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Why Apple Can’t Give Video or Music a Break

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Courting Hollywood

The idea of Apple’s (AAPL) pushing deeper into the services space becomes more interesting if you look at the company’s Services segment’s metrics. If we look at the figures the company shared recently, those it shared earlier, and third-party research, we can see why the company is increasingly courting Hollywood.

Apple is beefing up its $10-per-month Apple Music service with documentary films and plenty of other original shows. It’s also been trying to stir up more excitement in its App Store, where last year it raised the takes of developers who monetized their apps through subscriptions, according to Business Insider. App Store sales rose 40.0% in the company’s most recent quarter, building on a 40.0% rise in 2016.

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Each active iPhone brings $40 in App Store sales

The App Store is a big deal in Apple’s push to free itself from dependency on gadget sales, mainly of iPhones, whose market is cooling. 

To understand why Apple is likely to continue with video and music deals, we’ll have to look at its App Store’s data in detail. Each iPhone user in the United States (SPY) gave Apple $40 via the App Store in 2016, a rise compared to $35 in the previous year, according to a survey done by researchers at Sensor Tower.

Exciting App Store segments

Game sales, as usual, dominated the App Store scene, contributing 80% of its sales last year. However, the App Store’s entertainment segment registered the highest growth at 130% year-over-year. The entertainment segment is made up of sales of access to streaming video services by Netflix (NFLX), Time Warner (TWX), and Hulu. Entertainment spending per iPhone user more than doubled to $2.30 from $1.0 in the most recent quarter.

Growing entertainment spending shows why Apple is pursuing content deals with Hollywood producers. Perhaps that’s also why some have entertained the idea that Apple could use its massive war chest to acquire video game developer Activision Blizzard (ATVI).

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