The idea of an Apple (NASDAQ:AAPL) services bundle has been around for about four years or so, but it might become a reality in just a couple months. The iPhone maker is readying a series of bundles for its various services, according to a report from Bloomberg.
CEO Tim Cook has made services a major focus of the business as the average iPhone owner takes longer to upgrade their device. Apple’s well on its way to reaching Cook’s goal of doubling its services revenue from 2017 by the end 2020 after introducing several new services over the last couple years.
By offering bundles of those services to consumers, Apple has the potential to improve a key metric used by most subscription services companies: customer lifetime value.
Increasing attach rates and retention
One of the simplest ways to increase customer lifetime value is improved retention and higher attach rates.
Apple has over 60 million Apple Music subscribers. But it only has about 10 million active accounts for Apple TV+ (still on free trials), and Apple Arcade’s expected to reach 12 million subscribers by year-end.
Bundled pricing should raise attach rates for the services while increasing the stickiness of those customers since they don’t want to lose their preferred pricing.
A bundle of Apple TV+ or Apple Arcade with Apple Music could expand the subscriber base for all three services. It would help Apple differentiate its music-streaming service from competitors like Spotify, which is growing faster than Apple Music and threatens its dominant position in podcasts. Meanwhile, it would introduce Apple TV+ and Apple Arcade to more customers.
Apple Arcade could be the most important Apple service to get consumers to adopt. While it might cannibalize some of Apple’s App Store revenue, it should generate incremental revenue for most casual mobile gamers while increasing loyalty to the iPhone.
Ultimately, higher attach rates for Apple’s services will lead to greater loyalty for iPhone owners and increased switching activity from competitors’ devices. That’s the real driver of customer lifetime value: longer customer lives.
Getting new services profitable faster
Apple is also planning a new virtual fitness class subscription service, Bloomberg reports, which would be included in higher-tier bundles. Bundling new services like this or News+, which hasn’t yet attracted many subscribers, could get them to scale fast enough to cover costs.
Additionally, a fitness service could possibly benefit from reduced content costs if it’s bundled with an Apple Music subscription. The biggest driver of Peloton‘s (NASDAQ:PTON) cost of subscription revenue in 2019 was its growing music royalty expense. If Apple can negotiate the use of music in fitness classes as part of its Apple Music subscriptions, it would significantly reduce the number of subscribers needed to turn a profit.
A fitness service also ties in with Apple’s focus on health with the Apple Watch. Increased attach rates for the fitness service could lead to greater Apple Watch sales. Again, the tech titan is great at tying its services and devices together to increase the lifetime value of a customer.
The Apple bundle can make more money now
Driving incremental subscribers for services like Apple TV+ and Apple Arcade should be a top priority for Apple. Instead of paying a variable cost per subscriber on those services, like it does with App Store subscriptions, Apple’s costs are largely fixed based on its content budget. As such, the company can offer a discount for bundling those services and still produce incremental operating income.
That’s somewhat unique for bundling economics. For example, the cable industry will offer customers video service bundled with home internet service. The companies basically break even on video service, but increase the retention rates for home internet service, thus increasing customer lifetime value.
But Apple can make a profit now and profit later (through increased customer longevity) with its bundle.
Focusing on Apple’s customer lifetime value, as driven by its services, is what will fuel the next stage of growth for the FAANG stock. Bundling services together to increase the longevity of the average device owner while potentially increasing operating profits in the short term is a powerful factor supporting Apple shares.
PS5, Xbox Series X and Switch size comparison shows off just how big next-gen units are – VG247
We already know that the PlayStation 5 is the biggest games console in modern history, but a new illustration has made it clear just how big the machine is.
Over on Twitter, illustrator and 3D modeller @keisawada has put together a series of images that really put the size of the next-gen consoles into perspective.
The PS5 is placed next to a Nintendo Switch, an Xbox Series X, an Xbox Series S, a 30″ TV, and a regular PS4. The difference in dimensions is clear to see.
Xbox Series S(275x151x63.5mm)も置いてみた。 pic.twitter.com/C1K4mIOHBA
— 澤田圭(ｷｬﾗｸﾀｰﾃﾞｻﾞｲﾅｰ) (@keisawada) September 20, 2020
Sony’s next-gen PlayStation towers above the other consoles and almost threatens to match the size of the TV, too. It really is a massive bit of kit.
