However, Apple has managed to earn more money from gaming than the operating incomes of all these four gaming companies combined, in 2019.
Today, when we think of some of the biggest names in the game industry, Sony, Microsoft, Activision-Blizzard or even Nintendo come to mind.
This revelation was made during the recent antitrust trial against Apple. The exorbitant revenue was made possible thanks to the 30 percent cut it received from the developers on the games sold on its App Store. The report highlighted that it had a massive market share of over 55 percent along with really high-profit margins.
As reported first, Apple’s operating profits from games in 2019 totalled $8.5 billion, (based on WSJ analysis), exceeding the other four companies’ combined gaming operating incomes in the same year.
This is due to the fact that operating margins discussed in the trial didn’t include numerous joint costs that were associated with the App Store. The analysis included all of the game-related revenue but just a small section of the possible costs.
Apple further stated that the claims were not exactly that and the actual figures were actually much higher than that. According to the report, gaming-based figures was around $2 billion more than the operating profit generated from games during the same year by Sony, Activision, Nintendo and Microsoft. Data from other gaming companies were taken from company filings, whereas an analyst estimated the revenue figures for Microsoft.
According to analysts, gaming makes up the bulk of App Store revenue, based on data from Sensor Tower that estimated Apple received $15.9 billion in revenue from the App Store for the year — 69 percent of this figure was from gaming. Data from court proceedings revealed App Store had an operating profit of $12.3 billion for the year — a fifth of the total operating profit.
In the ruling of the Epic-Apple lawsuit, judge Yvonne Gonzalez Rogers highlighted that while Apple enjoyed a considerable market share of over 55 percent and extraordinarily high-profit margins, Epic failed to prove that Apple was an ‘illegal monopolist.’ Epic Games has now appealed the decision.
The numbers were revealed during Apple’s recent antitrust trial with Epic Games, showing that, thanks to the 30% cut it gets from all games in the app store, it makes more money than the biggest developers who actually make their own games. From gaming alone, Apple made $8.5 billion in profits in the fiscal year 2019. This is according to a Wall Street Journal analysis quoted during the trial and disputed by Apple.
The company says that the actual profits are much lower, since the analysis included all the game revenue but did not take into account the costs of running the App Store. However, other reports put Apple’s profits at an even higher number.
According to an earlier report via Sensor Tower, Apple’s total revenue from the App Store is at $15.9 billion, so that $8.5 billion from gaming would be 69% of the total. The Epic Games antitrust case failed however to convince the judge, who ruled that Apple, while it does have a “considerable market share of over 55% and extraordinarily high profit margins,” it’s not a monopoly since there are multiple game subscriptions available.
Epic Games was not content with this conclusion and already filed for an appeal.