There has been tons of speculation as to what Apple (AAPL) may announce at its event — dubbed "It's showtime” — which will be held on March 25 at the Steve Jobs Theater on its Apple Park campus.
Chief among the rumored unveiling is the likelihood that the tech giant will unveil a new services offering, which is widely expected to include a video subscription service and a news subscription. The latter has been touted by analysts as the Netflix (NFLX) for news service. Reports suggest that publishers needed tons of persuading from Apple to agree to a revenue share model, where Apple plans to keep about 50% of subscription revenue, according to WSJ sources.
Needless to say, this is an important event, particularly for investors and analysts who have been obsessed about the need for Apple to diversify its business away from iPhones. Apple shares closed Friday at $191.05. The shares, which received three analyst upgrades on Thursday, are up 21% year to date and have risen 27% over the past three months, besting the 10% year-to-date rise in the S&P 500 index.
One of the upgrades on Thursday came from Laura Martin, analyst at Needham, who assigned the stock with a Strong Buy rating. "On Monday, Apple will announce a new content service that, IF adopted by its users, should lower churn and drive higher lifetime value for each of Apple's 900 million unique ecosystem users,” Martin said. Adding, “Additionally, it might attract new users to Apple's ecosystem.”
Aside from the widely-expected new services bundle, Apple is also rumored to debut a stand-alone video streaming service as well, according to the Information, which earlier this year noted that Apple was in negotiations with studios and networks, advising them to be prepared for an April launch.
Bloomberg reported last week that Apple had reached out to AT&T (T), parent company of HBO as well as CBS Corp (CBS), which owns Showtime, in its rush to assemble a catalog of film and television for said subscription service.
It is not known how far these conversations (or negotiations) have gotten. And there are no clear details as to whether Apple would bundle the news service along with the streaming service, or if they will be offered separately. What we do know is the company has long had ambitions to enter this space and has signed a number of production or development agreements with both producers and Hollywood actors. This is in addition to the company last year announcing a multi-year partnership with Oprah Winfrey.
It remains to be seen whether any of these rumors are correct. What is clear is that, based on both confirmed and unconfirmed reports, Apple’s streaming service catalog will contain a mix of content that is either funded by Apple as well as those owned by major studios which it will license. As for the news subscription service unveiling, which is said to be priced at monthly rate of $10, this one is not so clear cut.
Reports suggests Apple would aggregate news and magazine subscriptions into one product. I’m curious to know what else will the subscription provide, given that some publishers such as The Washington Post and New York Times are hesitant to sign up due to the terms of the proposed revenue share agreement.
All that said, the good news is that the company is looking to diversify its business, which bodes well for its long-term prospects.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
