Stop us if you’ve heard this one before – according to the newest round of unsourced and presumably totally inaccurate rumours, Apple is looking at entering the video games market again with a brand new console. It’s a tale almost as old as Apple’s comeback; once every few years, along will come someone who will talk about Apple exploring the potential of a brand new gaming console.
So here’s the thing – we’re not going to explore whether or not this report is accurate. It almost certainly isn’t, and it doesn’t deserve more consideration than that. What I do find interesting, however, is this rumour’s resilience, particularly when juxtaposed next to Apple’s immense brand value and ability to totally dominate any market they enter. The question I want to explore is: would a hypothetical new Apple console actually gain any traction in the market?
Before we proceed, it is important to remember that this is an exercise in hypotheticals. Even assuming an Apple console is a real thing secretly in the works somewhere in the trillion dollar company, we don’t know anything about it. What kind of console would it be? What’s the hardware power like? What are the specs? What features and functionality? What is the controller like? What are the online services like? What engines does it support? What media does it use for game distribution? What is the pricing like? Does Apple have an in-house game development initiative to go along with it? What games might this system even have?
Given how much we don’t know, one might find this entire exercise futile. The reason I find it interesting however is because of how much we can still speculate even with all these unknowns. This ultimately comes down to balancing two very known trends we are all familiar with – the state of the console gaming market, and the state of Apple.
Let’s talk about that gaming market first, then. The video game consoles market is a dead-end. It’s seen almost no growth in 15 years (in fact in terms of userbase, it’s seen a contraction in the last few years), and no new company that has attempted to enter it since Microsoft with the original Xbox more than 20 years ago has found even the slightest bit of success. And it hasn’t just been small Kickstarter funded consoles such as Ouya either – we have had no less than Google (a company at least as big as Apple) attempt to have a go at starting up and establishing a brand new ecosystem for the core gaming market that consoles dominate, and totally fail.
Even the companies that are entrenched in the console market suffer – it took Microsoft years and billions of dollars of losses before they could reconcile the financial reason for Xbox’s existence to begin with. Sony lost out literally all the profits they made with their first two consoles with the PS3, which lost them so much money the entire company was brought to the brink of bankruptcy. Nintendo went from literally their most profitable period ever as a company to losing money for the first time ever thanks to the twin failures of the Wii U and the early years of the 3DS. Even companies that are already established in this market suffer – you have to front upfront losses and costs for years, after having spent billions in research and development, tack on another few hundred million (if not more) in marketing and logistics, and after all that, hope your product ends up selling at scale enough to make the entire endeavour worth it – and many consoles never reach that stage to begin with.
Why would any company want to enter a market like this? The truth is, most wouldn’t, and that’s why so few have tried after Microsoft and the Xbox. If the (then) richest company in the world couldn’t make it work for so long, then what chance does anyone else have? And yes, Xbox is profitable now – but it took 20 years. Were the 20 years of losses and beatings in the market worth it? Why bother with the gaming console market at all? In economics, there is a basic concept called opportunity cost, which, put simply, says that any endeavour by a profit seeking entity shouldn’t just be profitable in and of itself to be worthwhile, but also be more profitable than all other alternatives that the company could have attempted with those resources and assets. Put simply – why would any company bother spending decades, and billions of dollars, in trying to finally gain a profitable product line in a fiercely competitive, stagnant market that even entrenched players struggle with, when you could just use that one to do literally anything else? Smartphones, tablets, laptops, desktops, smartwatches, TV, movies, cars, literally anything would be a better use of those resources at this point. The PS4 and Nintendo Switch are considered exceptionally successful game consoles, both having sold over 100 million units over their lifetimes so far. Apple sells 100 million iPhones in three months (and those have far higher profit margins to boot). Why waste time on consoles? Especially when you are already making more money from games thanks to iOS than Sony, Nintendo, and Microsoft are put together?
I do think, however, that if for whatever perverse reason they did decide to give it a go, an Apple console would have the best shot at success a newcomer has ever had in the market, and the reason is simple. Apple’s brand power and marketing muscle is immense. The sheer hype of a new Apple console would be enough to sell a few million (if not tens of millions) upfront, which would then generate enough support from third parties to create more customer buy-in, perpetuating the cycle and establishing an Apple console as a successful and self-sustaining ecosystem. At least hypothetically – there are two major factors this would be contingent on.
