Apple executives cited the recently launched Apple TV+ as a positive contributor to the tech giant’s record services revenue of $13.3 billion in the first quarter.
CEO Tim Cook also took note of special co-ordination with A-list talent during the COVID-19 pandemic.
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“We worked with everyone from Oprah to Lady Gaga to inform, entertain and [give] back through Apple TV,” Cook said during a conference call with Wall Street analysts. Oprah Winfrey has been taping interview segments with various guests from her home in Santa Barbara, and Apple TV+ has released them several times a week. Lady Gaga helped spearhead the star-studded “Together At Home” concert, which streamed via Apple TV.
“Services like FaceTime and Messages set new all-time records for daily volume during this quarter as users relied on their devices to stay connected in a new reality,” Cook added.
CFO Luca Maestri didn’t dwell on video streaming but did name-check the newly minted service along with subscription offerings like iCloud and Apple Music during his comments. Apple overall cleared the bar set by analysts, with Maestri and Cook describing a roller-coaster ride in responding to COVID-19.
Customer engagement during the COVID-19 shutdown period is growing, Maestri said, along with the number of transactions and paid accounts under the Services banner. Strategically, he said, Apple TV+ is a marquee asset but also another way, along with Netflix and hundreds of other video apps, of promoting Apple TV, where the company takes a hefty fee of each transaction.
The Services unit, which rose 16% to $13.3 billion in sales during the quarter, is now nearly one-quarter of total company revenue. Streaming numbers were not broken out — no change of protocol there — but the company said it ended the quarter with 515 million global subscribers to services, including newer offerings News, Arcade, Card and TV+.
Apple has been gradually pivoting toward services, introducing a credit card, payments, videogames and other initiatives as it aims to wean itself from hardware sales. Because of supply-chain sensitivities and changes in the pricing plans offered by wireless carriers, iPhone revenue peaked in 2018 and no new gadget has yet become a comparable game-changer.
The quarter ending March 31 was the first full quarter of results for Apple TV+. The service, which launched in 100 countries last November, is one of a handful of multi-billion-dollar challengers to streaming leader Netflix. Strategically, it is premised on Apple’s large installed base of devices, which ended 2019 at about 1.6 billion. Every customer purchasing an Apple device is given one year free of Apple TV+, which otherwise costs $5 a month.
One unique aspect of Apple TV+, which has necessitated one-episode-at-a-time release patterns and increased scrutiny on original programming, is that it has no library. Last November, the launch slate head by The Morning Show, Dickinson and See drew mixed reviews from critics. The Morning Show gradually won over some early skeptics as it unfolded and it has a second season in the works. Stars and producers Jennifer Aniston and Reese Witherspoon collected Golden Globe nominations for their performances and the show got a series nomination. Aniston also won a SAG Award and Billy Crudup took a Critic’s Choice award.
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