With the slowing sales of iPhones as a backdrop, Apple (NASDAQ: AAPL) is increasingly relying on other categories like wearables to drive its future growth. One of the company's biggest bets involves services, and earlier this year, Apple unveiled four new options to add to the mix.
Apple News+ is the company's subscription news offering at $10 per month, which debuted in March. The Apple Card, the company's push into the credit card business, launched earlier this month to a select few users and is now available to the public at large. Apple Arcade, its subscription mobile gaming service, is scheduled to go live this fall.
Apple CEO Tim Cook. Image source: Apple.
That leaves Apple TV+, the most eagerly awaited of the four, and reports are emerging that the streaming platform is set to debut within the next two months.
Billions spent on content
Apple has been planning its entry into the streaming space for more than two years, with early accounts suggesting the company was planning to spend more than $1 billion on programming to seed its new venture. More recent reports suggest that the budget had increased substantially, as had Apple's ambitions in the space.
While the belle of Cupertino hasn't confirmed any of these stories, Apple held a star-studded event in April that showcased some of the top-shelf talent the company enlisted to create its content. Apple said the service will feature a "slate of programming from the world's most celebrated creative artists, including Oprah Winfrey, Steven Spielberg, Jennifer Aniston, Reese Witherspoon, Octavia Spencer, J.J. Abrams, Jason Momoa, M. Night Shyamalan, Jon M. Chu and more." With stars of that caliber, it obviously didn't come cheap.
Coming this fall
At the time of its presentation in March, Apple said "Pricing and availability for the Apple TV+ video subscription service will be announced later this fall." Since then, however, the company has been mum on the subject. A report in the Financial Times on Monday suggested the content budget had ballooned to more than $6 billion, as Apple plunged full speed ahead into the realm of streaming. Apple TV+ will go live within the coming two months, according to the report.
Citing "people familiar with the matter," Apple spent hundreds of millions of dollars alone on The Morning Show, which stars Jennifer Aniston, Reese Witherspoon, and Steve Carell. The show reportedly cost more to make per episode than Game of Thrones, which clocked in at $15 million per episode, making The Morning Show the "most expensive TV series ever produced." Apple released the first full-length trailer for the show on Monday.
A focus on quality
By some estimates, Apple now has little more than two dozen series, movies, and documentaries in the pipeline that will air on Apple TV+. This pales in comparison to the thousands of programming choices offered by the likes of Netflix or Amazon's Prime Video, illustrating that Apple plans to initially focus on the quality of its programming, rather than on quantity.
The company is weighing a $9.99 price point for the service and planning to initially debut a small assortment of shows, intending to expand its catalog in the coming months, according to a report by Bloomberg. The company is also hoping to launch Apple TV+ just in time to steal Disney's thunder, which plans to debut its own streaming service -- Disney+ -- in early November.
The sale of services has been responsible for a growing chunk of Apple's revenue in recent years, reaching a record $11.46 billion, or 21% of the company's revenue in its most recent quarter. With the recent addition of four new options for the Apple faithful, the company is hoping to further reduce its reliance on the cyclical nature of the iPhone, and it appears to be banking on Apple TV+ to lead the charge.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Amazon, Apple, Netflix, and Walt Disney and has the following options: long January 2021 $190 calls on Apple, short January 2021 $195 calls on Apple, and long January 2021 $85 calls on Walt Disney. The Motley Fool owns shares of and recommends Amazon, Apple, Netflix, and Walt Disney. The Motley Fool has the following options: long January 2021 $60 calls on Walt Disney, short October 2019 $125 calls on Walt Disney, short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.
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