You see comments questioning whether this is fair. And of course it is, Gaming Business are quite risky, Out of 10 games you could have one Game that makes all the money while the other 9 have millions throw out of window. Apple is letting these developers avoiding those risk for a likely fixed up front price and terms.

And it is the same with Apple TV+, all the shows are Apple Exclusive, it doesn't matter if they have Zero viewership. Apple has already paid for it.

This is compared to Apple Music, where Apple have to paid for every song streamed. And it is not a fixed cost.

I sort of disagree about "Pure Profits" from Services like Apple TV+. Name me one of these business that is even profitable, especially when you are looking ahead with Disney+. The Roku platform examples completely ignore they sell data to advertiser.

Apple is using this to dilute their profits margin from Services, or add value to their Active Users. Both the App Store and Google Search Engine Placement revenue has close to 100% margin. Something you don't want to show up in your quarterly report. By having Apple Music, Apple TV+, Apple News that operate at close to 0% margin, Apple manage to make that 100% margin down to ~50%. And it will be another moat in their ecosystem, who wants to enter a business, News, Music, or TV when there are no money to be made?

"it is believed that game developers will receive ongoing revenue based on how much time users spend playing their games"

So it looks like they're paying advances (significant - $1-$3M) against some kind of royalty agreement based on time spent playing their game. So not a fixed cost (but perhaps not everyone gets the advances against royalties deal?)

Edit: I just looked over at the Stratechery forums and it seems like others are questioning this as well

"For it to truly be a fixed cost, the participating game developers must be commoditized. Otherwise, they will demand increased payments as Apple’s revenues go up.

That may well be the case for games, but I think it’s worth noting because Ben has repeatedly made the same claim respecting Netflix, where talent is not commoditized, and has a history of negotiating a fairly consistent share of revenue over time. There, it’s not reasonable to characterize Netflix’s costs as fixed, in the big picture. So it’s importantly to look more closely, rather than to assume that outright purchases of content translate to a long-term fixed cost structure independent of subscriber count/revenues."

Apple's "services" strategy amounts to "commoditize complements; charge using monthly subscriptions". There is a fair distance between this and how other companies use "services". Trade carefully.

This is the same approach. Bankroll the initial development costs of the game, in exchange for exclusive rights to 'buy' the product (user attention).

Netflix also license it’s non original and original content for a fixed priced

If you look at all of their published deals like with STARZ, NBC for Friends, Disney etc. you can see they pay one fixed cost.

Typically, licensing fees are negotiated for a few seasons at a time. It's a flat rate per season, so whatever production costs are incurred, they're paid for by the studio — not Netflix. If something goes over budget, Netflix has already paid to use it. Likewise, if a show is immensely successful (like, say Orange Is the New Black), Netflix doesn't have to worry about paying more for that, either.

So by keeping viewership numbers private, Netflix actually has an edge in licensing negotiations between studios. Because if a studio doesn't know how popular a series is, it's harder to push for more money.