A whopping one-fifth of Apple’s Services revenue comes directly from Google, estimates Goldman Sachs, as analysts from the bank are calling for Apple to launch its own Amazon Prime like media service bundle.
The bank warns against Apple’s reliance on its rival for its services revenue as its venture into subscription Services is Apple latest long-term business strategy.
If you’re wondering why all this money is exchanged between the companies, it’s due to the fact that Google still pays an exorbitant sum to remain the default search engine on iOS devices — right in the $9 to $10 billion range, according to industry analyst Rod Hall.
An analyst for Goldman Sachs wrote in a note to investors:
Apple will need to add mid to high single digits growth back to Services revenues through successful launch of the ‘Apple Prime’ bundle including original video that we expect to be rolled out this Spring/Summer.
Reports surrounding some version of an ‘Apple Prime’ are not new. Earlier this month, Morgan Stanley analyst Katy Hubert also called for a “media bundle” to be launched from Apple later this year — predicting a successful launch would push the company back to a $1 trillion valuation.
From CNBC’s report today:
Goldman Sachs estimates Google paid Apple nearly $9.5 billion in traffic acquisition costs (TAC) during calendar year 2018, representing a third of Apple’s profit in the segment. The fees will continue to make up a large portion of Apple’s services revenue into 2019, the firm said, but will grow at slower rates.
Specifics as to what Apple will actually offer and at what price are still the biggest mysteries in this charade. However, a television and film style streaming service paired with at least Apple Music, and a subscription news service all seem in order for launch later this year.
Earlier today, Zac Hall argued that Apple’s audiobook experience could benefit from a complete subscription overhaul.
Previously, we reported on an observed uptick in Apple hiring rates for careers related to the streaming field.
What price would you pay each month for an ‘Apple Prime’ type service? Does the prospect excite you? Let us know in the comments section down below!