JP Morgan predicts Apple Arcade a $1b+ business by 2025
Watch your harmless Disney characters become psycho
Apple’s services seem likely to grow in strength, according to JP Morgan analyst Samik Chatterjee, who predicts Apple Arcade will contribute $1.2b in revenue by 2025.
Games become a billion-dollar business
It’s not just about Arcade. Chatterjee also thinks Apple Music will remain the second biggest global music streaming service, and that both Arcade and Music together will contribute billions in revenues by 2025.
“We estimate the addressable revenue opportunity for steaming revenues will be around $55 bn in 2025, led by a subscriber count of around ~900 mn subscribers,” he said.
“Interestingly, while most music streaming companies continue to see growth, the impact of a wider competitive landscape is starting to moderate growth for the largest incumbent companies, Apple Music included, in recent years at the expense of the most recent entrants,”
On Arcade, the analyst predicts 70 million subscribers by 2025.
But there could be more
What I’m uncertain about is the data used to underwrite these predictions. Not only this, but as Apple slowly moves toward introducing a new AR/VR platform, it seems inevitable the company will have key strategic partners working away to build immersive new environments for gaming. In the event it does so, what significance will these have on Chatterjee’s estimates? It’s possible not too much, given that the first generation devices will be expensive and the numbers sold limited, which also limits games used.
It does remain possible that Apple may exceed these estimates, however.
We should also ponder Apple’s constant move to expand its services base. Most recently, with the addition of Apple Pay Later, the company took another huge step to increase the breadth of services on its platform.
Services for survival
The company’s smart pivot to services over the last few years means it has built a growing ($19.8 billion in the last quarter, $68 billion in FY 2021) flow of high margin revenue.
Services now accounts for around 20 percent of Apple’s revenue and while the tech sell-off means AAPL stock continues to decline, it seems unwise to underestimate its innate business strengths.
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