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An Apple Entertainment Bundle Makes a Lot of Sense

Apple (NASDAQ:AAPL) is expected to offer an entertainment bundle that includes a news and magazine subscription, iCloud storage, and Apple Music as well as access to its growing original content library, according to reports from The Wall Street Journal and The Information. 

This venture could provide Apple with a new revenue stream and that’s important because Apple currently relies on iPhone sales for about two-thirds of its revenue and iPhone growth is slowing. The tech giant has been looking for other ways to make money off of its millions of iPhone users and has been giving special focus to its Services business, which did $9 billion in revenue last quarter. An entertainment bundle could help further boost this Services segment. 

John Legend and Alicia Keys sing in a car as part of Carpool Karaoke

John Legend and Alicia Keys participate in Apple’s show Carpool Karaoke: The Series. image source: Apple.

Apple focuses on revenue outside of the iPhone

Investors should be encouraged to hear that Apple is continuing to explore ways to expand its Services offerings, which include the App Store, Apple Music, iCloud, and Apple Pay. Apple has said that it wants to hit $50 billion in annual Services revenue by 2020. Last quarter, the segment grew about 31% year over year to $9 billion, or about 15% of its total revenue.

Apple’s paid subscriptions grew by an impressive 100 million year over year last quarter to 270 million. Apple Music, which costs $9.99 per month, announced in May that it had hit 50 million subscribers.

Meanwhile, Netflix hit 125 million subscribers worldwide last quarter, proving demand for high-quality original content is still going strong. And while Netflix’s $8 billion content budget for 2018 might make Apple’s reported $1 billion

Article source: https://www.fool.com/investing/2018/07/11/apple-could-sell-entertainment-bundle-as-iphone-sa.aspx

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