Apple may hit limit seeking subscriptions
Apple has once again summoned the media to its Cupertino, California, headquarters. Monday’s festivities are likely to be a star-studded sneak peek of a new $9.99 monthly entertainment subscription service, offering series and movies from the likes of Steven Spielberg, Oprah Winfrey and Brie Larson.
The place to find the service likely is to be on the Apple TV app, which is available for the set-top box and on such iOS devices as the iPhone and iPad. Reporters are eager to hear how Apple plans on expanding its base to TVs and other set-top boxes including Roku and the Amazon Fire TV Stick.
Additionally, Apple is likely to unveil a “Netflix of magazines” that will offer such publications as the Wall Street Journal and People for $9.99 monthly.
But most of the attention will be focused on the big Hollywood players Apple is likely to fly out to its campus. Which stars will be there? That’s the guessing game many are playing this weekend.
It’s important to remember why Apple is doing this, even though it’s more than fashionably late to the party.
Netflix started in 1997 and now dominates streaming, followed by Amazon Prime Video, Hulu, CBS All Access and others.
Disney and Warner Media are launching services in the coming months. Consumers, as was pointed out this week by Deloitte, can handle only so many subscriptions.
Will Apple consumers really stomach $30 monthly for entertainment, news and the pre-existing Apple Music service?
“Getting the consumer to do a monthly $30 subscription is just too difficult,” says Tim Bajarin, an analyst with Creative Strategies. “Apple has to come up with something else.”
The company doesn’t sell as many iPhones as it used to, and Apple sees that gravy train waning, so it’s broadening its strategy to collecting more monthly recurring charges, like Netflix and Amazon.
As it stands now, Apple sells more iCloud storage plans, Apple Music subscriptions and iTunes movie rentals than it does iPads, Mac computers, Apple Watches or accessories including the AirPods.
Services, the division that incorporates the monthly plans, generated more than $10 billion in the most recent quarter. It has a long way to go to catch up to the iPhone, which in the quarter brought in just under $52 billion.
Seven years after Spotify, Apple Music launched in 2014 as a mostly copycat service that ended up garnering more than 50 million subscriptions by targeting its 1.4 billion base of iPhone users.
Can Apple get even bigger numbers with entertainment, and get an iPhone size hit?
Andrew Wallenstein, the co-editor of show business bible Variety says that’s unlikely.
“They’re not going to take on Netflix,” he says.
“The market is too cluttered, and Apple is too late. But they do have the ability to carve out some significant market share.”
Apple doesn’t have to beat Netflix, he says, but “just increase engagement with its devices.”
“A monthly $30 subscription is just too difficult ... Apple has to come up with something else.” Tim Bajarin, Creative Strategies