Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now

You can switch off notifications anytime using browser settings.
Stock Analysis, IPO, Mutual Funds, Bonds & More

Apple integrating TV+ & iTunes may be backed by a sales motive

Apple recently broached the topic with music companies, but a consensus has not been arrived at.

, ET Bureau|
Updated: Oct 14, 2019, 12.44 PM IST
Apple TV+ will feature mostly in-house content, as opposed to commissioned shows for which they have to pay royalty fees.
Apple dipped its toes in the media pond by launching a music streaming service almost a decade ago. Ten years is a long time, especially in Silicon Valley. Telecommunication standards have undergone incremental upgrades. More people are surfing the Internet at much faster speeds than before. Apple seems to have realized, rather belatedly, that there is more money to be made in video content.

The Cupertino-based tech major is allegedly considering bundling Apple Music with its upcoming video streaming service, as per a report in the Financial Times. However, Apple’s move to create a monolithic medium-agnostic content library for a flat rate has divided the music community. Executives at record labels are reportedly wary of any such integration on Apple’s software platform.

According to the report, Apple recently broached the topic with music companies, but a consensus has not been arrived at. The two parties are yet to chalk out the pricing for the bundled service, with record labels having reservations on how a subsidised super bundle would affect the extant revenue sharing model. Under Steve Jobs, Apple browbeat music companies into selling individual songs for roughly a dollar each on iTunes.

However, the entry of dedicated music streaming services such as Apple Music and Spotify has helped revive the music industry. Both Apple Music and Spotify cost USD 9.99 a month in the US, while in India, the former costs Rs. 99 a month, and a monthly subscription of the latter will set users back by Rs. 119. Executives at record labels believe that their margins will suffer if Apple engages in a price war by undercutting rivals – in both music and video streaming.

Apple TV+ comes pre-installed on new iPhones, and will launch on November 1. The service will cost USD 5 a month, significantly less that Netflix. Experts reckon that Apple aims to forge a mega-bundle for the 400-million odd users who subscribed to Apple’s services last year. With iPhone sales not growing at previously witnessed levels, Apple is betting on content to drive new enrollments to its ecosystem.

A super-bundle could have many price tiers, spanning music, video, news, and gaming. Apple News+, which is an aggregator of newspaper and magazine content, is available in some countries for USD 10 a month. Apple’s cloud gaming service, Arcade, offers a catalogue of 100 games for USD 5 per month.

Apple TV+ will feature mostly in-house content, as opposed to commissioned shows for which they have to pay royalty fees, allowing them to realistically market the music plus video bundle for around USD 12-15 without eating into the margins of music producers. Netflix’s Standard plan (with two HD streams) costs USD 12.99 a month in the US while Amazon Prime membership can be obtained for USD 12.99 per month.

Apple’s decision to bypass short-term profits in favour of creating a loyal user base could also help sales of its hardware.

“Customers who purchase any new iPhone, iPad, Apple TV, Mac or iPod touch starting September 10 can enjoy one year of Apple TV+ for free. Beginning November 1, customers can initiate the one-year free offer in the Apple TV app on the device running the latest software. Customers have three months after device activation to claim the offer, or if the device was purchased and activated before the launch of Apple TV+, they will have three months starting November 1. The subscription will automatically renew at USD 4.99 per month after one year,” reads the official communique.

Apple Gets Serious About Services, Unveils TV+, Card, Arcade At Special Event

of 5
Play Slideshow

Tech Treat

28 Mar, 2019
By Karan BajajApple has typically held special events for hardware. Which is why a dedicated event for services was a surprise. Of the many services that were announced, only Apple Arcade and TV+ are expected to go global at launch. Karan Bajaj decodes some of the news from the event.Image: Reuters

Want stories like this in your inbox? Sign up for the daily ET Panache newsletter.

You can also follow us on Facebook, Twitter and LinkedIn.
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Other useful Links

Follow us on

Download et app

Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service