Apple Pushes Privacy and Security as It Launches 3 Pay Services

Hauling in some Hollywood fanfare, the company turned over the event at the end to actors connected with original series set to launch with the subscription VOD service this fall on the Apple TV Plus app. They included Jennifer Aniston and Reese Witherspoon teasing The Morning Show with Steve Carell; Jason Momoa and Alfre Woodard previewing See; and Kumail Nanjiani pitching Little America. Oprah Winfrey outlined projects with Apple including a streaming documentary, a yet-to-be named series on mental health and a live book club.

Director Steven Spielberg, who suggested recently that movies made for TV don’t carry the same creative weight as movies created for the cinema, was criticized on Twitter for teaming with Apple on Amazing Stories on Apple TV Plus: @TheBeardedMann tweeted: “Hold up. Is Steven Spielberg really advertising AppleTV at the #AppleEvent after he just bitched about Netflix??” Netflix CEO Reed Hastings said last week Netflix won’t be part of Apple TV Plus.

Signs have been pointing to Apple’s increasing attention to its growing services business as iPhones sales appear to have peaked (see 1811020043). Last fall, Chief Financial Officer Luca Maestri said the company would no longer report iPhone unit sales on quarterly earnings calls and would begin providing gross margin data on its growing services business, seen as a more important investor metric. Services brought in $10.9 billion in the most recent quarter, up from $9.1 billion year on year (see 1901300016), and services revenue grew from $8 billion in 2010 to $41 billion in fiscal 2018.

Such numbers could surge as Apple rolls out the new premium services. @NickWilson tallied the fees for the various Apple services on Twitter -- $10 a month each for Apple News Plus, Apple Music and the new Apple Arcade game subscription, plus, though the price wasn’t given Monday, an estimated $10 per month for Apple TV Plus: “If 1% of the 1B Apple hardware owners signup to the full boat = $400 million. A MONTH.”

Some 100,000 titles will be available on Apple TV Plus, due to launch in fall, said Peter Stern, vice president-video, news, books, iCloud and advertising services. He touted the ability for the Apple TV app to group content in one location, including live TV from cable or satellite providers. The app uses machine learning to help users find the content they want, he said.

The Apple TV app is coming to smart TVs beyond the Samsung deal announced just before CES; following Samsung, the Apple TV app will be available on Sony, LG and Vizio TVs and on Roku and Amazon streaming media players, Stern said. He gave Apple’s commitment that it “won’t share your personal information with anyone.” Apple TV app is available in 10 countries, rolling out to 100 countries throughout the year.

Though services were the focus of the announcements, CEO Tim Cook never strayed from hardware throughout the two-hour presentation. A consistent theme was the ability to find and view content anywhere, via streaming and downloads, on iPhones, iPads and Apple TV. The Apple TV app will be available for the first time on the Mac this fall, he said.

Among the features of Apple News Plus, the company's $9.99 monthly news service, available beginning Monday: a live cover for every magazine and infographics along with articles. Customers can browse a list of articles or read through full issues, and all articles are available for streaming or download. Magazines will format to phone or tablet-size, and more than 300 titles will be available at launch.

Roger Rosner, vice president-applications, said Apple News Plus personalizes content to the Apple user, without compromising privacy. “We download groups of articles to our servers, and then we use on-device intelligence to make recommendations.” Apple doesn’t know what users read “and we don’t allow advertisers to track you,” a comment that received one of the biggest cheers of the day. “So what you read about on Apple News will not follow you across the web.”

Privacy was key to the company’s Apple Pay announcement, for some the biggest news of the event. Apple worked with Mastercard to access its global network and Goldman Sachs, acting as issuing bank for its first-ever consumer project. Security is integrated throughout the hardware and software as part of the “completely rethought” Apple Pay, which includes an Apple credit card in virtual and physical formats. When consumers get their Apple card, a unique per-device card number is created and stored in a security chip used by Apple Pay, said Jennifer Bailey, vice president-Apple Pay. Each payment includes a one-time dynamic security code that protects a card number from being used without authorization, she said. Every purchase is authenticated with Touch ID or Face ID, she said.

Rewards are part of Apple Pay: users get 2 percent back on most purchases with the app, 3 percent back from the purchase of Apple products and 1 percent when using the physical card, a titanium card with the user's name etched. The company isn’t charging a fee for the card, claims lower interest rates than competitors, and won’t charge late or over-limit fees, said Bailey. By year-end, Apple Pay will be available in 40 countries, and is expected to be available for mass transit payments in Portland, Oregon; Chicago; and New York. The app will also have money-management features. Cook said Apple Pay could be the most significant change to the credit card industry in 50 years.

AirPower hopefuls were disappointed again when the multi-device charging pad didn’t make an appearance at the services-only event. @jakerobson tweeted: “AirPower’s never getting released, is it?” and @arelgar said: “all I wanted was to know when AirPower is going to be released.”

BTIG analyst Walter Piecyk predicted there was little Apple could say at the event to satisfy skeptics. Any criticism of Apple’s SVOD announcement “will probably be accurate but viewed through a short-term lens,” said Piecyk, calling content creation “difficult, expensive and very different than making phones.” He recalled Apple saying making phones was “quite different from the PC market,” and he referenced one-time Netflix skeptics “who wondered what media talent would work for a company that ships red envelopes.”

Netflix built a “media juggernaut from scratch” and is now the primary disruptor of pay TV, said Piecyk. Though it’s early days for Apple, it has $130 billion in cash, $65 billion in free cash flow, $16 billion R&D and 900 million active iPhone users with a TV app, he said. “Does that guarantee success? Of course not, but it’s a pretty good start.”