Apple Hopes Aggressive Pricing Will Boost Its Services Business

The iPhone maker revealed surprisingly low prices for two upcoming service offerings.

| More on:

With the slowing sales of the iPhone as a backdrop, Apple (NASDAQ: AAPL) has been increasingly relying on other areas of its business to generate future growth. The company telegraphed its intentions in early 2017 when Apple CEO Tim Cook announced the audacious plan to double its services business by 2022.

Toward that end, the tech giant unveiled a diverse group of four new services at an event in April, including a subscription news service, a credit card, a monthly mobile gaming service, and a streaming video service. Apple News+ launched immediately for $10 per month, and the Apple Card debuted in August.

Apple finally pulled back the curtain on the two remaining offerings — Apple Arcade and Apple TV+ — at its product event this week, with the prices for these services surprising investors and Apple fans alike.

Would you like to play a game?

The company’s new mobile game entry, dubbed Apple Arcade, will be available via a new tab in the App Store on Sept. 19, for a monthly subscription price of just $4.99. It will feature a catalog of more than 100 curated, exclusive titles, which users can initially play on the iPhone and eventually across a host of devices, including the iPad, iPod Touch, Mac, and Apple TV.

The number of games will increase in the coming weeks, and Apple plans to add new titles every month. The launch includes a 30-day free trial for prospective subscribers. Apple said all the games could be played offline, and a single subscription would include access for up to six family members via the use of the Family Sharing feature.

Joining the crowded streaming wars

The biggest news, however, was related to Apple TV+, the company’s long-awaited streaming video service. Apple revealed that it would launch on Nov. 1 with a monthly subscription price of $4.99 and a seven-day free trial. Additionally, the Cupertino company said customers that purchased a new device would “enjoy one year of Apple TV+ for free.” This was consistent with rumors that emerged late last year that the service would be free to owners of Apple devices.

The aggressive pricing by Apple was a surprise to many, as recent reports had suggested the company was considering a $9.99 price point.

Apple provided some details about its streaming offering at a star-studded event back in March, revealing a virtual who’s who of Hollywood elite that would be in front of and behind the camera creating Apple Originals, including Steven Spielberg, J.J. Abrams, M. Night Shyamalan, Ron Howard, Sofia Coppola, Reese Witherspoon, and Jennifer Aniston (not all of those big names have stayed with Apple — Abrams, for example, is reported to have withdrawn over issues of exclusivity).

Jennifer Aniston and Reese Witherspoon in a scene from the upcoming Apple TV+ original series The Morning Show.

Jennifer Aniston and Reese Witherspoon in a scene from the upcoming Apple TV+ original series The Morning Show. Image source: Apple.

Reports have recently emerged that Apple’s content budget, which was originally set at about $1 billion, has since ballooned to more than $6 billion, ramping up spending to compete with big-name streamers like Netflix and the soon-to-launch Disney offering, Disney+.

Off to a slow start

Apple highlighted nine shows that will be available when Apple TV+ debuts in November. Compare that to the more than 500 movies and 7,500 episodes on Disney+ and the nearly 4,000 movies and an estimated 1,800 multi-episode TV shows on Netflix, and it’s easy to see why Apple was so aggressive with its pricing. Viewers can watch all that Disney+ has to offer for $6.99 per month, and Netflix’s least expensive plan clocks in at $8.99 per month, while both services offer far more available programming.

Apple will continue ramping up its content over time and is hoping that its aggressive pricing and free giveaways will keep customers around long enough to get them hooked on some of the new shows on Apple TV+ — and, in so doing, help the company boost its ever-growing services revenue.

Should you invest $1,000 in WELL Health Technologies right now?

Before you buy stock in WELL Health Technologies, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and WELL Health Technologies wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Danny Vena owns shares of Apple, Netflix, and Walt Disney and has the following options: long January 2021 $190 calls on Apple, short January 2021 $195 calls on Apple, and long January 2021 $85 calls on Walt Disney. The Motley Fool owns shares of and recommends Apple, Netflix, and Walt Disney. The Motley Fool has the following options: long January 2021 $60 calls on Walt Disney, short October 2019 $125 calls on Walt Disney, short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Tech Stocks

Tech Stocks

The Smartest Tech Stock to Buy With $4,000 Right Now

Down almost 50% from all-time highs, this tech stock offers significant upside potential to shareholders in May 2025.

Read more »

Income and growth financial chart
Tech Stocks

2 Canadian Stocks That Could Turn $10,000 Into $100,000

If you're looking for growth and income, these two are some of the best options out there.

Read more »

money goes up and down in balance
Tech Stocks

1 Magnificent Tech Stock Down 27% to Buy and Hold Forever

Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) is starting to look severely undervalued after its latest drop!

Read more »

ways to boost income
Tech Stocks

1 Undervalued TSX Stock Down 18% to Buy and Hold

This TSX stock remains down but is due for a huge comeback for investors.

Read more »

grow money, wealth build
Tech Stocks

This TSX Stock Down 20% Could Triple Your Money by 2028

Down 20% from its 52-week high, this TSX stock is positioned to more than triple investor returns over the next…

Read more »

money goes up and down in balance
Tech Stocks

The Smartest Canadian Stock to Buy With $600 Right Now

The Canadian stock market has some big winners trading at discounted share prices, ripe for the taking, and here’s one…

Read more »

Muscles Drawn On Black board
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $4,000

Seeking strength from your investments? Then these are the three stocks to consider first.

Read more »

Investor wonders if it's safe to buy stocks now
Tech Stocks

Where Will BlackBerry Be in 4 Years?

With fresh partnerships and a tighter focus, BlackBerry is trying to lay the foundation for long-term growth.

Read more »