How resilient will Apple’s subscription services will be if a recession hits?

How would Apple’s subscription services — with 825+ million subscribers at last count — fare if a recession hits America, Apple’s largest market, by far?

A selection of Apple's  Services
A selection of Apple’s Services

Austin Carr for Bloomberg News:

In the last 12 months, paid subscriptions jumped by 165 million, with services revenue leaping 17% last quarter, to $19.8 billion.

But it’s tough to tell how resilient these services will be if consumer spending declines or a recession hits. Apple only discloses an aggregate subscription count and does not breakout subscriber numbers by service, meaning we have no insight into adoption or attrition rates for TV+ versus Fitness+ or iCloud. And with the last few years complicated by the pandemic, Chief Financial Officer Luca Maestri has said measuring growth can be “a bit deceiving” because “we’ve gone through some cycles of lockdowns and then reopenings and so on.”

Rising grocery and gas prices may prove to be a test of whether Apple’s services have really become essential for its customers. Tightening family budgets have already prompted some consumers to cancel superfluous apps. Netflix Inc., for one, recently reported its first subscriber decline in a decade…

Ultimately, Apple has to keep its services momentum going. The company has invested massively in marketing its subscriptions, particularly through freebies. These days, the promos are everywhere. My LG television is constantly offering no-cost TV+ trials. Ticketmaster offered me free access to Fitness+ after I bought some sports tickets. And on a recent visit to Best Buy to purchase an Apple accessory, a pop-up appeared on the credit-card machine: “PROMO- 6 MONTHS FREE OF APPLE NEWS+”—for $0.00!

Expect this sort of aggressive discounting to continue if the economy worsens.

MacDailyNews Take: Apple is working on hardware subscription, too, which go a long way towards making new hardware prices palatable to those feeling inflation’s pressure on their budget.

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7 Comments

  1. Thanks to the so called adults in the room and Bidenomics and Bidenflation where “Foodstuff are up 61.5% under Biden’s Reign of Error. Gasoline prices are up 85.8%, diesel prices are up 111%” I have been selling some Apple stock to supplement and survive this clown world administration that was installed by the system after the election steal. I’m not preferential to mule meat, however, their are 2000 plus mules that need to be taken to the slaughterhouse!

    While my Apple stock is up and I made gains from my original purchase price, it has lost what? 22% of it’s value, so I am not getting as much had I sold five months earlier, and my quantity is limited and I’m not sure it can handle that joke of the Biden/Harris boondoggle comedy hour.

    So, Apple will not have to worry about their subscription services and hardware subscriptions from me. I have no superfluous funds to patronize that which is not on my priority list of things needed to survive these idiots in DC.

    https://www.investmentwatchblog.com/bidenflation-still-soaring-but-metals-dive-15-since-may-4th-food-up-61-5-under-biden-gasoline-up-86-diesel-up-111-rents-up-16/

    1. Kamala Harris – the most space cadet ever. If Biden has a heart attack (God willing) then Kamala will suddenly have an accidental vocal
      Chord accident, and suddenly, Pelosi will have a stroke. God wllling, all of these things won’t happen at the same time, and while they won’t happen overnight, they will happen. Bidenomics will save us – MABA – Make America Biden’s Again!

  2. Doesn’t really matter, compared to (most) other subscription service providers. Apple’s primary business is selling hardware. The services are valued-added benefits for Apple’s hardware customers, as part of the Apple ecosystem. TV+ probably isn’t profitable by itself, but it brings prestige and helps Apple sell more hardware. If the services collectively make profit, great… If profit is lower due to economic conditions, no big deal. For Netflix, Spotify, and others offering subscription services, that’s their primary business. The exception is Amazon offering Prime as a value-added service for its retail customers, somewhat like Apple.

  3. Don’t be surprised if “Hardware Subscriptions” (leasing) doesn’t become the only way to get it.
    It will be the only way to keep the walled garden after anti-trust kicks in.

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