Apple journalist Mark Gurman published a post on Bloomberg in which he stated that investors are not expecting a significant profit on the Cupertino tech giant’s new services such as Arcade, TV+, News+, and Apple Card after their first few fiscal quarters on the market.
Apple’s newest services showing slow growth in the first year
The company is due to report results for the fiscal third-quarter on July 30th. Analysts have calculated that the company gained $13.1 billion in revenue from its services, which is a 15 percent increase from 2019. However, most of the company’s revenue comes from the licensing deals and the 30 percent commission Apple charges on App Store purchases, rather than the new services playing a major role in it.
Bloomberg‘s Mark Gurman reported that investors are not expecting a significant return from the newest services offered by the tech giant as some of them are still in the first year of launch.
Apple Arcade, a game subscription service, was launched in September of 2019. According to reports, the company has been taking steps to revamp the service due to weak growth in subscribers. it has been said that the company has canceled contracts for several titles that had been in development in an effort to introduce new and more engaging games to attract more users, instead.
Last November, Apple launched its very own content streaming service, Apple TV+. Though the service does not offer a diverse content library like Netflix or its other competitors, it is looking to acquire more blockbuster films. The company has also been offering free one year trials for people who have purchased new Apple devices after September 10th. Additionally, students who subscribe to its music streaming service for $5 a month get Apple TV+ free.
Apple Card was launched in August 2019. The company’s partner, the Goldman Sachs Group acquired about $2 billion in credit lines since the launch date of its card. The credit card offers a deferred payments program, daily cash backs, no fees, financing programs, and more. However, reports show that the service is not performing as well as other co-branded cards.
Apple News+, launched in March of 2019, has had the most stagnant growth rate so far. Though the service provides access to many major publications, it has failed to catch on with users., possibly because popular papers like The New York Times and The Washington Post have refused to sign deals with the tech giant.
The majority of Apple’s revenue comes from the App Store. The company takes a 30 percent cut from all paid apps downloaded from the App Store as well as from in-app purchases. The App Store generated $32.8 billion in the first half of 2020 for developers, according to Sensor Tower.
However, there is an ongoing antitrust inquiry into the company’s App Store policies. U.S. antitrust regulators are looking into the 30 percent cut the tech giant takes from developers. The company recently commissioned a report, defending the 30 percent commission it takes from App Store transactions. According to the research, the company’s commission rate is comparable to its competitors in 38 digital content markets.