Why Apple's recently announced news subscription service could be a success – The Motley Fool



Appleof (NASDAQ: AAPL) The rumored news service has finally arrived. The tech giant unveiled Monday a subscription level for its Apple News app, allowing users to access hundreds of magazines and some of the world's leading newspapers.

The service, called Apple News +, is just one part of Apple's reinvigorated effort to expand its service segment, making its business less dependent on iPhone sales. But can the service have a significant impact on users? Current subscription trends in general, as well as the progress Apple has made to date with its Apple News app, suggest that the new subscription level for Apple News has great potential.

Apple News subscription service on a MacBook Air, iPad and iPhone.

Apple News +. Source of the image: Apple.

S & P 395 active users

Apple News + has an incredibly strong foundation. Indeed, the app has a wider audience than any other news app in the United States and the United Kingdom, according to comScore data.

In addition, Apple said in its last call for results that its Apple News readership had reached a record of over 85 million active users per month during the holiday quarter – and this in only three countries, Apple having launched this service only in the United States, the United Kingdom and Australia at the time.

In addition, although the Apple News app is free, some users were probably already accustomed to paying for subscriptions via the app; users could pay subscriptions to third-party information and gain access to premium content in the app. Apple News + could therefore be a logical supplement for some users, especially given the amount of the subscription.

Apple News + gives users access to more than 300 popular magazines, such as Vogue, National Geographic Magazine, and People. In addition, The Wall Street Journal, Los Angeles Times, and Toronto Star are among the newspapers providing the content for the service.

A subscription frenzy

If the initial momentum of Apple with its news app and the compelling value proposition of Apple News + are already good reason to believe that the application will be a success, there is another key reason why the new service should thrive: digital subscriptions, in general, are booming.

For example, Apple's chief financial officer, Luca Maestri, said his company had 360 million subscriptions on its service portfolio, an increase of 120 million from the same quarter of the previous year.

"Given the continued vigor and dynamism of this part of the business, we now anticipate that the number of paid subscriptions will exceed half a billion by 2020," explained Maestri. "Our subscription business has become very large and diverse and covers many categories, from entertainment to health, fitness and lifestyle."

For a more specific example of a digital subscription based on fast growing information, just look at: The New York Times (NYSE: NYT). The growth of the company's digital subscriptions accelerated in the second half of 2018, with a total number of digital subscriptions of 3.4 million at the end of the year, up 27% compared to the previous year.

Suffice it to say, Apple News + seems poised to benefit from a solid foundation in the Apple News application itself and from a strong subscriptions dynamic in general.


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