The new offering, called Apple Arcade, was unveiled last month a part of a slate of new services, including as Apple News+ and Apple TV+. Apple did not announce pricing for either TV+ or Apple Arcade, nor specific launch dates for them, but both are expected to go live this year.
In the meantime, Apple is spending hundreds of millions of dollars to secure games to Apple Arcade, according to the Financial Times. The paper reported that Apple's budget for Apple Arcade exceeds $500 million for about 100 games that will be included in the service at launch, with that figure including incentives for developers to publish their games exclusively on Apple.
Although the Apple Arcade announcement wasn't as splashy as the star-studded TV+ reveal, some industry analysts believe that Apple's game service, which focuses on indie games rather than the blockbuster titles that dominate efforts by Alphabet (GOOGL - Get Report) and Microsoft (MSFT - Get Report) to launch game streaming services, could wind up being a hit.
In a recent report, HSBC analysts forecast that subscription revenues from Apple Arcade could outpace TV+ revenues within a few years, estimating that by 2024, game revenues could reach $4.5 billion by 2024, compared to an estimated $4.1 billion from TV+.
Mobile games could be fertile ground for a new subscription-based model, and Apple may also be in a strong position to execute a new gaming service given its installed base of 1.4 billion devices.
"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," Apple wrote in a blog post announcing Apple Arcade. "With the simplicity of a single subscription, Apple Arcade will bring games like these to the App Store's more than 1 billion gaming customers."
Mobile games are big business. According to research from App Annie, games accounted for 74% of worldwide consumer spend across iOS and Google Play in 2018, with total spend on iOS outpacing Google Play by 50%. At the same time, however, mobile games with upfront payments make up a small minority of overall spending on mobile games, compared to "freemium" or ad-supported games.
"With the subscription service, that's going to open it up to more monetization from these games," said App Annie's Amir Ghodrati. "People aren't as willing to pay up front for games on Apple, so having a venue for these games is going to be good for everybody."