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Apple Is Latest to Show We're Getting Tired of Subscriptions

Its services business, including Apple TV Plus and Apple Music, seemed invincible. But growth is slowing.

Apple TV Plus logo, glowing on a black background
Apple raised the price of its Apple TV Plus and Apple Music services as growth slows.
Connie Guglielmo/CNET

Apple is known for beating serious challenges. 

The Mac maker went from leader of the home computer revolution four decades ago to nearly insolvent in 1997. Its iMac and iPod survived the dot-com crash, after then the iPhone powered through the Great Recession. The iPad, Apple Watch and all manner of iPhone accessories have since helped turn Apple into the world's most highly valued company. 

But the company is facing a new type of challenge: our collective exhaustion with paying for monthly subscriptions.

The tech giant on Thursday reported that revenue for its services business, which includes the $11 per month Apple Music and $7 per month Apple TV Plus, had hit an unusual snag. For the second quarter in a row this year, Apple's services revenue had fallen from its high of $19.8 billion, pulled in just after last year's holiday shopping season. For the months of April to May, that total had fallen to $19.6 billion, and now Apple reported that it notched $19.2 billion between June and August.

Additionally, the company warned that while it expects its services business to grow again during this year's holiday shopping season, it will be "impacted by the macroeconomic environment." Or, in other words, all the bad stuff happening on the front pages of newspapers, like Russia's ongoing war on Ukraine, the now 3-year-old global pandemic and nagging inflation.

But also, there's an increasing sense that we, the consumers, are starting to hit the limit on how many monthly subscriptions we're willing to pay for. Here at CNET, we've done the math, and though streaming TV is cheaper than cable, when you begin to throw in music streaming, workout servicesvideo game catalogs and even food delivery, it starts to add up quick.

In 2019, when Apple launched its $5 per month Apple Arcade game subscription service, it was a bet that people would find that a bundle of fully paid-for games, ranging from kid-friendly to better-for-adults, would be compelling. But even back then, some industry executives began to warn that if people are offered too many subscriptions, they'll eventually get frustrated by that too.

"It's a real problem," Strauss Zelnick, the head of Grand Theft Auto developer Take-Two Interactive, told me in 2019. "Most Americans want two, three or four subscriptions -- they certainly don't want 40 of them, and they aren't going to pay for them."

Earlier this year, Netflix raised prices on its hit service by as much as $2 to help fund its stable of shows and movies and accidentally triggered an exodus of more than 1 million subscribers by the summer, its biggest drop ever. The company's since refound its footing and begun adding back subscribers, but investors are still jittery, keeping its shares valued at less than half what they were at the beginning of the year.

Apple isn't in as much trouble. Its shares are down just 20% so far this year, worse than the Dow Jones Industrial Average but better than the more than 32% loss for the tech-heavy Nasdaq 100. Further, its iPhone business is still growing, up 10% to $42.6 billion in its fiscal fourth quarter, Apple reported Thursday. 

But the company did raise prices for its Apple TV Plus and Apple Music subscriptions, by up to $2 per month, much the same as Netflix did earlier in the year. And just as Netflix said, the money Apple's charging is going toward artist royalties and to fund more shows and movies.

"We now have a lot more content and are coming out on with more each and every month," Apple CEO Tim Cook told analysts during a conference call Thursday. Apple also said it's seeing more transacting accounts and more paid accounts, with 900 million paying subscribers between all its various offerings.

But analysts are starting to pay more attention. "We knew Apple's iPhone business was slowing down, but we're also starting to see that trickle into their services segment," Jesse Cohen, an analyst at Investing.com, wrote in a statement. He added the trend is now a "cause for concern."