Apple Expands Game Content to Boost Services Growth

Apple's expanding game content portfolio is expected to drive its user base and aid growth in its Services business, which accounted for 29.2% of third-quarter fiscal 2025 sales and grew 13.3% YoY to $27.42 billion. The company's strategy of adding new games and introducing features like the Apple Games app and challenges is expected to boost its game content portfolio. However, AAPL faces stiff competition from Electronic Arts and Take-Two Interactive in the gaming space. The stock has dropped 7.3% YTD and is trading at a premium with a forward P/E of 29.85X.

Apple Inc. (AAPL) has been bolstering its game content portfolio, a move that is expected to drive user growth and aid the expansion of its Services business. The company's strategy of continuously adding new games, such as NFL Retro Bowl ’26, Jeopardy! Daily, and My Talking Tom Friends+, is anticipated to significantly impact its user base. Apple Arcade, which currently offers more than 200 games, continues to grow, with recent additions including Play-Doh World, Worms Across Worlds, Let’s Go Mightycat!, and Everybody Shogi [1].

At this year’s Worldwide Developers Conference, Apple introduced the Apple Games app, which allows players to enjoy all their games in one convenient place. This app introduces challenges and new ways to compete with friends in score-based showdowns, further enhancing the user experience [1].

The Services business accounted for 29.2% of third-quarter fiscal 2025 sales, growing 13.3% year-over-year to $27.42 billion. This growth was driven by a double-digit increase in paid accounts, as well as the expansion of Tap to Pay and Wallet services, along with strong demand for Apple TV+ content [1].

However, Apple faces stiff competition in the gaming market from companies like Electronic Arts (EA) and Take-Two Interactive (TTWO). EA benefits from strong performance across EA SPORTS, Apex Legends, and catalog titles. In the first-quarter fiscal 2026, full-game net bookings climbed 27% year-over-year, driven by robust digital downloads [2]. Take-Two Interactive benefits from strong demand for NBA 2K25, Grand Theft Auto, Zynga titles, and mobile games. Recurrent consumer spending grew 14% year-over-year and represented around 83% of net bookings, highlighting its monetization strength [2].

Despite the competition, Apple's stock has dropped 7.3% year-to-date, underperforming the broader Zacks Computer and Technology sector’s return of 13%. The stock is trading at a premium with a forward 12-month price/earnings ratio of 29.85X compared to the sector’s 27.71X. Apple has a Value Score of F, indicating that it may be overvalued [1].

References:
[1] https://finviz.com/news/154879/apples-expanding-game-content-to-aid-services-growth-whats-ahead
[2] https://www.nasdaq.com/articles/apples-expanding-game-content-aid-services-growth-whats-ahead