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Consumers Win as Google Play Pass and Apple Arcade Roll Out

2019-09-24 413 Posted by 3uTools


Just a few days after Apple  (AAPL - Get Report) officially launched a game-subscription service, Alphabet/Google (GOOGL - Get Report) let us know that it doesn't want to be left out of the fun.


Confirming recent reports, Google has unveiled Play Pass, a subscription service that will initially provide access to more than 350 Android games and apps. The service is launching in the U.S. this week, with international launches promised "soon." It officially costs $4.99 per month in the U.S., but those who sign up by Oct. 10th can get it for $1.99 per month for the first 12 months. Up to five family members are supported per subscription.


The move follows the Friday launch of Apple Arcade, which will provide access to 100-plus games on iPhones, iPads, Macs and Apple TV set-tops. Arcade costs $4.99 per month after the end of a 1-month free trial, and supports up to six family members per subscription.


Like the titles offered by Arcade, all Play Pass games and apps feature no ads or in-game purchases. However, unlike Arcade titles, which are being financed by Apple and will be exclusive to Arcade on Apple's platforms, Google isn't financing the development of Play Pass titles, and they'll continue to be offered on the Play Store on a standalone basis. Google says it plans to pay developers based on how much subscribers engage with a particular title (echoes of subscription music services).


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The Verge states games account for about two-thirds of current Play Pass titles. Notable games include Risk, Star Wars: Knights of the Old Republic, Stardew Valley and Reign: Game of Thrones. Non-gaming titles include AccuWeather, photo-editing app Photo Studio Pro and voice-recording app Hi-Q Recorder. Google promises new titles will be added to the service each month.


Potentially working in Google's favor as it tries to get developers to embrace Play Pass: Developers monetizing titles via ads and in-app purchases often get less revenue per user on Android than they do on iOS. Analytics firm App Annie estimates that gross consumer spending was 80% higher on the App Store than on the Play Store in Q2, even though Play Store downloads were 170% higher.


Meanwhile, thanks in part to favorable demographics, ads shown on iOS devices in a particular market tend to have higher average prices than ads shown on Android devices in that market. All of this gives developers an incentive to see if Play Pass can boost their total Android revenue...even if it means competing with hundreds of other titles for a slice of Play Pass' developer payout.


On the flip side, whereas there appears to be no risk that Apple Arcade games will be pulled from the service, the fact that Play Pass titles aren't being financed by Google and aren't exclusive to the service raises the risk that some developers will eventually pull their titles if they conclude that they're not getting enough of a payoff.


But for now, both Play Pass and Arcade look like good deals -- especially for consumers who loathe the experience of having ads constantly pop up while using a game or app, or of getting hooked on a game only to subsequently get bombarded with attempts to sell in-game purchases.


Here, it's hard to overlook the fact that by launching cheap subscription services for large libraries of mobile apps that lack ads or in-app purchases, both Google and Apple are showing a willingness to cannibalize existing revenue streams. Both companies generate billions in annual revenue from the 30% cuts they get on paid app downloads and in-app transactions handled by their respective app stores, along with the search ads they run within their app stores. And in Google's case, the company also has a large in-app ad business (AdMob) that could potentially be affected by its subscription service.


Ultimately, Google and Apple might each be wagering that the user experience improvements that Play Pass and Arcade can respectively deliver for Android and iOS will have ancillary benefits that help offset the cannibalization of existing revenue streams. Consumers who are hooked on an app-subscription service tied to a particular mobile platform might be less likely to abandon it for a rival platform. And just maybe, they might spend more time on their mobile devices if they enjoy using them more on account of having to deal with fewer ads and attempts to sell in-app purchases.


Either way, there's a lot for smartphone users in general, and avid mobile gamers in particular, to like right now about the Play Pass and Arcade launches.


Source: thestreet

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