Apple’s Sleeping Giant . . . Subscription Revenue
Apple has quietly amassed a potent side business of subscription sales, which now totals over 300M subscribers worldwide. When you think of an Apple subscription, Apple Music probably comes to mind. But that’s only 50M of their subs. The other 250M comes from third party apps which Apple users subscribe to through their App Store. Although Apple doesn’t publicly disclose rev share terms or income from third party subscriptions, Apple typically takes in about 20% of the third party subscription charges it facilitates. With hundreds of millions of these subscriptions under its belt, Tim Cook and gang must be enjoying a pretty hefty monthly annuity on this business.
Apple’s sprawling subscription business, which grows by roughly 10M subs each month, is a linchpin in its strategy to diversify their business through vertical integration. Gone are the days of the next miracle device (aka iPhone) to sustain the company’s revenue for a decade or more. Instead Apple must find more things to sell to their existing user base. It could be subscriptions, or ads within the iOS apps its users download, or new subscription bundles of video and audio content which are being created as we speak. These are the products we’ll know Apple for ten years from now, regardless of how many new iPhones they release.