Aggregating Apple

Posted: March 31st, 2019 | Author: | Filed under: Uncategorized | No Comments »

On Monday, Apple announced three new services. Apple News+, TV+ and Apple Arcade. These three services follow the mold of Apple Music. Apple is taking content from many different providers, aggregating it into one service, and selling it to users as a monthly subscription.

Each of these services aggregate content providers into a nice package to entertain users for a low price. Apple is not reinventing the wheel with any of these services as Netflix, Spotify, etc have established a playbook on aggregating content.

Strategic Advantages

When Apple began entering the services industry they started off with iCloud. iCloud made sense for Apple as it extended the capabilities of the iPhone, iPad, and Mac. As Apple continues to evolve into a services company, there are many ways they could go. Apple could create a gmail-like service or a search engine, but neither would take advantage of Apple’s unique position.

Apple News+, TV+, Arcade, and Music are leveraging many of Apple’s core competencies. Apple is leveraging its distribution advantage, its cash advantage, and its brand to create services that will generate high margins.

Apple’s distribution advantage starts with its 1.4 billion active iOS devices. For years, Apple was content with the revenue and high profit of selling the iOS devices itself but, starting with Apple Music, Apple is now taking advantage of this incredible reach. All of these services will most likely exist as default apps on each iOS device, they’ll each have trial periods and you’ll easily be able to sign up for each service through the credit card on the app store or your apple pay card.

Apple, unlike other potential service providers, is not limited to App Store rules or the iOS public SDK. For example, Apple can take advantage of its full access of iOS to create a superior online/offline experience with Apple Arcade.

Although Apple controls a lot of demand, it needs more than that to pull off these services effectively. Apple’s cash hoard allows it to spend liberally to create its own content to augment the TV+ experience. As Netflix has shown, having unique content is key to acquiring and retaining customers to a TV service.

Apple also has one of the best brands in the world. Stars like Oprah and Steven Spielberg, publishers like People and WSJ, music labels and game developers are lining up to be associated with Apple.

Improving the Strategy

As Google and Amazon have learned, making your services available everywhere is key to success. Apple has taken this approach with Apple Music (available on Android) and Apple TV+ (available on many TVs). However, as of now, Apple News+ and Apple Arcade are exclusive to iOS. This isn’t ideal. Apple created Apple News+ from its acquisition of Texture. Texture Android users were not thrilled to hear that Apple was shutting down Texture with no alternative for them. This may be due to not being able to get publishers and game developers on board.

Apple should continue to expand these services to other devices. Apple should increase its reach, aggregate more demand and therefore have more power over the content providers. This will allow them to attract more content and be able to negotiate better terms.