Apple to launch subscription bundles to boost digital services

Apple is launching a series of subscription bundles that will let customers subscribe to many of the company’s digital services at a lower monthly price.

The bundles, named “Apple One” inside the Cupertino, California-based technology giant, are planned to launch as early as October alongside the next iPhone line, according to people with knowledge of the plan.

The bundles are designed to encourage customers to subscribe to more Apple services, which will generate more recurring revenue. There will be different tiers, according to the people, who asked not to be identified discussing private plans. A basic package will include Apple Music and Apple TV+, while a more expensive variation will have those two services and the Apple Arcade gaming service. The next tier will add Apple News+, followed by a pricier bundle with extra iCloud storage for files and photos.

The initiative is a major effort by Apple to achieve the same loyalty that Amazon has won with its Prime program, which combines free shipping with video streaming and many other services for an annual or monthly fee.
Apple has no e-commerce delivery and warehouse network like Amazon’s, however, it has hundreds of millions of loyal hardware customers who have already availed some of its digital subscriptions. The iPhone and iPad will suggest different packages to users based on which Apple apps and services they already use. This feature will come later this year as part of iOS 14, the next software update for Apple’s devices.

The new bundles will be geared toward families, meaning they will work with Apple’s Family Sharing system that provides access to as many as six people for each service. The offerings are designed to save consumers about $2 to upwards of $5 a month, depending on the package chosen. For example, if a family subscribes today to all of Apple’s major services plus the highest iCloud storage tier, that would cost about $45 a month. A new bundle could knock more than $5 off that.

This approach is likely to be praised by Wall Street, which craves businesses that generate reliable revenue streams. However, there’s also a risk of confusing consumers with multiple subscription choices. This hampered the launch of the HBO Max streaming service, which was introduced this year alongside existing offerings HBO Go and HBO Now.

In addition to the services bundles, Apple is planning new software and hardware bundles, including giving buyers of the Apple TV set-top box a free year of Apple Arcade. That would follow a free year of TV+ offer to those purchasing new Apple devices.

For years, analysts and investors have called for Apple to mimic Amazon’s Prime approach. Some of Apple’s newer services, including News+ and TV+, have started slowly. By bundling them at a discount with more popular services, usage and subscriptions could increase.

Apple’s services segment is one of the company’s fastest-growing areas and has become a $50 billion-a-year business. While services like those for advertising and AppleCare were down in recent quarters due to the impact of Covid-19, digital offerings like the App Store, iCloud, and video products set records.

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