In a major shift to its business model, Apple looks like it will be moving away from reliance on product sales and looking to the subscription model for a sustainable future. Apple is considering bundling its premium subscription services, reports The Verge. It is not clear which services might be included in that bundle, but Apple has four subscription services to choose from: Apple Music, Apple News+, Apple TV+ and Apple Arcade.
Apple CEO Tim Cook hinted at the possible on an October 30 earnings call when asked if Apple would ever consider offering hardware as a bundled service (i.e., subscription iPhone).
…one of the things we are doing is trying to make it simpler and simpler for people to get on these sort of monthly financing kind of things. That’s a part of what we announced with the Apple Card earlier in the call and so we are cognizant that there are lots of users out there that want sort of a recurring payment like that and the receipt of new products on some sort of standard kind of basis and we are committed to make that easier to do than perhaps it is today, Cook said.
During that earnings call, Cook shared updates and highlights of its subscription services.
Apple Arcade: Launched in September, the gaming services gives subscribers unlimited access to a curated selection of more than 100 new games playable on Apple devices (e.g., iPhone, iPad, iPod Touch). For $4.99 a month after a free trial, up to six family members can play Apple Arcade games ad-free with no add-on purchases required. Play is available online or off, and the subscription is automatically renewable. Subscribers can cancel at any time. Cook said customer feedback has been overwhelmingly positive so far.
Apple News+: Though the Apple News+ subscription service has been bashed in the media, Cook said the premium digital news and magazine service has been expanded into the United Kingdom and Australia. It includes publications including the Times of London, the Australian, Hello Magazine, The Wall Street Journal, L.A. Times, The New Yorker, People magazine, Wired, National Geographic, GQ and more. Apple News is free; Apple News+ is available for $9.99 a month, after a free, one-month trial.
Apple TV+: Just launched, Apple TV+ is the first originals-only video subscription service, including programs like The Morning Show and See. The service is available on Apple devices in more than 100 countries and regions for $4.99 a month after a free, seven-day free trial. Consumers who buy a new iPhone, iPad, iPod touch, Mac or Apple TV will get a free year of the service. Subscribers to the Apple Music Student Plan get free access to Apple TV+.
Apple Music: Available for $9.99 a month after a free trial, subscribers get access to more than 50 million songs, ad-free. Music is available online and off, and Apple Music includes exclusive and original content as well as millions of licensed songs.
We can easily see Apple transitioning to a bundled subscription. With the right pricing and right combination of services, Apple could tap into long-term loyalty and become less reliant on products and more reliant on recurring revenue. The question is what the price point would be and what services would they bundle. Apple News+ does not seem to be a smashing success yet. While it offers quite a few magazines, it is light on its news offerings. Apple Arcade and Apple TV+ are too new to predict what their popularity will be, especially in light of the pending launch of Googles Stadia and the recent launch of Disney+. Apple has some competitive advantages, and a bundled subscription offering might be one of them. Wed like to see them test the idea first to figure out the best way to package it to the mutual benefit of Apple and their subscribers.