SVOD Helps Apple Post Record Q1 Services Revenue of $12.7 Billion

Despite myriad naysayers, the Apple TV+ subscription streaming video service is quietly exceeding expectations and producing on the bottom line, according to CEO Tim Cook.

Speaking Jan. 28 on the Q1 fiscal call, Cook said Apple TV+, which launched on Nov. 1, 2019, has had a “rousing start” with strong consumer response worldwide. Unlike Disney+, which launched on Nov. 12 in six markets, Apple TV+ is available in 100 markets that sell iPhone, iPad, Apple Watches and Mac computers.

The SVOD platform helped Apple’s “services” business segment generate record revenue of $12.7 billion for the first quarter, ended Dec. 28, 2019. That was up 17% compared to services revenue of $10.8 billion in the previous-year period.

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The services category, which also includes iTunes, the App Store, the Mac App Store, Apple Music, Apple Pay, AppleCare and Apple Arcade, has become a significant revenue driver for the Menlo Park, Calif.-based tech giant.

Apple also had a great quarter overall, posting record revenue of $91.8 billion, up 9% from the year-ago quarter. International sales accounted for 61% of the quarter’s revenue.

“We are thrilled to report Apple’s highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for Services and Wearables,” Cook said.

He said Apple’s install base across all branded devices grew in each of the company’s geographic segments topping 1.5 billion.

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“We see this as a powerful testament to the satisfaction, engagement and loyalty of our customers — and a great driver of our growth across the board,” Cook said.

 

Apple Ups Q2 ‘Services’ Revenue to Record $11.5 Billion

Apple April 30 reported record “services” revenue of $11.5 billion, up more than 16% from revenue of $9.13 billion during the previous-year period.

As the media/tech giant shifts its focus from hardware products such as iPhone, iPad, Mac and Apple Watch, among others, it has upped scrutiny on services, which include sales of digital movies and TV shows on iTunes and Apple TV, in addition to the pending rollout of Apple TV+ app and separate subscription streaming video service.

“Our March quarter [services] results show the continued strength of our installed base of over 1.4 billion active devices,” CEO Tim Cook said in a statement.

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Cook eyes Apple’s install base as the genesis for the future success of AppleTV+ and related Apple business ventures such as Apple News, Apple Pay (including branded credit card), Apple Arcade (gaming) and Apple Music.

Indeed, Apple said sales of its legacy iPhone declined nearly 18% to $31 billion from $37.5 billion during the previous-year period. The attributed the decline to 21.5% drop in unit sales in China – a slight improvement from 26.7% unit drop in the prior-year quarter.

Mac revenue dipped 4% to $5.5 billion, while iPad sales revenue increased 21.5% to $4.8 billion.

Net revenue fell about 5% to $58 billion from $61.1 billion. Net income fell almost 17% to $11.5 billion from $13.8 billion.

Apple Completes Shazam Music Recognition App Acquisition

Apple Sept. 24 announced it has finally completed the acquisition of Shazam, a highly-rated music app that enables users to recognize a song playing around them after hearing a few notes. The app has been downloaded more than 1 billion times.

Financial terms of the deal first revealed last December were not disclosed, although media reports pin the transaction around $400 million. It marks Apple’s biggest acquisition since the 2014 purchase of Beats for $3 billion.

“Apple and Shazam have a long history together,” Oliver Schusser, VP of Apple Music, said in a statement. “Shazam was one of the first apps available when we launched the App Store and has become a favorite app for music fans everywhere.”

The app – which was reportedly coveted by Spotify and Pandora – will soon be offered ad-free to users, according to Apple. How the tech giant plans to monetize Shazam remains to be seen.

Shazam says users employ the app more than 20 million times each day – yet the technology has reportedly never been profitable despite enabling users to discover, interact with and share video, audio or printed content across devices and mediums.

Online music has become a hot market with Apple Music recently edging ahead of Spotify with more than 20 million paying subs. In May, CEO Tim Cook said Apple Music was approaching 50 million users when combining free and paid subs.

Apple revolutionized personal technology with the introduction of the Macintosh in 1984. Today, the company has transformed consumer technology with the iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software platforms — iOS, macOS, watchOS and tvOS — provide seamless connectivity across all Apple devices and services, including the App Store, Apple Music, Apple Pay and iCloud.