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By Jakob Katzman

Apple TV+, the new streaming service being rolled out by the tech giant, is slated to enter the market in a little over a week. The service is Apple’s deep dive into the aptly named “Streaming Wars”. Through the platform, Apple will be joining other industry giants like Netflix, Hulu, HBO, Amazon, and Disney in a constant battle for screen time.

By “screen time”, I don’t mean the hours people devote to watching their favorite shows every day. With only 24 hours in the day, the battle for market share has expanded beyond grabbing people’s favorite shows and the time they use to watch them. In January, Netflix unveiled that their largest competitor is the video game Fortnite and pivoted their strategy from claiming “streaming hours” to trying to claim general “screen hours”. Bob Iger­– Disney’s CEO– has taken control of Hulu and started to roll-out a pay-tv bundle with ESPN+ and Disney+, while Disney has removed Netflix advertisements on their platform. These shifts in content, licenses, and even changing features (like using YouTube/Amazon using online DVR to “record” and allow users to save their favorite episodes to a cloud so they can watch the show(s) from any device) effects more than just where consumers will be able to watch the next episode of their favorite shows, it’s aimed to capture time where people turn on any screen.

Apple TV+ is breaking ahead of their competition through a variety of means. Their confirmed content includes big names such as Steven Spielberg, Steve Carell, JJ Abrams, Jennifer Aniston, Reese Witherspoon and many others. The service will cost five dollars a month, undercutting all of their competition and will come with a free year with a purchase of an Apple product (TV, iPad, iPhone, Mac). Furthermore, the subscription can be shared with up to six family members. Though Apple TV+ will have less content, their sales pitch is centered around the idea that their content will be of superior quality and expand with a steady level of high-quality offerings as the platform grows and matures. In terms of bundling, Apple has an excellent opportunity to combine Apple TV+ with such products as Apple Music, Apple News/News+ and Apple’s soon-to-be-released “Apple Arcade” which will support over one hundred games. All these content bundles boil down to one thing: brand loyalty. In this case, Brand Loyalty can be defined as using the multiple platforms that Apple offers at a relatively low-cost– once you’ve purchased their expensive hardware– and enjoying the features and variety enough to have no reason to switch to one of their competitors.

Apple’s strategy with Apple TV+ seems to center around their overall strategy of immersing their users in a technological world governed by Apple. This is not the same as a monopoly, Apple does not completely control the tech industry. As a matter of fact, Huawei is breaking ahead of them in terms of market share in their smartphone business.[1] This fact, however, does not take away from the true effect of bundling Apple TV+. Because new purchasers of Apple products get Apple TV+ bundled into said purchase for a “free” year, the platform has an excellent opportunity to jump upwards in member count and seize a large portion of the streaming services market share. Considering Apple’s Unaudited 2018 Q4 Summary: they sold roughly 180 million units between their iPhone, iPad and Macbook products.[2] That could be a potential 180 million new users of Apple TV+ in its first year. If we assume half that number actually uses it, that’s still 90 million new users before any consideration for current users of Apple products buying into the service. With this large growth in users, Apple TV+ would be on-par (if not exceeding) their competitors subscriber base. That said, it’s unclear how many people are going to be interested in using their free Apple TV+ membership, and who will renew it once their first-year trial ends. However, the tech giant has enough of a presence already that these looming threats could be a reality that Apple’s competition needs to face.

In my personal opinion, Apple TV+ has a few uncertainties in it. First, the five-dollar price is paired with a small initial content offering. While it’s not definitively a bad sign for the platform, their announced content budget of 6 billion dollars (according to the Financial Times) is below Netflix and Disney, and I doubt a lower price will not be enough to sway the entire cord-cutting/streaming market that they’re worth subscribing to. Furthermore, Apple can only do so much if their initial offering of content flops. Would they continue to fund the originals? Would they fund new ones? Would they pour money into further research on the market Apple TV+ is reaching? At the most extreme, would Apple consider acquiring one of the quickly dying television companies.

Once Apple TV+ fully rolls out in a little over a week, we’ll begin to see how these things pan out.

[1] Koetsier, John “Smartphone Shipments: Apple Down 12%, LG Down 18.5%, Samsung And Huawei Both up”. Aug 1 2019. Forbes. Forbes.com, https://www.forbes.com/sites/johnkoetsier/2019/08/01/smartphone-shipments-apple-down-12-lg-down-185-samsung-and-huawei-both-up/#6e8012c46d15

 

[2] Apple, “Q4 2018 Unaudited Summary Data” Apple. Apple.com. Date Accessed: October 23, 2019 https://www.apple.com/newsroom/pdfs/Q4-18-Data-Summary.pdf

 

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