Omdia Analysis: How tech companies' revenue streams influence their video game strategies

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GAFA constituents (namely, Google, Amazon, Facebook ,and Apple) can broadly be split into two camps – those that are reliant on advertising, and those that aren’t.

Most notably, Facebook is almost entirely reliant on ads. Its M.O. has typically been to first build an audience and then move to ad-based monetization – this is what it did for Facebook and then, years later, Instagram. And this is set to influence their strategy within games – both within and outside of the VR ecosystem where it already enjoys a leadership position through Oculus.

Similarly, Google is also heavily reliant on advertising and its position as a global leader in digital advertising suggests that in-game advertising could become a more important revenue line in the future. The company’s ownership of YouTube also gives it an excellent platform to expand into other new interesting areas of games-based advertising, such as esports and even a potential move into dynamic in-game advertising through Stadia.

Although advertising is not currently a huge part of Amazon’s business, it is one of its fastest-growing segments and will continue to be over the coming years. As Amazon moves further into ad-supported video services – including Twitch – it will continue to innovate around esports video advertising, while its Luna cloud gaming service gives it an opportunity to experiment with new kinds of in-game ads.

Apple is the least ad-reliant of the GAFA companies and, although it does operate an advertising business, the company has positioned itself in staunch opposition to many typical methods of tracking, targeting and delivering personalized advertising across digital devices, and has made moves to limit such techniques’ effectiveness on Apple devices. While this is a boon for consumers, it has made ad-based monetization of iOS games more difficult, impacting the top-line of developers and publishers. Apple’s movement towards subscription gaming with Apple Arcade makes even more sense within this context.

You can find more information on Facebook Google, Amazon, and Apple's revenue percentages--and how they impact their business strategies--right here.