Canada Markets closed

Apple Prices Arcade Aggressively: Should Gaming Players Worry?

Vasundhara Sawalka

Apple AAPL recently unveiled its subscription-based gaming platform, Apple Arcade, which will offer more than 100 new games beginning Sep 19. The service will be available to Apple device users for $4.99 a month.

The iPhone-maker’s aggressive pricing coupled with a strong content lineup is expected to be a game-changer. Apple Arcade is set to bring a curated selection of iOS titles, highlighting both familiar AAA franchises as well as emerging indie games.

The new service is likely to boost Apple’s footprint in the subscription-based game streaming space, which is currently dominated by established services from the likes of Electronic Arts EA, Microsoft MSFT and Sony SNE.

Notably, Microsoft’s Xbox Game Pass is priced at $9.99 per month while Sony’s PlayStation Now is priced at $19.99 per month. However, EA Access is priced similar to Apple Arcade

Moreover, relatively new services like Amazon AMZN Twitch, currently priced at $10.99 per month, might find it extremely difficult to match Apple Arcade’s rock-bottom price.

Notably, Apple’s Sep 10 announcement of new iPhones, iPad, Apple Watch 5, Apple TV+’s pricing and date as well as Apple Arcade helped the company reach $1 trillion market cap once again. Moreover, the company has returned 41.4%, better than S&P 500’s rally of 18.3% on a year-to-date basis.

Year-to-date Performance



Apple’s Solid Game Lineup Poses a Threat

Apple Arcade is set to offer games including Ballistic Baseball, Overland, Exit the Gungeon, Pac-Man Party Royale, Skate City, The Enchanted World, and The Brandwell Conspiracy among others.

Games from AAA developers like Konami's family-friendly Frogger in Toy Town and Capcom's underwater platformer Shinsekai: Into the Depths are expected to be released soon on Apple Arcade.

Moreover, EA’s SimCity franchise creator, Will Wright, is also rumored to be developing games for the service.

Although, Apple Arcade games are limited to iOS, Mac and Apple TV devices, users can download and play them offline. This enhanced accessibility is a key catalyst.

Competition Set to Intensify with Google’s Entry

Per Newzoo report, the global video game market is expected to generate around $152.1 billion revenues in 2019, up 9.6% year over year. Moreover, consumer spending on games is expected to witness CAGR of more than 9% between 2018 and 2022. This estimated increase in consumer spending bodes well for companies offering subscription-based services.

The solid growth prospects are attracting tech giants like Apple, Amazon, NVIDIA and Alphabet GOOGL division Google. The entry of the tech giants is expected to intensify competition for incumbents like EA and Activision Blizzard.

Apart from Apple, Google is a potent challenger, courtesy of its upcoming Google Stadia platform. Its lineup includes a ton of AAA heavy hitters as well as indie games including Assassin's Creed Odyssey, Cyberpunk 2077, Destiny 2, Doom Eternal and Watch Dogs: Legion, as well as smaller titles such as Gylt and Orcs Must Die! 3.

Google is also developing a basic version called Stadia Base, free for users, expected to be launched in 2020. Google Play Pass, which is rumored to be a $4.99 a month subscription service, is expected to compete effectively with Apple Arcade.

Zacks Rank

Apple, Microsoft, Amazon, Sony, EA and ATVI currently carry a Zacks Rank #3 (Hold).

Google parent Alphabet currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>