Apple lifted the curtain on Monday on a television and movie streaming service that will allow users of its 1.4 billion gadgets worldwide to stream television shows and movies, both Apple originals and those from other creators, in a first step to challenge streaming video leaders Netflix and Amazon.
The launch was the centerpiece of an event at Apple’s Cupertino, California, headquarters that focused on the technology company’s services, not its hardware, as it deals with declining sales of its iPhone.
Apple also introduced updates to its payment system, launched a games arcade, and added magazines to its news app.
Hollywood celebrities trekked to Apple’s home to help debut a revamped Apple TV digital storefront, called Apple TV+. Apple has commissioned programming from Jennifer Aniston, Reese Witherspoon, Oprah Winfrey and Steven Spielberg.
Apple’s jump into original entertainment signals a fundamental shift in its business as sales of hardware money-makers drop off. Without another category-defining new gadget announced to the public, Apple is looking to rely more on selling subscriptions and services like video, music and hardware insurance.
Throughout their presentation, Apple executives stressed privacy protections for consumers as they shop and consume content across a range of Apple phones, iPads or other hardware. They also emphasized content that would appeal to young audiences, potentially setting the stage for a rivalry with Walt Disney Co.
The company led off the event with an announcement that its free news app will now come in a paid-subscription version, called Apple News+, which curates a range of news articles and will include 300 magazines including National Geographic, People, Popular Science, Billboard and the New Yorker. Apple said it would cost $9.99 a month.
Apple also introduced a titanium, laser-etched Apple Card backed by Goldman Sachs Group Inc and Mastercard Inc that can track spending across devices and pay daily cash back on purchases.
Speaking at the event, Apple Chief Executive Tim Cook said Apple Pay, its digital wallet, will soon be usable on public transit systems in Portland, Oregon, Chicago and New York City. Apple Pay will be available in more than 40 countries by the end of the year.
Cook also said Apple Pay was on track to process 10 billion transactions this year and is accepted by 70 percent of merchants in the United States.
Speaking at the event, Vice President for Apple Pay Jennifer Bailey said the new Apple Card service will work through the company’s wallet app Apple Pay.
Users of the card, which will be issued by Goldman Sachs Group Inc, will earn 2 percent cash back on all purchases made through the digital wallet or 3 percent cash back on Apple products.
There will also be a physical card, which will give users 1 percent cash back on purchases.
The credit service will come with new features in the Apple Wallet aimed at helping consumers track their spending with a breakdown of monthly purchasing trends.
Cash back rewards will be credited to Apple Pay users’ accounts on a daily basis, Bailey said, and the card will not charge any international fees.
Credit card industry analysts said the rewards programs were not significantly different from what is currently available in the market, but that Apple’s broad consumer reach could make it a major player.
“Frankly I am bit underwhelmed,” said Ted Rossman, an analyst at Creditcards.com.
He noted that the rewards for Apple’s card were less attractive than benefits Citigroup Inc offers with its Double Cash Card.
The Apple Card is first credit card to be offered by Goldman Sachs, which is best known as a Wall Street investment bank.
Goldman has been seeking to expand its consumer-focused products, and offers personal loans and savings accounts through its online bank Marcus. Marcus has grown quickly since its 2016 launch, and now has $36 billion in deposits in the United States and U.K. and $5 billion in consumer loans.
With its new media push, Apple joins a crowded field where rivals such as Amazon.com’s Prime Video and Netflix Inc have spent heavily to capture viewer attention and dollars with award-winning series and films.
The big tech war for viewers ignited a consolidation wave among traditional media companies preparing to join the fray. Walt Disney Co, which bought 21st Century Fox, and AT&T Inc, which purchased Time Warner Inc, plan to launch or test new streaming video services this year.
Revenue from its services segment, which includes the App Store, iCloud and content businesses such as Apple Music, grew 24 percent to $37.1 billion in fiscal 2018. The segment accounted for only about 14 percent of Apple’s overall $265.6 billion in revenue, but investors have pinned their hopes for growth on the segment.
The company also introduced Apple Arcade, a game subscription service that will work on phones, tablets and desktop computers and include games from a range of developers.
The iPhone maker said it was working with Walt Disney Co, Sega and Annapurna Interactive on the new game service, which will feature more than 100 new titles that can be accessed through a tab in the App Store and will work on iPad, Mac and Apple TV.
Apple Arcade will have no ads or additional purchases and will let parents manage screen time. The service will be available this fall in more than 150 countries.
Apple shares were down about 1 percent after about an hour of presentations at the event, which was broadcast online.