AAPL Apple Inc

By Tripp Mickle and Joe Flint 

CUPERTINO, Calif. -- Apple Inc. unveiled new products for entertainment, financial services, news and videogames as the technology giant vies with competitors that are also moving to expand their disruptive influence outside their core businesses in search of new growth.

The announcements Monday mark a strategic shift for Apple as it seeks new momentum amid softening sales in its core iPhone business. The centerpiece of the star-studded event at Apple's headquarters, capped by an appearance by Oprah Winfrey, was a new video-subscription service to carry original programming.

In a first for the company, it plans to make its TV app, which will carry that content, available on competitors' televisions and other devices as well as its own -- reflecting Apple's growing ambition to go beyond selling its own gadgets.

Apple also announced Apple Card, a mainly digital credit card launched in partnership with Goldman Sachs Group Inc. that aims to challenge incumbents by offering low interest rates and eliminating both late fees and annual fees.

It unveiled Apple News+, a $9.99 monthly service that provides access to 300-plus magazines as well as newspapers, including The Wall Street Journal through an agreement with parent Dow Jones & Co. And it showed off Apple Arcade, a gaming subscription service offering access to 100-plus exclusive games for an unspecified monthly fee.

Chief Executive Tim Cook portrayed the services as an extension of Apple's existing mix of products, saying the integration of hardware, software and services is something Apple does better than anyone else. "We're excited to extend our services even further, making them even more entertaining, more useful and more informative," he said.

The initiatives are part of a broader movement by tech titans to spread into new industries, betting their combination of loyal users and troves of data can help unlock revenue opportunities. The efforts are fueling competition in new arenas between some of the world's biggest companies, as Amazon.com Inc. pushes beyond e-commerce into entertainment and finance and Alphabet Inc. goes past advertising into subscription gaming.

The tech companies are applying their digital expertise to established industries just as Apple did years ago with the music business, said Bob O'Donnell, president at Technalysis Research. "A lot of the markets they're currently in are peaking, so to maintain growth and satisfy investors they have to extend their reach," he said.

Apple's success in its new bets isn't guaranteed, and the company didn't disclose important details Monday that could shed more light on its odds, including pricing for the video-content and gaming services. Apple faces stiff competition in areas where it is expanding, including from existing entertainment and credit-card players and from companies providing free news and videogames.

Apple shares closed down 1.2% on Monday. They have gained ground this year despite a sharp drop in iPhone sales at the end of last year but remain well below their record high from last October.

The new video-content plans thrust Apple into rapidly intensifying competition among technology companies and traditional cable operators for pay-TV users.

Growing disillusionment with cable companies and the rise of streaming-subscription services like Netflix Inc. is leading millions of Americans to change their pay-TV habits, allowing companies like Amazon, Sony Corp. and Hulu to elbow into a $100 billion industry long dominated by Comcast Corp., AT&T Inc.'s DirecTV and others.

Apple's revamped TV app unveiled Monday -- which will house the new video-content service -- is designed to grab a share of that splintering TV market. A May software update will turn the app into a central portal where customers can use a single password to subscribe to content from AT&T's HBO, CBS Corp.'s Showtime and others. That will put it most directly in competition with Amazon, which is spending billions of dollars a year on content to compete with Netflix while also acting as a distributor for channels like HBO.

Apple's original-content service, called TV+, will be available in its TV app starting in the fall. Though the company only showed brief footage from its original series, it brought out several stars and directors to discuss their work with Apple, including Steven Spielberg, J.J. Abrams, Reese Witherspoon and Jennifer Aniston.

Ms. Winfrey cited the broad audience of people with Apple devices as one reason she is working with the company. "The Apple platform allows me to do what I do in a whole new way, to take everything I've learned about connecting with people to the next level because they're in a billion pockets, y'all, a billion pockets," she said.

Still, Apple acknowledged that to truly compete in services, it needs to do something it hasn't done before and bring its TV app to non-Apple hardware, including smart TV devices from Samsung Electronics Co., LG Electronics Inc., Vizio Inc., Roku Inc., Sony and Amazon.

The broader distribution is designed to help in an already crowded content marketplace. There were 496 scripted original series in 2018, according to research from Walt Disney Co.'s FX Network. Streaming services including Netflix and Amazon are driving that surge in programming. Since 2014, the number of streaming shows has grown nearly 40%, according to FX.

The competition has driven the cost of content sky high as programmers are spending heavily to lock down major producers. Apple committed $1 billion to create original shows, an amount that pales in comparison to what Netflix, HBO and others spend annually.

While streaming services are growing as more consumers cut the cords to their traditional pay-TV services, it isn't clear whether the marketplace can sustain the volume of content being produced.

"There's potential in a future Apple mega-bundle, but today, their announcement was mostly about creating an offering and experience largely identical to the one Amazon has had for years," said Matthew Ball, an independent consultant and former head of strategy at Amazon Studios.

The launch of Apple Card, which customers will sign up for on their iPhones, marks a major expansion of the tech giant's foray into financial services, begun in 2014 with Apple Pay. The card uses machine-learning on Apple's devices to organize people's spending behavior into summaries. Customers can receive a physical, titanium card to use in locations where Apple Pay isn't yet accepted.

The news app, called Apple News+, is a premium version of the existing, free Apple News app. Available immediately in the U.S., it provides access to articles from magazines including Vogue, GQ and Sports Illustrated, as well as newspapers such as the Los Angeles Times and the Journal. Publishers will split revenue from the app 50/50 with Apple, according to people familiar with the agreements.

"We believe in the power of journalism and the impact it can have on our lives," Mr. Cook said. "We think Apple News+ is going to be great for customers and great for publishers."

Apple emphasized the privacy of its new services, saying it won't track articles people read, purchases they make or games they play. The company recently released a TV advertisement touting its position on privacy as it looks to differentiate its offerings from competitors like Google and Facebook Inc.

Write to Tripp Mickle at Tripp.Mickle@wsj.com and Joe Flint at joe.flint@wsj.com

(END) Dow Jones Newswires

March 25, 2019 19:21 ET (23:21 GMT)

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