Apple TV+ may, briefly, steal Netflix’s crown, but it’s really about selling iPhones
Free Apple TV+ streaming with every Apple device will only get you so far when Netflix has a 10-year head start and billions going into original content
Bengaluru/New York — Apple’s move to offer a free TV+ subscription for a year with every new device may briefly crown the iPhone maker as the biggest streaming service by user numbers, leapfrogging Netflix. But it doesn’t mean Apple will keep the lead.
Under the company’s plans announced on Tuesday, any purchaser of an iPhone, MacBook, iPad, or iPod Touch will now get the Apple TV+ streaming service free and will be charged $5 a month only if they decide to continue after the year is over.
Given Wall Street expects Apple to sell at least 130-million iPhones outside of China in the next 12 months, and that in 2018 it sold more than 60-million MacBooks and iPads, that should allow TV+ to easily top Netflix’s almost 160-million users.
Thereafter, however, all bets will be off, with Apple facing the same need for fresh shows to make subscribers pay, which drove Netflix to sink a reported $12bn into new programming last year.
While the company has spent months assembling a roster of Hollywood talent and planned shows, analysts say the $2bn Apple plans to spend this year is a long way from a guarantee of the hits it would need to pull in viewers, regardless of the cheaper $5 a month price tag for TV+.
“We believe Netflix’s 10-year head start, scale, breadth of content and customer engagement is unlikely to be dented by an Apple TV+ subscription service with a relatively light content slate and no library content,” Credit Suisse analysts said.
The video-streaming market is on the verge of becoming a very crowded space, with the new services from Apple and Walt Disney set to compete with Hulu, Amazon’s Prime Video and HBO Max.
Analysts say this will change the nature of a business where the relatively limited number of services and the idiosyncrasy of them — Prime, for example, is bundled with Amazon’s free delivery service — means users rarely have to choose.
Whereas Netflix, in the past, took content from a wide range of studios and networks, now many of them will have their own streaming services and keep franchises such as, for example, the Marvel cinematic universe, to themselves.
Launching on November 1 in 100 countries, Apple TV+ promises to launch a new show every week and has already announced drama See starring Jason Momoa, The Morning Show, with Reese Witherspoon and Jennifer Aniston, and Helpsters, a children’s series from the makers of Sesame Street.
However, that still leaves it way short of the 700 separate shows Netflix made last year, including dozens in the US list of top 100 most-watched. The streaming pioneer also reportedly plans to up spending to $15bn in 2019.
“Apple is primarily focused on selling subscriptions to other services [for example HBO, Showtime] and modestly focused on original content,” said Daniel Morgan, a portfolio manager at Synovus Trust Company in Atlanta, who currently owns Apple shares. “It seems unlikely that new entrants such as Apple TV+ will be able to find a footing given how crowded the field has become.”
In this light, Apple’s main focus with the project may prove to be as much keeping iPhone and iPad sales rolling as wading into a costly streaming war.
Analysts from another Wall Street brokerage, Wedbush, said Apple’s base of 900-million global iPhone users could allow it to steal 100-million streaming subscribers within three to four years. But they also pointed to iPhone sales, particularly in China, as the company’s bigger priority.
“Apple is offering Apple TV+ free for a year ... to help stimulate demand for its trifecta of [new] smartphones,” Wedbush said. “[Tim] Cook & Co recognise this is a crucial product cycle.”