with a lawsuit, accusing Apple of monopolistic practices and antitrust violations.

While Apple ended up winning a majority of the court case, the tech giant was ordered to update their App Store policies, meaning Apple could no longer prohibit gaming companies from directing customers to alternative means of payment.

»>>Like this? Then you might enjoy this article on The History of Gaming, by Revenue Stream

Where does this data come from?

Source: Sensor Tower, via the Wall Street Journal