High-profile, Emmy-like event highlights the importance of services
On Monday, Apple made a series of service announcements at its much-anticipated Show Time event, held in the Steve Jobs Theater in Cupertino. Although there were no huge surprises, Apple pulled together a star-studded gala that kept the audience interested, and often wanting more details. It was a different type of show for the company.
All the apps and services Apple announced are extensions of its existing apps and services, but it’s fair to say that the company is taking its interests to a new level.
Apple launched News+, a news subscription service that gives access to high-quality magazine content and news publications for about $10 per month, to be initially only available in the US and Canada. Despite offering a curated subset of content from close to 300 publications, the service lacks material from The New York Times and The Washington Post, suggesting that some content providers are wary of Apple’s move. So for many subscribers News+ will be an additional subscription for feature stories rather than a full news service. Apple is going against services such as Readly, a similar subscription offering but with greater international coverage (see A “News-Stand in Your Pocket”).
As expected, Apple introduced a credit card as an extension to its Apple Pay service. The Apple Card gets added to a user’s Wallet app on an iPhone or iPad. There are no fees for the card, not even annual or late fees. Users can also opt for a physical, sleek-looking titanium card, which we expect will quickly become a must-have status symbol among Apple users.
Like Google recently, Apple introduced a gaming service, Apple Arcade. This will be a subscription service for games, limited to the iOS environment, which Apple pointed out is the world’s most popular gaming platform measured by individual users. Arcade will become available in over 150 countries in the autumn of 2019. Pricing was not announced.
But the star of the show was the new TV service Apple TV+, offering exclusive premium TV series, movies and documentaries featuring some of the top names in the entertainment industry. Among those who walked on stage to discuss the TV+ content they have produced or starred in were Steven Spielberg, Oprah Winfrey and Reese Witherspoon. Apple didn’t reveal pricing for the service.
This is clearly a large investment of money and attention for Apple. However, it sits alongside Netflix’s enormous commitment to original content, which is now measured in double-digit billions of dollars per year, and Amazon is also ploughing several billions of dollars into Prime Originals. Many people are asking if Apple has the appetite to keep up.
Apple is focussing on subscription services at a critical time for the company, as it searches for new sources of revenue growth to make up for stalling sales of iPhones. Its services business, which includes revenue from the App Store and licensing fees in addition to monthly subscriptions, has potential to fuel most of the revenue growth over the next few years. Apple is coming to a new stage in its corporate life, realizing that iPhone sales are unlikely to provide a continuing engine of growth, and keen vertical expansion gives it the best chance to keep growing. The company has a loyal following around the globe, and services could be a good chance for it to collect more wallet share.
But to gain that wallet share, Apple will have to compete against other well-entrenched companies that are looking down the same avenues for expansion including Amazon, Disney, Google and Netflix, along with a series of other streaming services trying to take advantage of changing consumer behaviour toward content.
Apple did try to distinguish itself from rivals with a focussed approach to its style of content, and by promising confidentiality. Privacy was a recurring theme in all product announcements, and Apple made clear jabs at Google and other companies that make money from personal information.
There were many questions left unanswered at Apple’s Show Time event, with pricing of its TV service as the biggest one. The announcement was also strongly aimed at the US, and Apple gave no details on how it would make the services truly relevant in other geographies. There’s a lot more work to be done as the company takes these services globally, and the announcement had the feel of an impressive trailer to encourage engagement with partners around the world.
Our full analysis of announcements from the event is available in our Instant Insight: Apple Boosts Services Portfolio report.
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