How Apple Arcade Will Reshape the App Store

Today Apple is releasing iOS 13, the latest version of its mobile operating system. It’ll have some fun new features, like dark mode and a revamped Photos app. But its most consequential contribution might be Apple Arcade, a jam-packed new gaming hub that has real implications for how apps get made—and how you pay for them.

Even in a vacuum, Apple Arcade impresses. Five dollars a month will eventually net you access to more than 100 new games; several dozen will be available at launch, if the version that dropped in the iOS 13 beta is a reliable indicator. And these games are no cast-offs. The offerings include what looks like high-quality fare from established studios like Annapurna Interactive and Ustwo Games, of Monument Valley fame. The genres range from strategy and fantasy to absurdist golf. Some, like Sayonara Wild Hearts, seem wildly ambitious.

You can play as many of the games as you want, as often as you like. Your games will sync between your iPhone and iPad and Apple TV. You can download games for offline play, and share one subscription among five family members, all for less than the cost of a far-off parking spot at a minor-league baseball game. That’s a little crazy. (It’s an imperfect comparison because of the types of games involved, but Ubisoft’s UPlay Plus subscription costs three times as much on a PC.)

But it’s what Apple Arcade is missing that’s downright revolutionary: ads and in-app purchases, the lifeblood of the gaming app economy. By making a hard pivot toward one subscription to play them all, Apple has a chance to nudge an entire industry toward something a little more salutary than constant cash draws.

Pay to Play

Take a quick look at the top-performing apps in the App Store. Each of the top 50 grossing games has in-app purchases. Forty-one of the 50 most downloaded free games have them. Even among games that you pay up front for—anywhere from $1 to $8—37 of the top 50 will still pester you for more money as you play.

The app economy has run on these in-app purchases for years, with free-to-download games like Pokémon Go raking in billions of dollars—yes, billions, plural—from people who trade cash for in-game money to buy Pokéballs and other assorted digital widgets. The experience of mobile gaming has largely transformed into an endless series of payment-fueled serotonin hits. The chance to crush new and exotic candies is never more than a deposit away. Features like loot boxes, where you pay real money for randomized in-game rewards, have come under particular scrutiny lately, with critics arguing that it amounts to gambling.

Apple has been complicit in all of this, taking a 30 percent cut of all in-app purchases. (Google does this with the Play Store as well.) It has also, though, tried to promote apps that take a different road. In 2015, Apple dedicated an entire section of the App Store to “Pay Once and Play” games that, well, you get it. But outside of the occasional breakout hit, these games travel a tough road. Their “freemium” competitors, after all, at first appear indistinguishable from free, making them an easier sell. And so studios have gradually drifted away from paid games, making them a relatively endangered species.

“There was this wave of indie games in the last five to 10 years that had a bit of a surge, but it seemed like in the last two or three years that market was starting to fall apart a little bit,” says Ryan Cash, founder of Snowman, the indie studio behind the popular Alto’s Adventure series. “It just became harder and harder for those indie developers to make money doing experimental things. There are many developers I heard say they’ll never make a mobile game again, or if I do it’s going to be free to play.”

That exodus bears out in the numbers. In August 2014, 37 percent of App Store games worldwide were paid, according to app analytics company SensorTower. By last month, that number had dipped to 13 percent. Only 5.5 percent of games released in the App Store this August were paid, versus nearly 25 percent that same month five years ago. And revenue from paid games made up only 1.4 percent of overall App Store game revenue last month.

The introduction of Apple Arcade won’t suddenly invert those numbers. The biggest publishers will continue to push in-app purchases, and their customers will continue to pony up. “Free-to-play will continue to be the dominant model by which the majority of mobile game revenue is generated,” Sensor Tower cofounder Alex Malafeev says. “It has proven to be the ideal method of monetizing the type of ‘drop in, drop out’ experiences the majority of casual players want from their mobile devices.”

But Apple Arcade does create an avenue for indie developers to pursue ambitious games that people will actually discover and play. It snaps into existence a business model that rewards ingenuity over compulsion. And it rewards games that are purposefully constructed with iOS devices in mind—rather than a slapdash port over from another platform—making the overall experience of playing those games more coherent. All for fivse bucks a month. Not bad.

Arcade Fire

One Apple Arcade launch game, Where Cards Fall, has been almost a decade in the making. Sam Rosenthal first dreamed it up a student project at University of Southern California. He originally conceived of the puzzle game as an iPad-only experience, which you can still sense even from the trailer; it has an almost cinematic sweep and scope, the kind usually reserved for console and PC games.

Snowman came onboard four years ago, helping expand Rosenthal’s vision to the iPhone and Apple TV, as well. “The last few years, we’ve been thinking about this dilemma where we want everyone to experience it, but it’s certainly not a free-to-play game. It would be absolutely destroyed with ads,” Cash says. “We knew it was going to be a premium game. And the problem there is that Where Cards Fall is the kind of game that would probably be $20. Or if we made the game 99 cents, for example, it cheapens the value of it, and we’re still not going to reach the kind of people you would reach with a free-to-play game.”

For Cash and Rosenthal, then, the timing of Apple Arcade was auspicious. Rather than having to choose among multiple bad options to find a sustainable business model for Where Cards Fall, they now have a potentially very good one. It also stands to find a much, much broader audience than it ever could have on its own.

“Apple Arcade may get them in with a golfing game or another action game or a racing game, and then stumble upon Where Cards Fall and try it, whereas they wouldn’t necessarily have spent that money up front on their own,” Cash says. “It’s a new way for people to discover gaming.”

Photograph: Apple

There are pitfalls here, as well. Apple Arcade is a curated experience, meaning that plenty of developers will get left out. And the subscription is so affordable, it risks depressing the perceived value of high-quality games, or at least make people less likely to spend cash on paid games outside of its auspices. Why drop eight bucks on an intriguing indie now and then when Apple Arcade has more titles than you could ever hope to work through, for less?

Still, the net effect is this: It will incentivize developers to make games that are fun and engaging in their own right, and explore structures and narratives that don’t fit the free-to-play mold. That doesn’t mean every game in Apple Arcade will do so. Developers may be paid out in part based on time spent in a given game, which means they’ll still try to keep you within their worlds for as long as possible. (That’s the model Apple has favored with its News subscription.) The difference, though, is that the time you spend there will never cost you more than that subscription.

Importantly, it’s not just indies; big hitters like Ubisoft, Square Enix, Konami, Capcom, and Lego have all contributed to the Apple Arcade launch lineup. Yes, they’ll continue to make AAA cash cows as well. But they and smaller shops will have license to innovate, to follow paths that, before Apple Arcade, had seemed too treacherous.

“We’ve only scratched the surface of what games can be as a whole,” Cash says. “There hasn’t been enough experimentation. There’s definitely been some, but I think this is going to allow people to dive deeper, take bigger risks, and try different things.”

Well over a decade after the App Store launched, it’s about time.

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