Apple is to launch a dramatic bid to sign up millions of iPhone users for its streaming services as it takes on Amazon Prime and Netflix in a battle to dominate the global entertainment industry.
The company is set to announce a new service called Apple One which will allow customers to bundle together its Apple TV+, Music and iCloud products for a single monthly fee, with different tiers of membership and a discount for users who sign up for more than one of them. In future this could even be expanded to include online fitness classes.
If the gamble works, it could lure swathes of Apple's 1.5bn iPhone users into joining up - and allow the firm to overhaul rivals such as Amazon, which is attempting a similar feat with its Prime model. Details of Apple One are expected to be revealed in September and the service is thought likely to go live the following month.
It comes as the US tech titans vie for control of online entertainment, with billions of dollars of revenue at stake as viewers leave TV behind to embrace the internet.
Streaming firms such as Disney, Netflix, Apple and an Amazon spent more than $25bn between them on new shows last year and are already engaged in a price war which could be turbocharged by the new bundle service.
Apple - whose programmes include The Morning Show, which stars Jennifer Anniston and Reese Witherspoon and is one of the most expensive series ever made with a reported $300m budget - has been aggressive in pricing its subscription products.
Its TV+ service is priced at £4.99 per month with a year free for users who buy an iPhone, compared to £8.99 for Netflix in the UK. The bundle could allow it to offer further discounts.
Apple's services business already has revenues of $50bn (£38bn) a year and generated higher sales than its MacBook computers, Apple Watches or iPads in the last quarter.
The company has an estimated 68m Apple Music customers, while its Apple TV+ service has 33m according to data firm Ampere Analysis. In comparison, Netflix has almost 200m users, Amazon has 150m Prime members, and Spotify has 138m subscribers.
Analysts have predicted that Apple’s services division could eventually be a $100bn business. It has grown quickly even as overall sales of iPhones declined.
The Apple One package is expected to be announced in October alongside the new iPhone. According to Bloomberg, packages would start with Apple Music and Apple TV+ with options for its gaming service Apple Arcade, its Apple News+ service, and iCloud storage.
Users who sign up will save between $2 and $5 per month, the report said. Apple said it does not comment on rumours or speculation.
The company is also considering bundling hardware devices, such as its TV box, with games and video services. A further offering being developed is a sports fitness app to rival exercise bike company Peleton.
Shares rose 2.6pc, inching the company closer to a $2tn valuation. Apple is now worth $1.98tn, having broken the $1tn marker only last year.
Bosses are expected to reveal a new super-fast 5G iPhone in September, able to download videos and games faster and complement its subscriptions.
CCS Insight analyst Ben Wood predicted Apple could enjoy its best quarter after releasing the new iPhone, despite the havoc wreaked by Covid.
He said: “I think the [November to January] quarter will be Apple’s biggest ever. There is pent up demand for an iPhone. The Apple One package would justify the inclusion of 5G, with gaming, music and content locking users into Apple’s services.”
The service would follow the model pioneered by Amazon’s Prime offering of free delivery, video streaming and music, which starts at £7.99. Amazon is planning to add free grocery deliveries as well.
Wall Street has grown hungry for subscription based businesses that can provide a constant stream of revenues.
But while Apple pivots to focus on software and services, some developers have baulked at the 30pc fees it takes from apps on its Apple App Store.
The latest rebel is Epic Games, the company behind hit game Fortnite. The developer on Thursday announced a discount for customers who buy its game directly through them, rather than through Apple’s store.
The move comes as Apple faces a competition investigation in Europe over claims the App Store gives it too much power.