Apple is due to report its fiscal third-quarter financial results on July 30. While the Cupertino firm is expected to report $13.1 billion in revenue from services, up 15% from a year earlier, most of those gains are expected to be from existing services like the App Store, not from the company’s newer Apple TV+, Apple Card, Arcade, and Apple News+ services.
Apple journalist Mark Gurman on Tuesday reported via Bloomberg that investors are not pleased with the lackluster returns Apple is seeing from the services in their first few quarters.
Apple TV+, Apple’s entry into the already crowded video streaming market, launched last November. Gurman says one analyst estimates that a mere 15% of eligible customers had signed up for the service, despite a one-year free trial included with the purchase of an iPhone or other Apple hardware.
Apple’s Arcade subscription games service is facing a similar scene. The service, which launched last September, recently began changing its strategy and has canceled contracts for some games in development, as it searches for other titles it believes will be more attractive to subscribers.
The service began offering some users a second free trial month, suggesting subscribers aren’t sticking around.
While the Apple Card has accumulated around $2 billion in credit lines since it launched last August. However, that is a fraction of other co-branded cards, says a February report by The Nilson Report.
Apple News+ is said to be the poorest performer among Apple’s services. The service offers access to subscriptions from The Wall Street Journal and The Los Angeles Times, as well as access to hundreds of magazines. However, it has failed to catch on with readers, possibly due to a lack of access to popular publications like The New York Times.
Recent reports indicate Apple is struggling to get users to pay for the service. A November report indicated the service attracted 200,000 sign-ups within its first 48 hours of availability, but those numbers have stagnated since then.
The App Store continues to be the bright spot in Apple’s Services growth, generating $32.8 billion in the first half of 2020 for developers. That’s up more than 20% from a year earlier, according to Sensor Tower estimates cited by Gurman. Paid subscriptions were over 515 million in the fiscal second quarter.
However, Apple’s App Store policies, including its 30% cut of the action from app sales and in-app subscriptions, are drawing unwelcome attention from U.S. antitrust regulators. Apple CEO Tim Cook and other CEOs of big tech firms will participate in an antitrust hearing on Wednesday, being held by the U.S. House Judiciary Antitrust Subcommittee as part of the investigation on competition in digital markets.
