One major Apple service has reportedly stagnated after a strong commercial debut

by Adrian Diaconescu / Nov 15, 2019, 6:56 AM

One major Apple service has reportedly stagnated after a strong commercial debut

Among Apple's five big businesses, the iPhone division continues to bring in the highest revenue scores quarter after quarter, with over $33 billion earned in the July - September 2019 timeframe alone. At the same time, however, the overall decline of the global handset market has had a particularly negative impact on profits generated by the Cupertino-based tech giant's mobile devices.

That $33 billion total, while impressive by any standard, is down from close to $37 billion raked in during 2018's third calendar quarter (Apple's fourth fiscal quarter). As this is a trend that was fairly easy to predict, Apple started devising a plan a little while ago seeing the company lean hard on two other business segments for continued overall growth. We're talking about wearables and services, the latter of which yielded earnings of $12.5 billion in the last quarter, up from $11.46 billion between April and June 2019 and only $10.6 billion during calendar Q3 2018.

As the name suggests, this department includes many different products, some of which have been launched recently to boost Apple's portfolio and help sustain a healthy growth pace. While Apple TV+ and Arcade have made far more headlines of late, Apple News+ became available several months back, capturing the spotlight... for around 15 minutes and then largely lurking in the shadows of its more popular relatives like the iOS App Store, Apple Pay platform, iCloud, or Apple Music.

Apparently, the subscription-based service for magazines isn't doing as well as certain analysts, publishers, and even Apple itself anticipated, at least according to a new CNBC report quoting the usual unnamed insiders and "people familiar with the matter."

A flying start followed by months "in neutral"

Although we can't think of a similar (and similarly high-profile) platform to compare this number with, 200,000 subscribers in 48 hours sounds like a great achievement. Unfortunately for Apple, CNBC's sources claim the News+ service hasn't been able to "materially" increase the figure reached within just two days of a March 25 commercial debut. It's unclear exactly where the subscriber total stands right now, but Apple is probably not making a whole lot of money from this particular "service."

Not when you consider the company has to split every $9.99 monthly charge fifty-fifty with the publishers of the more than 300 magazines and newspapers currently available as part of a premium Apple News+ subscription. In turn, each publisher gets an individual piece of the earnings based on how much time users spend consuming their content, which has naturally made a fairly small impact on the revenue scores of most Apple partners.

One such partner told CNBC on condition of anonymity that it received between $20,000 and $30,000 a month from Apple since News+ launched, which is understandably "far lower" than what was "initially expected."

Will something like this also happen to Apple TV+?

To answer that question, we must first ask ourselves why Apple News+ isn't such a big hit as many people thought it would be. One core explanation is that the product itself simply isn't that popular anymore. It's no longer about digital vs paper, it's magazines in general that have a somewhat limited audience nowadays.

That's obviously not true for video content, and another thing that distinguishes Apple TV+ from News+ is the former's aggressive advertising strategy. As CNBC points out, Apple didn't put a lot of "marketing heft" behind its magazine subscription service following its launch, which is unlikely to happen with TV+ anytime soon considering how much money has already been invested in original content to go after industry veterans including Netflix and Hulu.

Apple TV+ also has a precious advantage over News+ in that excellent promotion allowing iPhone, iPad, Mac, and Apple TV buyers to get one year of free access. Naturally, many of these people will leave the platform once their first 12 months are up, but some are likely to stay on ... as long as Apple manages to vastly improve its digital library.

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8 Comments

1. TBomb

Posts: 1662; Member since: Dec 28, 2012

I could've told you the News+ wasn't going to be as successful as everyone hyped about. I see a similar possibility with TV+. All of the competition (Hulu, Disney, Netflix, etc) have shows and movies created from years before. Apple is starting at 0. The content they offer has to be intriguing enough to buy the subscription and then they have to keep making content at the pace that consumers consumer at. Today's binge watching trend makes this harder for Apple as you could probably get through all of the shows on TV+ that are interesting to you in under a month. They will need a Game of Thrones (or two) to really catch on. ^My opinion

posted on Nov 15, 2019, 9:08 AM 1

2. NarutoKage14

Posts: 1346; Member since: Aug 31, 2016

I think it will be very difficult for Apple to create even a single show nearly as good as GoT considering their censorship track record. It's not that they can't, it's that the content for such a show is far too mature.

posted on Nov 15, 2019, 11:21 AM 1

3. ssallen

Posts: 214; Member since: Oct 06, 2017

Its a lot closer to CANT then WONT. Creating a complex, innovative show like GOT actually takes years of experience and risk taking. Apple doesn't have any of that. Probably wont for a decade even if they gobble up every piece of talent that is available. Producing entertainment content is way outside Apple's wheelhouse.

posted on Nov 15, 2019, 1:11 PM 0

7. sgodsell

Posts: 7573; Member since: Mar 16, 2013

Before it was Apple News+. It was a company called Texture, which was a company that started back in 2010. Texture supported multiple platforms, including apps for iOS, Android, Amazon Fire OS, Kindle, and the Chrome Browser for Windows, Mac OS, Chrome OS. Apple then killed off Texture (May 28, 2019), and all the apps and support for other platforms. Only to rename it, and only support iOS, and Mac OS. Go figure that Apple's new Apple News+ (Magazine subscription service) killed off a lot of users, and revenue.

posted on Nov 16, 2019, 7:38 AM 0

8. sgodsell

If Apple was really trying to get into more services, then Apple would not be buying services like Texture (Apple News+), only to kill off all of its supported platforms, and to restrict it to only iOS, and Mac OS instead.