- Apple is expected to launch a new streaming TV service and news subscription app at a press event on Monday.
- The launch of the two subscriptions will culminate nearly 10 years of Apple interest in distributing news and TV content.
- Apple has yet to describe what the draw for consumers will be for these products.
Apple is holding a press event at its campus in Cupertino, California, on Monday at 1 p.m. ET, where the company is expected to announce new subscription services as it seeks to find new areas of revenue growth to combat stalling iPhone sales.
The announcements are likely to include a streaming video service that includes original programming produced by Apple and bundles of streaming packages from current players like HBO and Starz. On top of that, Apple is expected to revamp its News app to include a subscription to several major publications in one spot.
Monday's announcement is critical for the iPhone giant not only because investors and analysts believe that Apple's subscription services are going to drive the majority of revenue growth over the next few years. The new services also represent the culmination of dreams Apple has been chasing for almost a decade.
Apple has been working to break into TV since before current CEO Apple Tim Cook took over in 2011. Late Apple CEO and cofounder Steve Jobs said that he "cracked" TV, according to a 2011 biography written by Walter Isaacson.
"Going back to Jobs, Apple has always been obsessed with content ambitions," Wedbush analyst Daniel Ives said. "But the resources and strategy behind this has been flawed and now Cupertino is playing way behind the eight ball."
Apple has also signaled its desire to break into TV during the Cook era.
"This is an area of intense interest," Cook said in response to a question about Apple TV in 2012. "We are going to keep pulling the string and see where this takes us."
In 2014, Apple's senior vice president in charge of software and services, Eddy Cue, went so far as to say that the "TV experience sucks," echoing Cook's comments that today's TV experience is "stuck in the 70s." Earlier this year, Cook even said that he expects the cable bundle to "unravel."
The stakes for Monday's announcement are even higher given that it looks likely that Apple might not have any new hardware to reveal after launching new iPads, iMac computers and AirPods headphones in the run-up to Monday's event. Usually, new hardware is the star of the show at Apple launches.
"It's an appropriate move to clear the decks of hardware to emphasize the point around services," Loup Ventures founder and longtime Apple analyst Gene Munster said.
"I think they don't want people writing about new AirPods and iPads. They want them focusing on where the company is going long-term."
Apple has been associated with 34 different productions, according to a tally from Goldman Sachs, and we'll get our first glimpses of that content on Monday. Apple has reportedly invited several Hollywood celebrities to attend the launch, including Jennifer Aniston and Reese Witherspoon, and is shelling out a reported $1 billion per year on video content.
That content will be part of a new digital TV strategy, CNBC reported in October. Apple plans to mix its original shows, which it will provide for free, alongside subscription "channels" from services like HBO and Starz, which users could either purchase individually or subscribe to as a bundle for a discount. The Wall Street Journal on Sunday reported those channels will be available for $9.99 a month each.
This would be a significant reduction of Apple's grand ambition over the past decade. In Issacson's biography of Jobs, it sounded like Apple was going to build a magical television, instead of a marketplace for channels.
"I'd like to create an integrated television set that is completely easy to use," Jobs told Issacson. "It would be seamlessly synced with all of your devices and with iCloud," and would have the "simplest user interface you could imagine."
The prototype TV in Apple's labs included an ultra-high-definition display, online videoconferencing cameras and a streaming TV service separate from cable.
The Apple TV rumors affected Apple stock. Carl Icahn wrote letters in 2015 saying that he was investing in the company because he expected Apple to release a new TV in the near future, but Apple had already shelved those plans, according to the Wall Street Journal. In 2015, the company considered buying Disney after that company declined to participate in a streaming video service, and also considered a bid Netflix, the Wall Street Journal reported on Sunday.
The product announced on Monday will be greatly reduced from these ambitions. Instead of an Apple television set, Apple's TV service will stream on iPhones, iPads and the Apple TV set-top box. Apple has also shown that it's willing to distribute video on third-party gadgets, and the Wall Street Journal reported that the company is negotiating with video set-top box maker Roku to distribute the service there. In January, Apple partnered with Samsung to bring the iTunes video store to Samsung's smart TVs, for example.
That's not the only subscription Apple is likely to discuss on Monday.
Last year, Apple bought Texture, an app that bundled a slew of digital magazines together for $9.99 per month. While that service is still operating, Apple is expected to relaunch it as a paid tier for the Apple News app next week. The app would provide an all-you-can eat package of news publications for one monthly fee.
Reports about Apple's news package have centered around the revenue share between publishers and the iPhone giant — 50 percent could go to Apple, according to reports, which is higher than the 30 percent Apple takes from apps sold in the App Store. That could be one reason why The New York Times won't be part of the package, the newspaper's CEO hinted to Reuters.
We don't yet know which other newspapers and magazines might participate, or how the service could promote paywalled versus other content. The issue is especially important to media companies that are growing reluctant to share content with tech companies without getting data about readers, or at least a healthy portion of ad and subscription revenues, in return.
There's a remote chance that Apple could use Monday's event to announce a release date for its wireless charger, AirPower, which was announced in 2017 but missed its 2018 launch window. A new marketing image for the charger was discovered on Apple's website last week, hinting that it could finally arrive soon.
But given Apple's emphasis on services, it's more likely to reveal or preview a third service to complement its TV and news subscriptions.
One possibility is an iPhone-integrated financial service centered around a Goldman Sachs-issued credit card. Goldman CEO David Solomon is reportedly attending Monday's event.
"While video and news services have dominated recent press reports, we believe Apple will also extend its payment and ad services some time this year with any announcements in these areas serving as positive surprises," Morgan Stanley analyst Katy Huberty wrote in a note distributed on Friday.
Apple could also launch a service that bundles various video games. Cheddar reported in January that Apple is investigating a gaming subscription service.
But Apple is most likely going to use its time to sell its new services-focused product strategy to consumers. With over 1 billion Apple devices in use today, Apple has to prove it can fulfill its promise to create innovative new digital products to keep those users paying long after they first buy a new iPhone or iPad.
In addition, Apple's TV service is launching into a crowded field of streaming video services that's only expected to grow over the next year with new offerings from Disney, AT&T and NBCUniversal. Apple will have to prove its TV service can stand out.
When Apple CEO Tim Cook addresses a crowd of journalists, analysts and movie stars on Monday about why Apple's subscription products are better than the competition, expect a detailed explanation. After all, Apple leadership has only been thinking about TV and news for the better part of a decade.
Correction: The expected pricing for HBO, Starz and Showtime has been updated following an editing error.