Where Apple Arcade Fits in Apple's Services Portfolio

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Apple Arcade, the new subscription gaming service from Apple (AAPL) - Get Report , launched two weeks ago. For $4.99 a month users get access to over 50 exclusive games without the annoying ads or in-app purchases.

TheStreet's Katherine Ross sat down with Zev Fima, Research Analyst for ActionAlertsPLUS, to discuss where Apple Arcade fits into their investment thesis. Here is what he had to say:

"It's a recurring revenue stream, so that'll add a larger multiple and it has a higher margin than the overall business. So as it grows, we're looking at higher overall business margins. And for us we look at Apple Arcade is just another service that they can sell users so that every month they can pull in a little bit more and it makes the ecosystem a lot stickier. So the switching costs are higher."

RELATED: Apple Arcade Feels a Bit Like Streaming Services in Their Early Days

RELATED: Consumers Win as Google Play Pass and Apple Arcade Roll Out

Ross also talked to Will Hershey, CEO and Co-founder of Roundhill Investments, who manages esports ETF (NERD) - Get Report to discuss how big the potential market is for the service. Here is what he had to say:

"When you look at mobile gaming, you're talking about 2 billion gamers worldwide. I mean, that's just an amazing number and you actually have a breakdown that's very different from more hardcore games. It skews about 50% female, and actually the average mobile gamer is over 30 years of age. So it's a very different audience, but a wide audience that Apple's going after here."

Watch the video above to see what else they had to say about Apple Arcade and be sure to stick with TheStreet for more on Apple and the markets.

Apple is a holding in Jim Cramer's Charitable Trust Portfolio, ActionAlertsPLUS.com. Want to know when Jim buys or sells AAPL? Sign-up for a free trial here.

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