After much speculation, Apple appears to be developing bundled subscriptions to save subscribers money while growing recurring revenue. The subscription bundles, which are collectively being called ‘Apple One,’ could launch as early as October, reports Bloomberg. If so, the timing would coincide with the release of Apple’s next line of iPhones. Subscription bundles have been rumored since 2019 when Apple rolled out a series of new subscription products, including Apple Arcade and Apple TV+.
The ‘Apple One’ program would serve multiple purposes. From a consumer perspective, subscribers would save money on bundled packages of subscription services. From the company’s perspective, Apple hopes to get people to subscribe to more Apple services, thereby increasing customer loyalty, recurring revenue and customer lifetime value.
Tiered subscription bundles
Though Apple did not officially release information about the ‘Apple One’ subscription bundles, people familiar with the matter shared details of tiered options for subscription bundles with Bloomberg. Tiers being considered include the following:
- Apple Music and Apple TV+
- Apple Music, Apple TV+ and Apple Arcade
- Apple Music, Apple TV+, Apple Arcade and Apple News+
- Apple Music, Apple TV+, Apple Arcade, Apple News+ and additional iCloud storage for files and photos
While pricing is not known, we can expect to see that the basic services will be less expensive than the tiers which are all inclusive. Various sources speculate that Apple is hoping to attract families with its subscription bundles, while generating recurring revenue. Apple currently offers Family Sharing options for up to six members of a household. Eligible subscription services include Apple Music, Apple TV+, Apple News+ and Apple Arcade, as well as iCloud storage, App Store purchases, iTunes, and other options.
New virtual fitness app
Bloomberg also reports that Apple is working on a new subscription for virtual fitness classes, similar to what companies like Fitbit, Peloton and MIRROR are offering. The app would be made available on iPhones, iPads and Apple TV. It could be included in one of the pricier subscription bundles, and sources say the app has been codenamed Seymour. Mac Rumors says that the app will include a range of activities, including indoor running, cycling, rowing, stretching, core training, strength training, outdoor walking, dance and yoga. This fitness subscription service is expected to launch in October as well.
Apple up to 550M subscriptions
In Apple’s July 30 earnings call for its third quarter of fiscal year 2020, the company reported all-time record performance and strong double-digit growth in the App Store, Apple Music and cloud services. Their new services – Apple TV+, Apple Arcade, Apple News+ and Apple Card – are all contributing to the company’s growth in service revenue. The company said during the quarter paid subscriptions grew by more than 35 million. The company has over 550 million paid subscriptions across their various services. This is an increase of 130 million compared to the same period last year. The company’s goal for subscriptions this year is 600 million, according to Apple CEO Tim Cook.
Some media outlets are comparing the subscription bundles to Amazon Prime, which includes a wide range of perks and benefits for one subscription fee, paid monthly or annually. In addition to free shipping, it includes Prime Video, Prime Video Channels, Prime Music, Amazon Music Unlimited, FreeTime Unlimited, Prime Gaming and Amazon Photos (editor’s note: some of these services require an additional subscription payment on top of the Prime membership cost).
We are surprised it has taken Apple so long to make the subscription bundles a reality, because this has been rumored since last year. But then the COVID-19 pandemic has derailed plans for a lot of companies. This just makes good business sense. Subscribers can pay for the package of services they want and pay one (lower) fee per month instead of paying for each service individually. This also makes billing easier, and it could improve retention and customer loyalty for Apple. Afterall, it is easy to cancel one subscription like Apple News+ that you might only use occasionally, but if you subscribe to Apple Music, Apple Arcade and Apple News+, it is harder – and less likely – that you will cancel. Over the long haul, this increases recurring revenue for Apple, making them less dependent on device sales.