The Real Importance Of Apple’s TV+ For The Streaming Media Market

Apple TV Plus : Illustration

Apple announced its streaming video service, Apple TV+ will be available November 1, 2019,​ for $4.99 per month. (Photo by Chesnot/Getty Images)

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 Not long after Apple announced its TV++ streaming video service, we began to see news stories that it would be a Netflix killer, have an impact on Disney’s new streaming service and other streaming services in the market or in the works today.

But the reality is that what Apple is creating is a brand new category of video services that sits alone and while it could impact the purchase decisions of whether to subscribe to Netflix, Disney or others, its purpose is to deliver a different type of original-only content service to the worldwide streaming video market.  

While Netflix, Disney, Amazon, and some others do create original programming, they also have shows that are 15 years old or even older. That gives them breadth and depth and gives their customers a lot of choices with their subscription. 

Apple is very late to the streaming media market and it does not make sense for them to enter with just another me-too competitor. 

Instead, they are focusing on a completely new media model in which they are committed to creating their own shows and programs that have movie-quality cinematography and rich storytelling. Everything will be new and in some cases, serialized. This is the way they can differentiate themselves from competitors. 

You can see this developing in the type of top-level creative talent they are hiring with the initial programs that will launch with Apple TV+ on November 1. 

Apple is sitting on $250 billion in cash and they see Apple TV+ as a strategic new service and is committed to making it successful.

To do that they needed to be very different with their offerings. 

Apple will develop their programs around this ultra-high quality cinematic design and rich storytelling model. While it will launch with about nine shows, you can expect Apple to be very aggressive in building up its original programming catalog over time. 

This type of dedicated original programming only service is unique to the streaming video industry. Some see it is a gamble for Apple but pricing it at $4.99/month should make it acceptable to a broad Apple product user base to start. Add to this the decision to include one year free of Apple TV+ on all new iPhones, iPads and Macs purchased after September 10, 2019, and Apple could have an installed user base north of 200 million Apple TV+ subscribers by the end of 2020. (Apple sells 200-220 million iPhones, iPads and Macs combined each year.) More importantly, if Apple delivers truly compelling content, millions who get it for free for a year could get hooked on the service and move to full paying subscribers after their free year is over.

This type of service fits well within Apple's broader business model.

Over the years, in discussions I had with Steve Jobs, he often pointed out that Apple is actually a software company, and Apple creates hardware to deliver the virtues of its operating systems and apps. This is still the major tenet behind Apple’s business model. Yes, they make loads of bucks on the hardware, but as their recent earnings report showed, their software apps and services now bring in just over $40 billion a year with margins even larger than what they get on the hardware. 

Of course, for this to succeed Apple must deliver compelling content. 

Two of the Apple TV+ trailers out, See and Morning Show look strong and if the others they produce are in this same class, Apple TV + could be off to a solid start.

What is also interesting is that Apple, with its large installed base and cash horde, is probably the only company that could pull off a specialized original content-only video offering at this stage of the streaming media wars. Anyone else trying to do this would have a bigger challenge. 

While Apple TV+ is not a slam dunk, its dedicated focus on cinematic quality video and rich storytelling using an original programing only model, coupled with its low price and unique distribution scheme, should help Apple become a major player in streaming media even though they start out way behind their competitors. 

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 Not long after Apple announced its TV++ streaming video service, we began to see news stories that it would be a Netflix killer, have an impact on Disney’s new streaming service and other streaming services in the market or in the works today.

But the reality is that what Apple is creating is a brand new category of video services that sits alone and while it could impact the purchase decisions of whether to subscribe to Netflix, Disney or others, its purpose is to deliver a different type of original-only content service to the worldwide streaming video market.  

While Netflix, Disney, Amazon, and some others do create original programming, they also have shows that are 15 years old or even older. That gives them breadth and depth and gives their customers a lot of choices with their subscription. 

Apple is very late to the streaming media market and it does not make sense for them to enter with just another me-too competitor. 

Instead, they are focusing on a completely new media model in which they are committed to creating their own shows and programs that have movie-quality cinematography and rich storytelling. Everything will be new and in some cases, serialized. This is the way they can differentiate themselves from competitors. 

You can see this developing in the type of top-level creative talent they are hiring with the initial programs that will launch with Apple TV+ on November 1. 

Apple is sitting on $250 billion in cash and they see Apple TV+ as a strategic new service and is committed to making it successful.

To do that they needed to be very different with their offerings. 

Apple will develop their programs around this ultra-high quality cinematic design and rich storytelling model. While it will launch with about nine shows, you can expect Apple to be very aggressive in building up its original programming catalog over time. 

This type of dedicated original programming only service is unique to the streaming video industry. Some see it is a gamble for Apple but pricing it at $4.99/month should make it acceptable to a broad Apple product user base to start. Add to this the decision to include one year free of Apple TV+ on all new iPhones, iPads and Macs purchased after September 10, 2019, and Apple could have an installed user base north of 200 million Apple TV+ subscribers by the end of 2020. (Apple sells 200-220 million iPhones, iPads and Macs combined each year.) More importantly, if Apple delivers truly compelling content, millions who get it for free for a year could get hooked on the service and move to full paying subscribers after their free year is over.

This type of service fits well within Apple's broader business model.

Over the years, in discussions I had with Steve Jobs, he often pointed out that Apple is actually a software company, and Apple creates hardware to deliver the virtues of its operating systems and apps. This is still the major tenet behind Apple’s business model. Yes, they make loads of bucks on the hardware, but as their recent earnings report showed, their software apps and services now bring in just over $40 billion a year with margins even larger than what they get on the hardware. 

Of course, for this to succeed Apple must deliver compelling content. 

Two of the Apple TV+ trailers out, See and Morning Show look strong and if the others they produce are in this same class, Apple TV + could be off to a solid start.

What is also interesting is that Apple, with its large installed base and cash horde, is probably the only company that could pull off a specialized original content-only video offering at this stage of the streaming media wars. Anyone else trying to do this would have a bigger challenge. 

While Apple TV+ is not a slam dunk, its dedicated focus on cinematic quality video and rich storytelling using an original programing only model, coupled with its low price and unique distribution scheme, should help Apple become a major player in streaming media even though they start out way behind their competitors. 

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