Apple Inc. raises prices for its music and TV+ services for the first time.
Apple Inc. It raised prices for its music and TV+ services for the first time, citing rising licensing costs, a move that risks giving rivals an edge in the fiercely competitive streaming industry. .
The company raised the price of Apple Music from $9.99 a month for individuals to $10.99 a month, effective immediately, making it more expensive than services from Spotify SA technology and Amazon. com Inc. Spotify rallied 9.4% to $97.07 in response to the news, its biggest intraday rally in nearly three months.
With its video package, TV+, Apple will continue to offer lower prices than companies like Netflix Inc. or Warner Bros. Discovery Inc., but that service has been slow to build the user base of rival platforms. Price of Apple TV+ will go up to $6.99 from $4.99 and standard Apple One package increases $2 to $16.95.
Apple’s push into streaming in recent years is part of a broader effort to generate more revenue from services. That category now generates nearly a quarter of the company’s revenue — nearly $20 billion in the June quarter — up from less than 10% in 2015. Apple will release its latest quarterly results this week. .
The company said in a statement that Music price increase is due to “increasing licensing costs” and artists and musicians will now earn more money. That’s good news for investors in Warner Music Group Corp., a top record company, which sent shares up as much as 15% on Monday.
Apple is also increasing the annual music plan to $109 from $99 and the annual TV+ subscription to $69 from $49. Apple One family plans are going up from $19.95 to $22.95, while the Premier plan, which adds News+, Fitness+, and extra storage on Arcade, Music, and TV+, is up $ 3 to $32.95.
Shares of Apple rose less than 1% to $148.56 on Monday. While the stock is down 16% this year, that’s less likely than the broader indexes have suffered. The S&P 500 index fell more than 20%.
When explaining the increase in TV+, Apple said that service was introduced “at a very low price” because it started with only a few shows and movies. Now, it’s “home to an extensive selection of series, feature films, documentaries, and entertainment for children and families from the world’s most innovative storytellers,” Apple said.
However, the service’s viewership has yet to match those of other major streaming platforms. While Apple TV+ has had a string of critically-acclaimed hits, including Oscar-winning Coda and series like Severance and Ted Lasso, it’s still a run in the streaming video space. hot competition. Nielsen’s most recent report shows that Americans spent more time watching at least five other paid services, along with ad-supported videos from YouTube and Pluto TV.
Apple increasingly relies on services to boost hardware sales in an environment where device upgrades are becoming more expensive and less frequent. The Cupertino, California-based company has accelerated the release of new digital services in recent years, including credit and recently a savings account.
Apple on Monday also released the first version of iPadOS 16 with Stage Manager multitasking software, as well as Mac OS Ventura update for Mac desktops and laptops. It also launched iOS 16.1 with a shared iCloud photo library and new smart home features.
The company isn’t alone in raising streaming prices. The cost of Walt Disney Co’s flagship Disney+ service. will grow 38% to $11 by the end of the year. The company is introducing a new tier of ad support, which will then cost the same as its previous offering of $8 a month. That followed a 43% price increase, to $10 a month, for the ESPN+ streaming service in August. Netflix, which raised prices earlier in the year, is also introducing an ad-supported plan , though – at $7 a month – it will be cheaper than its existing offerings.
