Thanks, but there's this quote in the article that you linked:

"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."

For better or for worse, and it hurts me on a personal level to say this, but from Apple's perspective, the talent creating these games _is_ a commodity. Those rates are insanely high, there's not a remotely similar substitute available in the market, and you get the halo of Apple for the rest of your career.

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 a very familiar model for Apple. It's how they approach innovative new hardware development as well. For example with retina Displays they paid for the tech development and even bankrolled construction of the manufacturing facilities in exchange for exclusive rights to buy their output. They did the same with lots of things.

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