Apple insists services are critical business; new numbers illustrate the scale

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Apple has shared some massive numbers in the services portfolio for the year that passed. In a snapshot, tech giant reported 900 million paid subscriptions across the suite of services, which includes Apple Music, Apple TV+ and the App Store, globally. This shouldn’t come as a surprise, considering the importance (and indeed the revenue generated) bestowed upon the services umbrella, by the company.

There are multiple Apple services, many of which you can think of as subscriptions, which users can sign up for individually or as a choice of bundles called Apple One. There is Apple Arcade cloud gaming, Apple Fitness+, Apple Pay as well as Apple News+, some of which aren’t available in all countries as of now. These also include the iCloud+ storage and functionality such as Private Relay to hide your internet protocol (IP) address, Hide My Email to mask your actual email ID from potential mailing lists, and cloud storage up to 2TB.

App Store numbers keep growing

Apple says that since 2008, as much as $320 billion was sent the way of the developers as their earnings for apps, services and digital goods sold on the App Store and across the Apple services portfolio. As an important element to this, the App Store continues to grow, and now sees around 650 million visitors every week in the 175 regions it is now available in.

It has been a tough year, with the very structure of the App Store under regulatory lens. The US Department of Justice may have a say in the ongoing Apple and Epic Games anti-trust appeal. The Netherlands’ regulators forced Apple to comply with an anti-trust order that allows dating apps to use third-party payment systems for users.

Apple first changed the structuring of the share for each transaction that it keeps for itself. There is now a 15% fee, instead of 30%, for businesses and app developers who earned less than $1 million in the previous calendar year. Secondly, in-app subscriptions in the first year also attract a 15% cut, instead of 30%.

Subsequently, the App Store pricing system was tweaked to introduce 700 additional price points for developers. This means, prices for apps, in-app purchases or subscriptions can now be as low as $0.29 or as high as $10,000, with rounded endings (like $1.00), instead of $0.99, as has been the case till now.

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The steady increase in users visiting the App Store reflects on the numbers. In 2021, the company informed that just the App Store ecosystem facilitated $643 billion in billings and sales during 2020, which coincided with the global pandemic and the subsequent lockdowns. This was a 24 per cent year-on-year increase at the time, before Apple’s share from each transaction was calculated.

“We believe that our products and services should be made for everyone. We believe that privacy is a fundamental human right, and that our highest obligation to our customers is security,” says Eddy Cue, Apple’s senior vice president of Services. Cue, an old hand at Apple, has completed 34 years at the company, and doesn’t shy away from crediting the success of different services to content creators globally.

“Never before have we enjoyed instant access to more cinematic original series, more engaging films, more global music, more creative apps, more essential journalism, and more immersive games and sports,” he adds.

Numbers testify to a growing importance

In the latest quarterly numbers, the importance of the services portfolio for Apple was again visible. Despite the increase in subscription prices for Apple Music, Apple TV+ and Apple One bundle in the period, for which the numbers were, services still saw increased revenue year on year. In fact, the $19.2 billion was a record in itself, up from $18.3 billion in the same period a year ago.

Apple Music and Shazam play the right tune

Remember when the first Apple iPod was launched in 2001? That’s 22 years ago. It was famously pitched with the slogan “1000 songs in your pocket”. At the turn of the year, Apple Music streaming service has 100 million songs available within one subscription. Many of them in the higher resolution lossless format too. Apple says monthly plays in Spatial Audio have grown by over 1,000 per cent.

In 2018, Apple spent $400 million to acquire Shazam, then a popular music discovery app, for smartphones. One of the things Apple did soon after was make Shazam ad-free on iPhones and Android phones. In fact, the tech giant keeps working on ShazamKit, which invites third party apps to integrate music recognition functionality in their apps and link that to Shazam’s catalogue of tracks and albums.

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In 2022, which incidentally marked 20 years of Shazam at our service for music discovery, the app clocked its 70 billion(th) successful Shazam discovery. The app has since added more national and city charts, something Apple Music has also painstakingly curated. In 2022, 40 million different songs were discovered by users on the app. In fact, Apple says that more than 1 million artists received their very first Shazam.

Piecing together movies, TV and sports

There are some interesting usage trends which have emerged across services. Apple TV+ content has received some significant awards through 2022, which has helped put in on a very hotly contested global video streaming map. Rivals, perhaps not in terms of the scale of the library but more as a subscription and attention share, include Netflix, Amazon Video, and Disney+, with local players making their presence felt too. Apple TV+ shows and movies, all of them being originals, were nominated 1,305 times and registered 300 wins.

Ted Lasso won the Emmy for the Outstanding Comedy Series, while the Academy Award for Best Picture went to CODA, which made Apple TV+ the first streaming platform to get an Academy Award in this category. Apple TV+ also made its first move in the live sports space, with Friday Night Baseball and Major League Soccer in the US. Whether Apple makes similar moves for streaming rights globally in 2023 remains to be seen.

In India, we are embarking on a trend of different rights being awarded for television broadcasts and internet streaming – something we have seen with the Indian Premier League T20 cricket tournament’s latest rights acquisition. This could give streaming platforms, including Amazon Prime Video (they have acquired broadcasts rights for cricket in New Zealand), a separate pie to fight for.




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