Apple’s profits from gaming outweighed those of major game companies, according to a report, with Apple earning more from App Store games in its 2019 fiscal year than Nintendo, Microsoft, Activision Blizzard, and Sony combined, Report informs referring to Apple Insider.
Analysis from the Wall Street Journal put Apple’s operating profits derived from gaming in 2019 at $8.5 billion.
The report claims the gaming-based figure is approximately $2 billion more than the operating profit generated from games during the same 12-month period by Sony, Activision, Nintendo, and Microsoft. The gaming companies' data stemmed from company filings, while Microsoft's figure was from an analyst estimate.
Gaming makes up the bulk of App Store revenue, the analysts offered, taking into account data from Sensor Tower that estimated Apple received $15.9 billion in revenue from the App Store for the year, and that 69 percent of that figure derived from gaming. Using data from the court, it was implied the App Store had an operating profit of $12.3 billion for the year, accounting for almost a fifth of the overall operating profit.
Apple’s dominance, however, is under threat. Its position as the gatekeeper to the gaming economy places it at odds with Facebook Inc., Microsoft and “Fortnite” maker Epic Games Inc. as each company prepares for the next frontier in technology: virtual reality, according to the Wall Street Journal.
Another threat to Apple’s profit engine comes from China. New rules in that country aim to decrease the number of hours young people can play games. Three of the top five grossing mobile games in the App Store are from China, including the No. 1 title “Honor of Kings” from Tencent, which generated an estimated $2.5 billion last year from users, according to analytics firm Sensor Tower.
Globally, customers spent a total of $45 billion on mobile games through the App Store in fiscal 2020, according to Sensor Tower. Almost 31% of that money was spent in China while 26% was in the US; Apple’s cut came out to an estimated $13.5 billion or about 5% of Apple’s overall sales that year of $275 billion. Fifty percent of Apple’s revenue came from hardware sales of iPhones.