This Thursday, July 30, Apple is going to report its latest quarterly earnings, and at least some investors believe the highly lucrative Services division will earn quite a bit of money — but not because of the company’s newest offerings.
Bloomberg has the report on Tuesday, outlining what investors believe is a relatively lackluster return for Apple from its newest services, which include Apple Arcade, Apple News+, the Apple Card, and the video streaming service Apple TV+. It’s worth noting that some of these services haven’t been available for a full year, but that isn’t stopping the investors from having a less-than-great outlook.
Analysts are forecasting that Apple is going to announce somewhere around $13 billion in revenue for the Services division alone, according to the report. That’s yet another massive gain for this segment of Apple’s overall business, but the investors expect that the majority of that money is going to come from existing services, like the App Store, and other deals, including licensing, rather than services like Apple Arcade or Apple TV+.
The worst of the bunch appears to be Apple News+. This service, which expands on the stock Apple News app and experience, launched in March of last year and costs $9.99 per month. However, while publishers haven’t been the happiest with the service, and even The New York Times recently rescinded its partnership deal with Apple, it has also reportedly not caught on with consumers, either.
Apple News+ reportedly saw around 200,000 sign ups around its launch, after just 48 hours, but that number has apparently remained steady since then. Apple, of course, isn’t going into any great detail in this regard, so nothing is confirmed on the company’s part.
Meanwhile, the other services are at least doing better than News+, but still not great in the investors’ eyes. Apple TV+, for instance. Earlier reports had suggested that the video streaming service had only picked up fewer than 15% of eligible customers, despite offering a full year of service when purchasing a new Apple product like an iPhone, iPad, or Mac.
That isn’t stopping Apple from moving ahead with support for the streaming service, though. The company continues to sign major deals for new content and bring on both new and well-known creators. In fact, just recently we reported that Apple is teaming up with legendary director Werner Herzog to bring the new documentary Fireball to Apple TV+. And the World War II war thriller, Greyhound, starring Tom Hanks, became Apple TV+’s biggest opening weekend release to date, what’s described as a matching a major tentpole film’s theatrical debut. Greyhound‘s success has even reportedly shifted Apple’s film acquisition plans, looking for more blockbusters to release on a regular basis throughout the months ahead.
And then there’s the Apple Card, Apple’s first branded credit card it released in partnership with Goldman Sachs. According to the report, Goldman Sachs has picked up somewhere around $2 billion in new credit lines following the launch of the Apple Card. That’s just a fraction of what other co-branded credit cards have, suggesting Apple Card hasn’t been eagerly applied for by potential customers.
Finally, Apple Arcade. This service, which retails for $4.99 per month and offers a rotating library of more than one hundred exclusive games (for mobile), is apparently off to a less-than-great start as well. The company does add new games to the service on a semi-regular basis, and yet investors do not believe that Apple Arcade has earned enough interest –and recurring dollars– from customers.
Retaining customers is the most important part of any subscription service, and, as such, there was a report back in June that Apple had started cancelling some contracts with game developers working on Apple Arcade games, opting to shift its strategy to focus on more games like the popular Grindstone, all in an effort to keep players coming back. Essentially, the bigger, more “story-driven” games that can typically be played through just a single time by most players are starting to get a bit of a side-eye from Apple as far as Apple Arcade is concerned.
We might learn more later this week about how all these services are doing in their early days, but it’s apparent that at least a few investors aren’t too ecstatic about what customers think of these options.
How about you? Which of Apple’s newest services are you still paying for?