Tech giant Apple is to set to unveil the particulars of its billion-dollar vision for streaming video. It has the potential to be the subscription “bundle to rule them all”, and even take on Netflix.
At an event on Monday, March 25, in the Steve Jobs theatre at California’s Apple Park campus, the Tim Cook-run gadget company, which has been experiencing losses in their iPhone vertical, is expected to formally announce its foray into the video on demand (VoD) market, besides launching a revamped subscription news service.
Apple had notably sanctioned a budget of over $1 billion for this project. A catalogue of original content involving Hollywood’s A-listers, including Steven Spielberg, JJ Abrams, Reese Witherspoon, and Oprah Winfrey is in the pipeline, while five of them are wrapped up and ready to air.
Here’s what Apple’s video strategy looks like
These originals, alongside content from other networks, are expected to stream on the TV app on iOS or Apple TV to begin with, as opposed to previous stabs at pushing original video on Apple Music. By summer, it will launch a Netlfix-like service in the US.
Apple may offer add-on video subscriptions so that users can watch their own bundle of video services in one place, according to reports. This will be akin to the Amazon Prime Video and its Channels model, where you cobble together your internet-delivered TVranging from premium cable networks, such as HBO and Starz, to niche networks, like Yoga Anytime Channelbased on your subscription.
This rumoured video service on Apple TV may act as a similar storefront for discounted bundles of other company’s streaming services, while its own originals are in the making. Alternatively, it could have a library of licensed shows or movies.
HBO has reportedly confirmed licensing some of its already released programmes to Apple, which has been scrambling to lock in deals with other networks, including Showtime, Starz, and CBS; notably but unsurprisingly enough, not Netflix.
How does this affect Netflix?
Netflix CEO Reed Hastings confirmed this week that the company wasn’t participating in Apple’s service. Netflix, for one, does not participate in bundles like Amazon’s Channels, nor does it allow signing up through the iOS app (owing to Apple’s in-app payment fees).
The pioneer of streaming content on a single platform, Netflix could be severely impacted by Apple’s entry into the field. Moreover, with the latter’s budget soaring past the $1-billion , there is legitimate cause for concern.
Apple has not only been able to bag notable content creators for its 40-odd TV shows and films in the but also executives; two television executives from Sony have hopped aboard to spearhead this effort.
Other adversaries
While Apple should expect competition from DC Universe’s new comic-flavoured fare to a planned Disney+ next year, Apple TV’s premium video service will certainly give the high-quality productions on Hulu and Amazon Prime Video a heady contest as well.
Apple’s takeover of Texture, which is Netflix for magazines, has led to speculation that the company is chasing the “one bundle to rule them all” pipe dream. A combination of Apple Music, subscription Apple News, and a video service can give consumers a much-needed one-stop hub that meets all demands of online entertainment.
Besides Amazon’s storefront service, the bundling model will also bring Apple in direct conflict with Comcast, which recently announced a $5-a-month service, Xfinity Flex, with similar perks and more.
Like most video services, Apple’s competition won’t be restricted among similar players. Telecom companies like AT&T, with streaming services like VRV and YouTube, gaming services like Fortnite, and traditional TV programming will round off Apple TV’s forthcoming contest.
Pocket pinch and perks
Premium products with high price tags and strong privacy settings have always been Apple’s strong suit.
With the video service, however, there is reason to believe that Apple will provide free access to all its programmes to device users, in the hope that viewers will come for Oprah or Abrams and then tack on other paid services to watch HBO, Starz or Showtime in the same place, enabling it to take a cut of the service’s subscription revenue.
Sceptics are not sure if the company will give away $1 billion in programming for free to device owners; at best, they may avail an extended free trial or a discounted bundle packaging a group of 15-odd video services, which include paid streaming networks and free digital channels.
Apple has been negotiating to bring its new TV app to multiple platforms, including Roku and smart TVs, according to people familiar with the talks; this is an unusual move for a company that has long preferred to limit its software and services to its own devices.
Competitive pricing is key in this sector. Disney CEO Bob Iger recently said that Disney+, which will host a new Star Wars original series besides blockbuster Disney movies, will cost substantially less than Netflix.
But what has Apple spent $1 bn on?
That said, there’s much to rejoice for. Apple’s original shows cover the whole range of drama, comedy, documentary, animated films, and other undefined deals with big stars. Out of 30 shows, five reportedly have finished shooting, including an Octavia Spencer mystery drama, a comedy about Emily Dickinson starring Hailee Steinfeld, and an M Night Shyamalan thriller.
Apple’s partnership with critically and commercially successful production house A24 is expected to yield more original content for the video service. The company has also acquired a few films at Sundance and Toronto film festivals to distribute on Apple TV, like Jada Pinkett Smith-produced Hala.
Apple has come under scrutiny for restricting its creators from developing edgy content, in its agenda to push for more family-friendly programming. Although Disney’s whole claim to fame and success banks on that, it created a vacuum, which other networks soon filled and could stand to crimp Apple’s performance.
Driving force behind a radical move
While the lure to online TV programming is more palpable than ever today, Apple’s motivation behind the venture may be a strategy to improve iPhone sales, which have dwindled in several pockets of the world over the past few months. The phone, one of the most popular in the world, accounts for more than half of Apple’s sales and revenue and plays the most important role in making it the first US company worth $1 trillion.
In January, Apple reported its first decline in revenue and profit for a holiday quarter in over a decade.
Presently, Apple is on a deadline to double its services revenue to $50 billion before 2021; putting a lucrative bundle of video in people’s hands on demand may be the perfect ploy to seize the “Netflix and Chill” generation. Alternatively, this could be Netflix’s way of focusing anew on TV and news, as iPhone sales continue to sputter.
That would make it a radical move, which takes Apple out of its comfort zone into an area that is replete with risks, to deepen the ties between iPhone users and the company. This is a big gambit too, considering the growing importance of software applications over hardware devices today.
Why it matters
What Apple lacks in experience and track record with video content, it makes up for in vision and execution. Morgan Stanley estimates that a combined media package from Apple that includes video and music could generate more than $22 billion in sales by 2025. Footage of a few original shows is believed to be screened at the special event, followed by smoothening of the distribution agreements.
The company will launch the service in more than 100 countries by the end of 2019, says a report; but Apple has already hired strategists to help craft award campaigns for Oscar and Emmy.
In India, the demand for original content is on the rise since Netflix, Amazon Prime Video, and foray into the sector. To compete with the strong trends of regional content consumption, efforts in original content creation have taken over the VoD landscape of late.
Foreign giants and local online streaming platforms alike have taken to developing indigenous content besides streaming popular western TV showsNetflix’s Sacred Games, Ghoul, Little Things, and Prime’s Made in Heaven are heralding a new generation of stream-worthy content in the nation.
Apple’s new video service could certainly benefit from identifying regional viewing patterns of device users in each and expanding its scope of creation to include country-specific content.
Prarthana Mitra is a Staff Writer at Qrius