We know why Sony’s machine is so big: it’s mostly due to cooling. Matt MacLaurin, the vice president of UX Design at PlayStation, has previously explained in a post on LinkedIn that the PS5 runs very hot. As such, it needs more space to adequately vent the heat.
The console hasn’t even launched yet and already it’s causing a schism online; some gamers think it looks pretty and futuristic, others think it looks out-dated and imposing.
Whatever you think of it, though, you can’t argue with its absolutely massive size. The PS5 is approximately 390mm tall, 260mm deep, and 104mm wide (and the digital version is only 12mm slimmer).
Sony will release two consoles in November; the standard model and the digital-only models They’ll set you back $499 and $399, respectively.
Sony apologizes for PS5 pre-order disaster — promises more stock soon – Tom's Guide
If you’re angry about the way Sony has handled PS5 pre-orders, you’re not alone. Pre-order windows for the $499.99 PS5 and $399.99 Digital Edition opened quickly after Sony’s mid-week games showcase, causing chaos across the internet as people struggled to get their orders in.
Now Sony has accepted that things haven’t gone smoothly, and issued an apology to fans about the way things have been handled. “Let’s be honest: PS5 preorders could have been a lot smoother,” the Sony’s official PlayStation account tweeted. “We truly apologize for that.
“Over the next few days, we will release more PS5 consoles for preorder – retailers will share more details. And more PS5s will be available through the end of the year.”
Let’s be honest: PS5 preorders could have been a lot smoother. We truly apologize for that. Over the next few days, we will release more PS5 consoles for preorder – retailers will share more details. And more PS5s will be available through the end of the year. pic.twitter.com/h1TaGsGBunSeptember 19, 2020
Hopefully that’s a sign that Sony was either too conservative with initial allocations, or it has a plan to ramp up production quickly – because a possible alternative is allocations intended for other markets’ November 19 launch being rerouted to cope with America’s November 12 date.
Either way, it’s good that Sony has recognized its mistakes, because the PS5 pre-order window opened in a manner that’s the polar opposite of what was originally promised. Back in July, Eric Lempel told Summer Game Festival curator Geoff Keighley that: “I think it’s safe to say that we’ll let you know when pre-order will happen. It’s not going to happen with a minute’s notice.
“At some point we’ll let you know when you can pre-order PlayStation 5, so please don’t feel like you have to go run out and line up anywhere until you receive official notice on how that’ll work.”
In something of an ironic twist, the man who asked the question also seems to be caught in pre-order limbo.
Amazon has just informed me I may not receive my PlayStation 5 pre-order on release day due to “high demand.” pic.twitter.com/3S1ZqmhWKaSeptember 18, 2020
Hopefully, Sony’s promised additional stock will cope with demand, because at the moment, Christmas has come early for scalpers. A search on Ebay for PS5 pre-orders reveals listings of up to $12,500 for confirmed console bundles.
This chaos is good news for Microsoft, which will open its Xbox Series X and S pre-orders at 8 a.m. PT.11 a.m. ET on September 22. While there’s no guarantee that the new Xbox won’t be just as scarce as the PS5, the company may well hope to pick up a few disappointed would be PS5 buyers unless Sony gets its act together very quickly indeed.
Sony Apologizes for Rough PlayStation 5 Preorder Mishap – HYPEBEAST
Sony has just tweeted an apology for its misaligned preorder system which took gamers by surprise — leaving many without a secured PlayStation 5 console. Taking a form closer to a Quickstrike sneaker release, the console was announced last Wednesday that it would be available for preorder the next day but was launched just hours later on Walmart — leading to other retailers opening their preorder links which caused a frenzy of preorders by quick-handed gamers and resellers alike.
Resellers got their hands on multiple preorders while fans were left emptyhanded. Recognizing this, Sony has promised to release more preorders “over the next few days” with more units coming at the end of the year. Those that missed out should get ready for an update from Sony next week so that they lock down a preorder of their own.
Let’s be honest: PS5 preorders could have been a lot smoother. We truly apologize for that.
Over the next few days, we will release more PS5 consoles for preorder – retailers will share more details.
And more PS5s will be available through the end of the year. pic.twitter.com/h1TaGsGBun
— PlayStation (@PlayStation) September 19, 2020
In other gaming news, the Nintendo 3DS has been discontinued.
PS5, Xbox Series X and Switch size comparison shows off just how big next-gen units are – VG247
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