5 ms·

> ... how is that different than the console makers[1]? the differences are subtle, and indicate more of a degree of monopolization than a binary determination

> ... how is that different than the console makers[1]? the differences are subtle, and indicate more of a degree of monopolization than a binary determination (as is always the case). the console market differs in at least these ways: (1) console makers don't set the prices for games, (2) console makers can't charge any amount of markup on the games, (3) gamers have more mobility among platforms (can switch to PC gaming, for example). overall, apple has much more control of the producer-to-consumer value chain, and they extract all the excess value in the value chain, which is why it's considered a monopoly even though technically there is competition via android and the play store. for example, and as noted in the article, producers absorb the cost of apple's markup, rather than passing it on to consumers, which indicates apple has all the pricing power in the relationship. this 30% markup is the rent-seeking behavior of concern in the article. apple's growth is no longer built on innovation, but rather on its market posiiton and ability to extract these rents without providing further, direct value. for investors this is a clear concern (but not necessarily a reason to dump the stock). for consumers, it's a clear concern--we've seen this movie before with the likes of ibm, at&t, microsoft, sony, etc.

scarface74 8y ago
1) console makers don't set the prices for games, (2) console makers can't charge any amount of markup on the games, (3) gamers have more mobility among platforms (can switch to PC gaming, for example). Apple doesn’t set the prices on games. In fact, they got sued for illegally collaborating with book publishers for trying to allow publishers to set their own prices - unlike Amazon. Apple doesn’t “charge a markup” they take a fee for selling games just like the console makers do for both their online games and physical disc. Back in the day, you had to get your media manufactured by the console maker. If it were truly a markup, Netflix and Hulu would charge more for subscriptions via iTunes than on their website. Users can change phones anytime they want to. In the US, you can switch phones every year or in some cases every 6 months.
sjwright 8y ago
> (1) console makers don't set the prices for games Apple doesn't set the prices for apps. > (2) console makers can't charge any amount of markup on the games Apple charges a flat percentage; console makers charge a unit cost. I don't know what it is but it's likely in the order of $5-10 per unit. This is likely much higher for digital game sales, and probably includes a percentage component. > (3) gamers have more mobility among platforms (can switch to PC gaming, for example). Apple device users have comparable mobility among platforms.
- scarface74 8y ago
  https://www.ign.com/articles/2006/05/06/the-economics-of-game-publishing https://www.ign.com/articles/2006/05/06/the-economics-of-gam... The final cost of publishing a game that we'll delve into is the distribution of the game, and that's the process of getting the game sold to wholesalers and then to retailers where you'll then have a chance to buy it. Wholesalers typically pay around $30 per game and with the costs of getting the goods to the wholesalers, any co-op advertising or marketing, and return of good contingencies being roughly $14 per game, the publisher is going to typically get $16 for every unit sold. This doesn’t include the $3 - $10 per unit that the game maker pays the console manufacturer. So the typical game maker gets less than 25% of the purchase price of a game. Compared to 70% on the App Store.
JackFaker 8y ago
I find this comparison to be very peculiar. Modern "smartphones" are marketed and function as general purpose devices that can also make phone calls. These pocket computers have more in common with laptops with integrated wireless radios and have been positioned to be or become a users primary general purpose computing device. In contrast, game consoles are designed to be appliances with a limited set of features that serve a specific set of functions. While it is true modern consoles devices are built with mainstream general purpose hardware the intended purpose of these devices is still limited even if it is possible to do more with them.

scarface74 8y ago

1) console makers don't set the prices for games, (2) console makers can't charge any amount of markup on the games, (3) gamers have more mobility among platforms (can switch to PC gaming, for example). Apple doesn’t set the prices on games. In fact, they got sued for illegally collaborating with book publishers for trying to allow publishers to set their own prices - unlike Amazon. Apple doesn’t “charge a markup” they take a fee for selling games just like the console makers do for both their online games and physical disc. Back in the day, you had to get your media manufactured by the console maker. If it were truly a markup, Netflix and Hulu would charge more for subscriptions via iTunes than on their website. Users can change phones anytime they want to. In the US, you can switch phones every year or in some cases every 6 months.

sjwright 8y ago

> (1) console makers don't set the prices for games Apple doesn't set the prices for apps. > (2) console makers can't charge any amount of markup on the games Apple charges a flat percentage; console makers charge a unit cost. I don't know what it is but it's likely in the order of $5-10 per unit. This is likely much higher for digital game sales, and probably includes a percentage component. > (3) gamers have more mobility among platforms (can switch to PC gaming, for example). Apple device users have comparable mobility among platforms.

scarface74 8y ago
https://www.ign.com/articles/2006/05/06/the-economics-of-game-publishing https://www.ign.com/articles/2006/05/06/the-economics-of-gam... The final cost of publishing a game that we'll delve into is the distribution of the game, and that's the process of getting the game sold to wholesalers and then to retailers where you'll then have a chance to buy it. Wholesalers typically pay around $30 per game and with the costs of getting the goods to the wholesalers, any co-op advertising or marketing, and return of good contingencies being roughly $14 per game, the publisher is going to typically get $16 for every unit sold. This doesn’t include the $3 - $10 per unit that the game maker pays the console manufacturer. So the typical game maker gets less than 25% of the purchase price of a game. Compared to 70% on the App Store.

JackFaker 8y ago

I find this comparison to be very peculiar. Modern "smartphones" are marketed and function as general purpose devices that can also make phone calls. These pocket computers have more in common with laptops with integrated wireless radios and have been positioned to be or become a users primary general purpose computing device. In contrast, game consoles are designed to be appliances with a limited set of features that serve a specific set of functions. While it is true modern consoles devices are built with mainstream general purpose hardware the intended purpose of these devices is still limited even if it is possible to do more with them.