Business

/

ArcaMax

Why is Apple bundling its subscription services?

By Wendy Lee, Los Angeles Times on

Published in Business News

Apple on Tuesday said it will sell bundles of its subscription services including music and TV this fall as it faces mounting competition from rivals to lure and retain customers.

The bundle initiative, called Apple One, will group the company's subscription services in gaming, music and video streaming service Apple TV+ and provide 50 gigabytes of cloud storage starting at $14.95 a month.

Additional bundles include a family plan and one that has more of the company's services, including the new Apple Fitness+, which streams workouts. The most expensive plan is $29.95 a month.

"Apple One makes it easy to get these services and find the one plan right for you," said Lori Malm, director of services, at a presentation on Tuesday.

Analysts said the bundling will help entice customers to sample more services and reduce the rate at which people unsubscribe. Prior to Apple One, many customers subscribed to each individual service, with Apple Music costing $9.99 a month and Apple TV+ $4.99 a month.

"It could make it easier to sell to consumers," said Neil Cybart, founder of Above Avalon, a site that analyzes Apple's business.

 

Cybart said that the bundling also will provide a boost to the least popular of Apple's services, such as Apple News+, the company's news subscription service; and Apple Arcade, which offers access to more than 100 games. (Disclosure: The Los Angeles Times participates in Apple News+.)

"If you're including them in bundles of Apple Music and Apple TV+, the benefit for Apple would be those two services see increased adoption, increased usage," Cybart said.

Apple still makes the most money from its iPhones, but services have increasingly become an important part of its business. The services segment in the fiscal third quarter had more than $13 billion in sales, about 22% of the company's overall revenue. Last year, Apple launched its video streaming service Apple TV+, pouring significant amounts of money into exclusive shows and movies.

Cybart estimates that Apple TV+ has 25 million to 30 million subscribers. The platform's shows have garnered 18 Emmy nominations, including several for critically acclaimed drama "The Morning Show."

...continued

swipe to next page
(c)2020 Los Angeles Times, Distributed by Tribune Content Agency, LLC.