Apple Arcade and TV Plus: How to out-Prime Amazon's subscription service

It's time to take the Upgrade Program to the next level. The monthly price would include all-you-can-eat Apple.
Written by Jason Perlow, Senior Contributing Writer

On June 3, Apple held a keynote for its annual World Wide Developer Conference (WWDC). It introduced iOS 13, the latest incarnation of its mobile operating system, as well as iPad OS, which aims to make its tablet into a PC replacement. Apple also introduced WatchOS 6 with enhancements that make its wearable into more of an independent OS from the iPhone, by including the app store. And it introduced a high-end Mac Pro workstation, geared toward creative professionals.

Not heavily discussed at the keynote were two new services, Apple TV Plus and Apple Arcade, both of which were previewed at a separate event in March. We don't currently know what they will each cost, nor do we know much about their content at launch -- beyond a preview video and industry scuttlebutt.

Stacking up the costs of services

Apple TV Plus will be a premium video streaming service similar to Netflix or Amazon Prime Video, with exclusive original content like Steven Spielberg's Amazing Stories, a post-apocalyptic science fiction drama; See, which stars Aquaman and Game of Thrones star Jason Momoa; and alternate history space race drama For All Mankind, which is from Battlestar Galactica producer Ronald D. Moore.

Apple's new video service comes at a time when consumers are already bombarded by existing premium video streaming services from companies like Netflix, Hulu, Amazon, HBO, and CBS (ZDNet's parent company). And, other than announcing pricing and a Nov. 12 release date, we haven't seen what Disney (which owns the Marvel, X-Men, and Star Wars properties) intends to do yet with Disney Plus.

As for game subscription services, Apple Arcade will launch this autumn with over 100 games specifically designed by selected developers. It will compete with Google Stadia and Microsoft's xCloud, both of which appear to be mostly hardware agnostic. Stadia will run on inexpensive Chromecast devices as well as existing Android phones. While Microsoft hasn't gone into specifics with xCloud, it is likely to run on existing Xbox One systems and both of the major mobile platforms.

All this is on top of the monthly subscription services Apple is already selling: Music, News Plus, and iCloud storage. As my colleague Jason Cipriani noted in our recent Jason Squared, consumers are beginning to suffer from subscription fatigue.

Once you start stacking up the costs of all the services you use to stream premium content, be it music, video, games, and news, you can quickly get into the $50- to $100-per-month range, which approaches the very same monthly costs consumers have tried to eliminate by being "cord cutters" in the first place.

Apple Select: An all-you-can-eat option

Apple is launching its new services as a relative latecomer to the unique content game, and during a period when device revenue growth from its iPhone and iPad businesses is slowing down.

While it has not been in the company's traditional interests to provide value superior to its competitors, as its products have traditionally been more expensive and positioned as more luxury and super-premium, Apple may want to consider adopting some of the marketing tactics its competitors, such as Amazon, have used to cultivate loyalty for their services.

ZDNet Editor-in-Chief Larry Dignan makes a good argument for an "Apple Prime" -- or, as I like to call it, an "Apple Select," which would give its customers an all-you-can-eat option that would be more affordable than buying all the services piecemeal. He thinks that a bundled Apple offering should cost between $300 and $400 a year.

I agree with his fundamental analysis and even the suggested price point. But the big issue here is: Does Apple want to be in Amazon's turf, where continuous spending also means eternal rewards and more perks added to the mix for the same monthly or yearly fee? If its strategy with becoming a financial services provider with Apple Card is any indication, I'd say, "Yes."

The problem, however, is that the traditional Apple strategy has always been about capturing entire ecosystems lock, stock, and barrel, which includes the devices and the software and apps that run on them. Consequently, the company now finds itself in the crosshairs of both the US antitrust apparatus and the even more aggressive equivalent in the European Union.

Amazon's services -- as well as Google's -- are fundamentally multi-platform. While both of these companies have their own devices and platforms, they can run their services on everyone else's -- including direct competitors. Because they are cloud- and services-focused, it's not in their interests to restrict their streaming and content products to their platforms.

To be platform-agnostic, or not to be

Apple is going to need to think long and hard about just what it wants to do with its content properties. Does it restrict them only to its iOS, iPadOS, MacOS, WatchOS, and TVOS platforms? Or does it provide these services on Android, Windows, and other set-top platforms such as PlayStation, Nintendo, Roku, and smart TVs as well?

The company has already made some baby steps to this effect, by porting Apple Music to Android, although reviews of the app and the service running on the platform have been tepid, and Apple has hardly put its best effort into making Android a first-class citizen with the service.

Apple has committed to putting Apple TV Plus on other platforms such as Roku, Amazon Fire TV, and smart TVs. That's a good start, but it's hardly the makings of a platform-agnostic service that Amazon offers with Prime. Apple's other services such as Books and News Plus don't run on other platforms and neither does its popular iMessage service.

And while Stadia and xCloud will use streaming technology to provide immersive gaming experiences, it doesn't look like Apple Arcade is a streaming service, so it's effectively stuck on iPhone/iPad/Apple TV and potentially Mac (unless the company creates a similar game streaming infrastructure so it can run on other platforms).

It's unlikely, I think, that Apple is going to go through the extra effort to become a platform-agnostic company. It's not just in its DNA to do this. I think, however, the company can bundle not only the software and content on a monthly or yearly basis, as Larry Dignan suggested, but also the hardware.

How Apple Select could work

Currently, Apple has an Upgrade Program for iPhone devices, which is roughly equivalent to a lease, so customers can replace their smartphone every year with a similar monthly payment that goes on ad-infinitum. In my opinion, it's a good program for those like myself that like to keep their hardware current, and it includes AppleCare+. It saves me the trouble of having to resell the phone hardware every year, and it's a payment that can easily be amortized and declared as a business expense.

I would like to see Apple extend this to other hardware, such as the iPad, the Apple Watch, the Apple TV, and Macs. I'd like a similar monthly payment, using Apple Card (encouraging reward spending and generating interest for Apple), which would get me a new device every year or every two years. And the monthly price would include an all-you-can-eat Apple Select (or Apple Prime or Apple Platinum) with all of Apple's services. Plus, a priority concierge-type support at the Apple Store for everything.

Not everyone would necessarily be up for something like this. Perhaps only 10% of Apple's existing customer base would be willing to spend upward of, say, $1,500 to $2,000 a year for this, depending on the mix of what they are leasing. But it certainly would be a premium offering that would differentiate from what Amazon and the others are doing.

How much would you pay each year to be an Apple Select customer? What would you expect from such as service offering? Talk Back and Let Me Know.

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