This week Apple announced its forthcoming streaming service, Apple TV Plus, which will see Apple step up to produce its own TV shows. Everyone from Steven Spielberg to Jennifer Anniston to Big Bird is involved, but what do the analysts think?
Bizarrely, the analysts opinions are mixed with many focusing more on the questions Apple didn’t answer during their star-studded string of announcements.
Greg Harwood, pricing specialist and a director at analyst firm Simon-Kucher & Partners, says that Apple will need to absolutely differentiate themselves from the competition if they want to succeed.
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“Apple is already dabbling in the services space with Apple Music subscriptions, iCloud storage and AppleCare warranties,” says Harwood.
“Apple is now set to double down on services to drive its next phase of growth. The company will need to enact a strategy that will power the next generation of growth by building longer term relationships, generating recurring revenues, and providing various opportunities to cross and upsell to existing Apple customers.”
“In today’s world, content is king […] The vast drive towards video streaming has been extremely lucrative for established players such as Netflix, Amazon, Disney, Hulu and AT&T — so the potential move for Apple to enter this space is a particularly interesting one.”
Martin Garner, Senior Vice President at CCS Insight, reckons that Apple’s forthcoming streaming service has a clear place in the market, but it’s a niche that could harm the company’s widespread appeal.
“Apple’s TV Plus original content program launches in fall 2019, focusing on quality storytelling. This gives it a clear position in the market, which will produce some hit shows. But it will lack the full range and diversity of content available through Netflix, Amazon and others, and that is set to limit its appeal.”
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“With no pricing details given, and no details of its financial commitment to original content, Apple has yet to convince the world that its service can line up alongside Netflix and attract significant numbers of paying consumers,” adds Garner.
Still, Harwood posits that while it’s an incredibly expensive move, it could pay out if they get it right. “The move towards TV subscription services and creating original content is one that certainly requires deep pockets but represents significant potential returns if executed with the customer in mind.” claims Harwood.
Apple’s already sizeable audience gives them a boon in terms of acquisition, but with the near endless competition out there, they’ve got their work cut out for them.
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“Given the highly competitive landscape and the endless choice of digital content that is available via the subscription mechanism Apple will need to examine what it can offer customers that they cannot already get elsewhere,” says Harwood.
“Here at Simon-Kucher we believe that the path to subscription excellence is a constant evolution,” adds Harwood. “There is not a subscription business out there that has the perfect answer to each of these questions on day one; the key message being to start simple and go from there.”
Dominic Sunnebo, global consumer insight director at Kantar Worldpanel Comtech, asked whether Apple TV+ can beat the multitude of other streaming services, says that it isn’t about winning or losing.
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“There can be many winners in the huge and ever expanding content world,” says Sunnebo. “Consumers are increasingly willing to subscribe to multiple different streaming services. Kantar Worldpanel ComTech data highlights that in the US, 45% of Netflix customers also subscribe to Amazon Prime Video. 39% of Amazon Prime Video customers also subscribe to Hulu. In contrast to Apple’s hardware ethos, it is clear with the launch of Apple TV Plus, that Apple is willing and confident in its ability to play alongside media giants like Netflix and Disney.”
We’re seeing Apple soften its idea of a walled garden recently with the addition of Apple TV to several pieces of hardware that aren’t emblazoned with a piece of fruit on it. It’s a big step for Apple, and could be crucial if they want to carve out a piece of the streaming pie for themselves.
When it comes to convincing people to pay for another streaming service, Sunnebo points out that Apple has past experience doing this. “Apple has form here. When Apple Music was launched, it looked likely an incredibly punchy play, going up against the likes of Spotify. Fast forward to 2019 and Apple is within a 10% share of Spotify amongst iPhone Music subscribers.
All analysts highlight one key fact: Apple TV’s change to become more of a service than a hardware product, in addition to the original content coming from the Apple TV+ service could be far more profitable than the company’s current angle of making and selling hardware.
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