Apple Show Time Event: Credit Card for iPhone Users, Subscription News, Lots of Celebs but Nothing to Show

Bottom Line


At a services-only event at its headquarters in Cupertino, CA, Apple was only partly successful in assuring Wall Street that it can grow services as the market for smartphones matures and iPhone sales slow. The Apple Card was the most compelling product Apple launched at the event and should make the iPhone and Apple Pay ecosystem stickier. An updated Apple TV app consolidates various third party apps, but Apple is not showing off clips or discussing pricing for its own Apple TV+ service.

Analytical Summary

Apple got its hardware news out of the way last week (see our Hands-On report with the iPad mini) and used the Show Time event for five apps/services:

  1. News+ – At $10 per month, this is a pricey way for consumers to get a lot of quality content presented in a beautiful format. Content owners who have not been able to establish a paywall should be willing to give Apple a high percentage of revenue in order to get some for themselves. For consumers, this may be a tough sell on its own, but it could be used to sweeten discounted content bundles down the line.

  2. Apple Arcade – With a few exceptions, game developers have found it difficult to make money without hooking whales with free-to-play loot box mechanics. That’s the rationale Apple gives for its upcoming subscription gaming service. Subscription gaming services are essential when they add value to existing games (Xbox Live), provide known games at a lower prices (PlayStation+), or remove the risk of buying games with limited playability (HTC Vive+). Apple Arcade is different: it asks consumers to pay monthly for games that they don’t know they’ll want to play. It’s a great idea, but Apple did not announce pricing, and it may not work.

  3. Apple Card – This was the most fully realized product that Apple announced at the event, and is designed less to disrupt the credit card industry overall as to improve the economics and experience of using Apple Pay. Apple is not charging fees, the app gives consumers better tools for managing interest, privacy controls are built-in, and the Card’s rewards are modest but doled out daily. The two biggest draws are likely to be Apple clarifying the obscure names found on bills with actual merchant names, and a beautiful titanium card with no listed numbers. When consumers use the physical card, they get even less cash back, but it’s really pretty and one should not underestimate Apple users’ desire for minimalist membership badges.

  4. Updated Apple TV app – The new app consolidates content previously found in multiple third- party video and TV apps in addition to iTunes and Apple’s first-party service coming later this year. The Apple TV app is also coming to the most popular smart TVs, and to streaming boxes from Roku and Amazon. Studios are not going to be happy about giving up control of the customer and user interface, but they have little choice but to allow their content to be aggregated because Apple controls the distribution platform.

  5. Apple TV+ - The long-rumored and partly announced service was given a TV upfront session aimed at Wall Street and consumers rather than advertisers. Instead of showing clips from the upcoming shows which might generate interest, Apple paraded celebrities on stage to congratulate themselves and describe their show concepts. Aside from a Sesame Street spin-off aimed at teaching kids coding basics, nothing described was unique or obviously must-see-TV. Apple was not willing to show off content or announce pricing, and it is not going to be available until the fall. It isn’t clear whether the programming will be worth paying for, but, more critically, it isn’t clear why Apple is in this business at all.

Competitive Landscape

Apple may lump these announcements together under “Services,” but they are completely different businesses. Apple News+ and Arcade are fairly straightforward digital services that indirectly challenge Google and Microsoft, but mostly are competing with non-consumption.

Apple Card will steal business from incumbent credit card companies, but it is designed mainly to capture the Apple Pay market. The danger for credit card companies is that this could expand the market for Apple Pay and siphon off a lot of spend among the wealthiest consumers. For rival device vendors like Samsung, Apple Card reinforces the hold that Apple has on its users – if you’re using Apple Pay and Apple Card, you are significantly less likely to switch to a phone from Samsung, Google, or OnePlus. However, in China, Apple may find it harder to break the hold that WeChat has on mobile payments, so Huawei, Xiaomi, and OPPO may have less to worry about in their home market.

In TV, Apple will be competing not only with other studios also paying A-list talent to create new shows, but also with the deep content libraries that studios have built or licensed. If Apple TV+ shows are worth paying for, people will overcome subscription fatigue and pay, but Apple did not announce pricing, and they may just be celebrity vanity projects. If the shows are good, Apple does have some advantages: Amazon has proven with Prime that you can successfully bundle video with completely different services, and Apple has many different things it can group together – everything from storage to music to games to AppleCare. Apple’s video service will also launch in far more geographies than most of its competitors.

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