Here’s the most basic problem – any games system is only as good as the games on it. It literally doesn’t matter how powerful or capable or novel your proposition is with your platform. The Xbox was the most powerful console the world had ever seen when it hit the market, it struggled against the PS2 because the PS2 had a pace ands volume of content it simply could not match. Stadia was a very promising pitch – it was a new games platform with a lot of interesting differentiators and value proposition, from convenience and low cost, to the social features (such as integration with video-on-demand and streaming) and frictionless medium of distribution for games. It didn’t matter, because no one is interested in your games platform unless you have, you know, games. And games that justify to the market at large the considerable costs (financial or otherwise) that come with the need to buy-in to a whole new ecosystem to begin with.
The question is, would Apple ever have an in-house production effort for games that could create exclusive content for this new console at a level enough that people would want to? Looking at how they handle games on iOS, the answer would appear to be no. It almost feels like Apple is more than happy to just be custodian of a profitable platform, without necessarily contributing to its success with their own games. However, there are multiple caveats here – firstly, and most importantly, we have seen that when Apple gets into a new creative industry with a concerted push, they do actually try to secure exclusive content. Look at just how many major shows and movies, with some of the biggest talent in the world behind them, are on Apple TV Plus. Look at how many exclusive songs they signed up for Apple Music. If Apple were to make an actual attempt at a game console, I think they would make sure to get exclusive content t- wether in-house, or made in collaboration with external creators. The amount of major exclusives they have been able to get for Apple Arcade (the aforementioned mobile gaming subscription service) already shows us that they would have no trouble getting third parties in their corner if it comes to that.
But then we come to a potentially even bigger question – what would the price be? Is Apple’s business model even compatible with how the games industry works? Apple does not like to sell products at a loss. One of the reasons Apple devices are high priced is because Apple makes a profit off of every single one of them. Now, this poses a unique challenge in context of the gaming market, because with game consoles, people expect costs to taper out at a certain point – as of right now that appears to be $499, but mass market consoles have almost always topped out at $399. Sony and Microsoft are able to manage this because they sell the consoles at loss. Nintendo typically does not like selling consoles at a loss (there are some exceptions when they have), and manages to keep low costs while maintaining profit margins by using cheaper and outdated hardware.
For Apple to sell a console at $399 or even $499, and for it to be profitable at the margins they enjoy, they would either have to forego their brand of premium hardware to be able to have a mass market palatable machine that still makes them profit, or… well, there is no or. That’s the only thing they can do. If they want to have a powerful machine that they can still sell at a profit margin, they would conversely have to look at higher costs.
But interestingly enough, Apple has inadvertently solved this problem already too. Apple’s in-house chips are incredible, boasting better performance, power, and efficiency than the x86 chips that power most Windows computers, as well as PlayStation and Xbox consoles. Take the current Mac mini for example – it sells for $699 (which is, yes, more expensive than any console should be), and it’s an incredibly powerful and capable machine. A more pared back version, that doubles down on processing power, and strips back the extraneous hardware and functionality expected from a computer but not a console, could presumably be sold for $500 or thereabouts. Apple may have to develop a version of their A-series and M-series chips specifically optimized for video games – but it isn’t out of the realm of possibility.
So the answer is: if Apple were to enter the market, they are positioned to have a powerful, premium console sold at a profit, while being somewhat reasonably priced, and getting a lot of exclusive compelling content. Put that way, yes, an Apple system could easily be a huge success – and again, let’s not forget to account for their sheer marketing muscle and the strength of their brand either.
Of course, as we have established several times, this is all a moot point, because of all the terrible decisions I can see any company making, trying to get into the console market is one of the worst ones. As we’ve already covered, it’s a stagnant market, with no stability, that can take years and billions of dollars to break into, all while Apple is already earning money hand over fist from video games without having to lift a finger. There will never be an Apple console – but if any company other than Sony, Microsoft, and Nintendo were to have a chance at making it work, it would be Apple, and no one else.
Note: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, GamingBolt as an organization.
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