Practice English Speaking&Listening with: Apple is building a huge new subscription bundle

Apple is trying everything it can to build an internet services empire.

It's the only thing Tim Cook ever wants to talk about these days.

And you know what services companies love the most?

Subscription bundles.

So in the 46th episode of The Story Behind series, let's talk about what an Apple Subscription Bundle

would look like and why Apple would want to have one.

This video was sponsored by Skillshare.

The first 500 people to sign up using the link in the description get 2 months of premium

access for free.

Two trends are clear at Apple: One, revenue from the iPhone is down and the Apple is

trying to shift over to making money from internet services instead, and two, the company is preparing

to launch a lot of new services.

Beyond things like Apple Music and Apple Pay, they are rumored to launch a Netflix-like

video streaming service including exclusive videos from the likes of Oprah, a gaming subscription

service, probably focused on iOS games and even a news subscription service that would

let you access all the paywalled news with one centralized subscription.

Each for roughly 10 dollars a month.

And those are just the services we've heard of, but there are probably multiple more in

the works too.

So, we just know Apple is at least thinking about bundling those services together.

I mean, nearly every successful services company does, because it's really profitable to do so.

Microsoft has Office 365, Google has a similar bundle for G-suite, Amazon has Prime, and

Adobe has the Creative Cloud bundle.

That last one costs me nearly 60 euros a month.

Talk about profitability, that's over 700 euros every single year from me alone.

The bundling trend doesn't seem to show any signs of slowing down and I think Apple is

positioning itself to do something similar with its product portfolio.

So there are really two questions to answer.

One, what would an Apple subscription bundle look like and two, what's the business logic

behind this whole bundling thing?

Of course it's hard to predict the exact bundles that will emerge, in no small part because we are speculating

on yet unreleased services, but I think it's both fun and kind of useful to make some educated guesses.

So, I'll share 2 of my favorite potential bundles and then I want to hear yours

either tweeted at me @TechAltar or in the comments below.

OK, the Apple media bundle is what I'll call the more realistic one in my opinion.

It would include the existing Apple Music service together with the upcoming video streaming,

news and gaming subscriptions, and maybe a few extras a month like special in-game items

like exclusive Fortnite skins, App Store gift cards or credits and so on.

Imagine this thing for, say, 20 dollars a month instead of the $40+ the services would

cost individually.

Just imagine Apple saying you get premium access to all 4 major forms of media,

which is music, videos, games and news, for one subscription.

If those yet unreleased services end up being any good, I can see a ton of people finding

that attractive

and switching to it and away from having multiple solo subscriptions like Spotify and Netflix.

And just like Office 365 and Spotify, I wouldn't be surprised if they also came up with a Family

option too.

Like say $40 a month for 5 people for all forms of media?

That's a lot of recurring revenue for Apple, but a pretty good deal a lot of people would

be happy to jump on, I think.

Now, less likely but more fun would be if, just like Microsoft is doing with Microsoft

Managed Desktops,

Apple would also consider offering hardware together with one of its bundles.

Like imagine a bundle where on top of the Apple media bundle I just talked above, you

would also get a new iPhone every two years, and, say, 1 TB of iCloud storage for good measure.

Apple would then take back your used iPhone after the period, refurbish it and sell it

on to customers, since extending the life-cycle of iPhones is a stated goal of the company.

A bundle like this is pretty extreme, I guess it would probably cost like $50 a month, which

comes from $20 for the media bundle plus $30 for the cost of the iPhone spread out over

2 years.

Quite a lot of money, but not a bad deal and it could mean that Apple could challenge mobile

carriers like Verizon and T-Mobile and their subsidized plans.

People hate being tied to their carriers, but especially in the US, they have gotten

too used to not buying a phone at full price.

But with an Apple subscription, they could get an unlocked phone that is subsidized.

Now they would be stuck with Apple, but I guess most iPhone users already are anyway.

This last one is a bit of a moonshot and will probably not happen, but I like it a lot,

so I created a Twitter poll for it, it is linked in the description below,

you can go there, cast your vote on your favorite bundle, or if you have an idea for another bundle,

let me know either there or in the comments below.

Alright now, let's move on to the business logic.

So, why would companies create bundles in the first place when they seem to make things

cheaper for us, the consumer.

So a subscription business can be simplified to 2 key elements.

Number 1, customer acquisition costs, i.e. how much it costs to convince someone to start

using your service,

and number 2, the customer life time value, i.e. how much money you will make from a user

in total.

If the first is lower than the second, things are looking good.

And a bundle can improve on both significantly.

If a business like my sponsor Skillshare has to pay advertising fees to me and provide

a free 2 month trial to each user it wants to acquire for its single service, then their

customer acquisition costs are probably pretty high.

But in a bundle like Office 365, Microsoft has to convince one person once who will then

pay for multiple services at once

and recruit new users to start using all of those services too.

For free.

One acquisition gets many people to use many services, which is typically cheaper.

And once acquired, companies can typically make more money form users with a bundle.

For a start, the bigger the bundle the harder it is to leave.

I might be ready to quit one service in my bundle, but maybe not all of them,

and even if I do, I can't convince all of my family members to leave all of those services behind as well.

Bundles are sticky and incredibly hard to leave.

And profitability is usually not bad either.

A typical bundle looks something like this: You get 5 services for the price of 2 or something,

right?

Seems like a good deal to you and also a good deal to the company, because it doesn't cost

them 5 times as much to get you those services.

Typically software like Office apps and games, as well as self-produced media like TV shows

cost a lot to make up front

but there is no significant cost to delivering it to new customers.

They are not physical products that you have to manufacture again and again for each user.

So in a bundle you, the user, get to enjoy more services and the company manages to get

you to pay a higher average price than you would have without the bundle

without significantly increasing their costs.

There are some exceptions to this, like music streaming, where companies have to pay lots of royalties

to a record label after every steam, but for most bundles this holds true.

So bundles are a cost-effective way to acquire new users, they increase total revenue of a company

without proportionally increasing costs and they make an ecosystem extremely hard to leave.

Those are all things Apple loves.

So if indeed they come up with all the services they are rumored to come up with, I fully

expect them to start bundling them up soon.

Now this is the 4th video on my channel that was fully edited and animated by my friend Adam,

who I recently hired as a video editor.

TechAltar is now a job not only for myself, but a second person as well.

And this really goes to show that, in today's world, if you want to land your dream job,

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