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Apple Needs to Fix This Big Problem Before Offering Video Games

By Tim Beyers – Feb 10, 2014 at 7:30PM

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A new report has the Mac maker offering games through Apple TV. An infrastructure upgrade may need to come first.

A recent report from iLounge says that Apple (AAPL -0.34%) may begin offering video games in its next-generation Apple TV. Good news, right? Sure, but the Mac maker is probably going to have to upgrade iCloud first, Fool contributor Tim Beyers says in the following video.

Consider the alternative. A gaming-centric Apple TV that didn't offer streamed titles would need a fat hard drive for downloading games and storing progress locally. A workable solution, Tim says, but it could make the device materially more expensive and draw comparisons to (and competition from) the major consoles.

Streaming games could eliminate those costs but at the expense of beefing up iCloud for broadband data delivery in real time, which, in turn, would force heavy investments in data center technology. yet there's reason to believe Apple is already making precisely this sort of commitment. Capital expenditures have come in around $8 billion in each of the past two fiscal years. For comparison's sake, Google (GOOGL -0.94%) doubled its investment in capex last year yet managed to spend only $7.4 billion.

Tim says beefier data centers should deliver for Apple investors. Why? Streamed games and video aren't the only needs. There's also a rich revenue opportunity to be had in transforming Time Machine into an online backup service similar to that offered by Carbonite and its competitors.

Now it's your turn to weigh in. Do you want an Apple TV that streams games? What about beefier iCloud backup service? Please watch the video to get Tim's full take and then leave a comment to let us know what you think, and whether you would buy, sell, or short Apple stock at current prices.

Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple and Google at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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