Apple's Quest For an Entertainment Mega-bundle with Apple Music and Apple TV+
Apple has reportedly embarked on talks with music companies by way of laying the groundwork for a kind of subscription mega-bundle that, at this point, would include both Apple Music as well as the company’s new streaming TV service launching on November 1st.
This news comes via the Financial Times, which cites anonymous sources as saying the endeavor is still at an early stage and that Apple hasn’t even started talking about pricing details yet. However, it seems the music companies have displayed some initial resistance to this idea, perhaps thinking that adding more content to a bundle along with Apple Music for one monthly price might dilute the music-related revenue those companies are already receiving.
The Take: Apple has portfolio of unique subscription services including Apple Care, iCloud, Music, News+, TV+, and Arcade that would offer tremendous value if bundled together. Although the idea of all or some of these services being packaged together is not a new one.
In their quest to become an entertainment super-bundle, Apple faces early hiccups in its talks with record labels. Some executives fear that margins could take a hit if Apple undercuts the $9.99 monthly price it currently charges for its music streaming service.
But Apple still controls their own bundling destiny. While they have to license music rights and subsequently share revenues with the record labels, they solely own the rights to the content being created for Apple TV+.
Because TV+ content costs are fixed, Apple could theoretically bundle those services together for $12.99 per month without putting much pressure on music rights holders to offer a discount.
Like Disney, Apple is interested in amassing subscribers as fast as possible. And like Disney, bundling its services is the best way to get there. Apple Music has done well (currently around 60m subs), largely due to the fact that the app’s pre-installed on iPhones and in the pockets of millions of people. Historically, that strategy hasn’t been as successful working in the other direction -- getting people to buy new Apple devices. But giving away TV+ for free to new buyers of iPhones, iPads, and Macs is a great start.