Apple is known for overcoming major challenges.

The Mac maker went from a leader in the home computer revolution four decades ago to nearly insolvent in 1997. Its iMac and iPod survived the dotcom crash, after which the iPhone survived the Great Recession. Since then, the iPad, Apple Watch, and a variety of iPhone accessories have helped make Apple the most respected company in the world.

But the company faces a new challenge: our collective tiredness of paying monthly subscriptions.

The tech giant said Thursday that revenue from its services, which include the $11-a-month Apple Music and $7-a-month Apple TV Plus, were facing an unusual problem. For the second quarter in a row this year, Apple’s services revenue fell from a peak of $19.8 billion just after last year’s holiday shopping season. That fell to $19.6 billion in the April-May period, and Apple has now reported that it reached $19.2 billion in the June-August period.

The company also warned that while it expects its services business to pick up again during the holiday shopping season this year, this will be “influenced by the macroeconomic environment”. Or, in other words, all the bad things that happen on the front pages of newspapers, like Russia’s war against Ukraine continuesnow a 3-year global pandemic and painful inflation.

But it also feels increasingly that we, as consumers, are starting to reach the limit of the number of monthly subscriptions we are willing to pay for. Here at CNET, we did the math, and still streaming TV is cheaper than cable TVwhen you start throwing streaming music, training services, video game catalogs and even food deliveryit starts to add up quickly.

In 2019, when Apple launched its $5-a-month Apple Arcade game subscription service, you could bet the selection of fully paid games, from kid-friendly to adult-friendly, would be compelling. But even then, some industry executives began to warn that if people were offered too many subscriptions, they would eventually become disenchanted, too.

“It’s a real problem,” Strauss Zelnick, head of Grand Theft Auto developer Take-Two Interactive, told me in 2019. they are not going to pay for them.’

Earlier this year, Netflix raised prices on its hit service by as much as $2 to help fund its stable of series and movies, accidentally sparking an exodus of more than 1 million subscribers by summer, this is the biggest drop in history. The company has since recovered and started to win back subscribers, but investors are still jittery, keeping the stock at less than half of what it was at the start of the year.

Apple doesn’t have many problems. Its shares are down just 20% this year, worse than the Dow Jones Industrial Average but better than the more than 32% loss in the tech-heavy Nasdaq 100. What’s more, the iPhone business continues to grow, up 10% to $42.6. In the fourth fiscal quarter, Apple reported on Thursday.

But the company has raised subscription prices for Apple TV Plus and Apple Music to $2 a month, roughly the same as Netflix at the start of the year. And just like Netflix said, the money that Apple charges goes towards artist fees and funding more shows and movies.

“We have a lot more content now, and we’re releasing more content every month,” Apple CEO Tim Cook told analysts on a conference call Thursday. Apple also said it’s seeing more transactional accounts and more paid accounts, with 900 million paid subscribers between all the different offerings.

But analysts are starting to pay more attention. “We knew Apple’s iPhone business was slowing, but we’re also starting to see that trickle down to their services segment,” analyst Jesse Cohen wrote in a statement. He added that this trend is now “alarming”.

Source by [author_name]