All eyes were on Apple Inc (NASDAQ:AAPL) CEO Tim Cook on Monday as he unveiled video and news subscription services under Apple TV as well as a credit card.
The announcement was the iPhone maker's biggest push for an alternative revenue stream in more than a decade. Apple co-founder Steve Jobs tinkered with revamping TV years ago.
Apple declined 1.9% to $187.40 in Monday's midafternoon Nasdaq trading.
The tech giant announced a new paid tier of the Apple News app called Apple News+ that includes magazine content for $9.99 per month. It provides access to articles from more than 300 magazines including Vogue, GQ and Sports Illustrated, as well as such newspapers as The Wall Street Journal and the Los Angeles Times.
“We believe in the power of journalism and the impact it can have on our lives,” said Cook. “We think Apple News Plus is going to be great for customers and great for publishers.”
Apple also said it would release its own credit card, known as Apple Card with Goldman Sachs Group Inc (NYSE:GS). The physical card itself is made of titanium. The credit card will have no number, late fees or annual fees. It will offer 2% cash back on purchases and use machine-learning on Apple’s devices to organize people’s spending behavior into weekly and monthly summaries.
Separately, Apple’s new videogame service, called Arcade, will provide access to more than 100 exclusive games through the company’s App Store.
Apple TV Plus
Jobs also announced Apple TV+, a long-rumored ad-free, on-demand entertainment streaming service that includes original programming produced by Apple and bundles of streaming packages from HBO, Showtime. HBO, Starz, CBS All Access, and Smithsonian Channel.
The second half of Apple's launch event included a parade of Hollywood A-listers like Oprah Winfrey, Steven Spielberg, Steve Carrell, Reese Witherspoon, Sarah Bareilles, and Jennifer Aniston, discussing their upcoming shows with Apple producations. Apple is now associated with at least 34 different TV and movie productions, according to a tally from Goldman Sachs.
Cook said Apple TV+ will be made available on smart TVs from Samsung, LG, Sony and Vizio, and even on the boxes that compete with Apple TV hardware, notably Fire TV and Roku.
The new streaming service will be good for original content creators, according to Helios and Matheson Analytics Inc (OTCMKTS:HMNY) CEO Ted Farnsworth.
“The more platforms we have to stream MoviePass Films, the better," Farnsworth told Proactive Investors. "The more competitive the industry landscape becomes ultimately makes the experience better for the consumer.”
MoviePass Films is a joint venture of MoviePass parent Helios and Matheson and Emmett Furla Oasis (EFO) Films. It has already started principal photography on "Axis Sally," starring Al Pacino, and signed a three-film deal with Bruce Willis, whose film "10 Minutes Gone" is in post-production.
READ: Helios and Matheson CEO touts MoviePass member perks as the unlimited subscription plan returns
In a sign of frayed relations between Netflix Inc (NASDAQ:NFLX) and Apple, Netflix has decided to opt out of the Apple bundle, which will upsell subscriptions to HBO and Showtime, in addition to its original programming.
“The tell-tale sign of a disruption to come is when a competitor pulls away," Farnsworth said. "Netflix had declined to be a part of Apple’s premium service for two reasons. Not only does Netflix believe it’s so far ahead that it’s impossible for competing streaming platforms to catch up, Netflix is also superprotective of the information it has learned through 20 years of streaming and doesn't want to share that data with another partner. In saying this, Apple is Apple. Apple will create its own original content — or partner with other large studios. At the end of the day, Apple will disrupt streaming, just like it did with music.”
Apple is likley to spend more than $1 billion in acquiring and producing original TV shows over the next year.
For Apple, the launch marks the first time it is making its services business the centerpiece of a major event. It recently pushed out an unprecedented flood of hardware announcements made through press releases, from new iPads to a refreshed iMac and AirPods.
While Apple’s iPhone business seemed to be on an almost never-ending rise, Apple reported its first decline in revenue and profit for a holiday quarter in more than a decade. In the fiscal first quarter, iPhone revenue fell 15% from a year earlier to $51.98 billion, missing consensus market forecasts of $52.67 billion.
New revenue stream
Cook has acknowledged that customers have struggled with Apple’s high prices and were holding on to older iPhones for longer than in the past.
Over time, apps and services, from Spotify to Netflix, have often become more important to users than the devices that run them. That allows consumers to hold on to phones longer or switch to less expensive versions.
The company’s ambition in video is to become an "alternative to cable," combining original series with shows from other networks to create a new entertainment service that can reach "more than 100 markets" worldwide, said The Wall Street Journal.
Clearly, it is the tech giant’s big push to build a robust revenue stream.
—Updates with comments from Helios and Matheson CEO Ted Farnsworth, Apple TV+ launch—
Contact Uttara Choudhury at [email protected]