Apple’s gaming rules limit number of games available on phones

Yahoo Finance’s Alexis Christoforous, Brian Sozzi and Dan Howley discuss the how Apple is limiting the number of games allowed on its iPhones and what impact this has on its rivals.

Video Transcript

ALEXIS CHRISTOFOROUS: I want to talk a little Apple now for a couple of reasons. Apple got an upgrade today from Deutsche Bank, stock is higher, but also there is a new report from Bloomberg that is highlighting an issue here with the Apple App Store. So Apple's current rules are preventing makers of game streaming services to actually get on that app.

What a time for that to be happening. I want to bring in our tech correspondent Dan Howley. Dan, what's your response to what's going on with Apple, and have they said anything yet publicly about it?

DAN HOWLEY: Yes, so this basically comes as a Bloomberg report saying that the reason why you're not seeing game streaming platforms from the likes of Google, via Stadia and NVIDIA via it's GeForce Now, and very, very limited games through Microsoft's X Cloud is because they can only license individual games, and the owners of those games have to be the ones to license them on the App Store.

So in other words, these services allow you to basically play games in the Cloud in mass. So if you have Google Stadia for instance, you can get access to x number of games provided through that service and then play them directly on your iPhone or iPad. Apple says that's a no no in their book, so they are not allowing that service.

Ditto for NVIDIA and it's GeForce Now and Microsoft. Microsoft's X Cloud only has right now a Halo game, and that's because Microsoft developer and publisher of that title. That's the only thing available. Now, on Android on the flip side, you can get access to those services without issue, and that's been something that you've been able to do for some time now.

And as the industry transitions more to this Cloud based gaming platform style, Apple is going to have to contend with developers and publishers saying, look, we want to get on your platform, you say you're not doing anything that would violate antitrust laws, but this seems to go against that entirely. So for Apple, it comes at a bad time. They have their own gaming platform called Apple Arcade, and essentially what they're doing is saying, look, we have this. You can game on that if you want.

BRIAN SOZZI: Dan, do you think Apple Arcade is [AUDIO OUT] and if it doesn't gain traction in this type of environment when we're all home, will it ever gain any traction?

DAN HOWLEY: I think it is gaining traction. We haven't heard any of the dire reports that we've heard out of Apple News Plus. You know, that really has gotten kind of hammered. People saying that not enough members have signed up, not enough uptake for that. We haven't heard that from Apple Arcade.

Apple Arcade also is good, because you don't need a cell connection to use it, and that was another sticking point for Apple and the reason why it's not allowing those kinds of services is because you can download the games directly from Apple Arcade. You don't have to say, all right, now get online, now stream this game.

But with 5G coming down, we're going to see more people being able to stream items such as that, so eventually Apple's going to have to say, look, you're welcome on our service or probably face some kind of repercussion.

ALEXIS CHRISTOFOROUS: Hey, Brian can you give us more on this upgrade I just touched on at the top of this segment? Deutsche Bank upgrading Apple. What's behind that?

BRIAN SOZZI: Yeah, it appears, Alexis, to be really valuation based. Apple stock has been hammered just like a lot of other big cap tech plays over the past month and a half with the market [AUDIO OUT] stores in China, closed its stores in the US, so there is concern of how this quarter will shake out, but I wouldn't be surprised if over the next couple of weeks you see the cell side community and say take a stand here [AUDIO OUT] Apple.

What the stock has just got too cheap, so Deutsche Bank, look, perhaps a little ahead of the curve, but I wouldn't I wouldn't be surprised to see others come here and pile on that call as well.

ALEXIS CHRISTOFOROUS: All right, guys. Thanks so much.