Will Apple's new shows be shown outside Apple's walled garden?

When Van Amburg and Erlicht signed Spencer, Spielberg, Aniston, Shyamalan, Winfrey and Witherspoon, I had assumed not.

Over at Macquarie, analysts argued both sides of the case and came to a different conclusion. Analyst Ben Schachter writes for the majority (from a note to clients excerpted by Barron's Tiernan Ray):

For maximum penetration of its forthcoming [over the top] OTT service, we think Apple could align the service more with the iTunes strategy on desktops – operating system and hardware agnostic – and less like some of its apps exclusive to iOS. This has already been tested somewhat with Apple Music being available on Android devices (although the number of Android Apple Music subs is likely de minimus), and many expect the entire Apple Music platform will ultimately be the foundation for the video content distribution service. From a media reach perspective, limiting Apple OTT to only Apple devices may dampen competitiveness and quality of content given the degree of ubiquitous penetration of other services – Prime Video and YouTube TV for example. These services, despite being backed by hardware and OS ecosystems of their own, are distributed across smart TV operating systems, third-party OTT dongles, and mobile devices. Apple may decide it has to do the same in order to have the broadest reach, relevance, and scale...

Our media team thinks this may also be an opportunity for Apple to develop a “services-specific ecosystem” given the head start Apple Music may give a fledgling Apple OTT service; we think it too has to expand well beyond its current distribution points – Apple Music would make for easy delivery of Apple OTT marketing to users across the ecosystem, even those on the fringe who don’t own Apple hardware but subscribe to Music. As Apple increasingly becomes a services story, and the offerings expand, so too must the independence of its ecosystem, and the company may realize a video platform is strategically central to this as a flagship consumer-facing product.

My take: This is a question Spencer, Spielberg, Aniston, Shyamalan, Winfrey and Witherspoon must have asked before they signed with Apple. The answer will be in the contracts, no? Paging Variety and the Hollywood Reporter.

12 Comments

  1. Robert Paul Leitao said:
    In my view, by-and-large Street analysts continue to underestimate and not fully value Apple’s widening economic moat. The ubiquity of Apple devices (including iPhones, iPads, Macs and Apple TVs) justifies the exclusive distribution of content through Apple’s product paradigm.

    A 4K Apple TV starts at only $179. That’s a one-time cost for a living room “gateway” to Apple’s streaming content versus the monthly equipment charge tacked on to millions of cable contracts. When it comes to costs, consumers are knowledgeable and their decisions are increasingly prudent and informed. Further, content consumption is moving from the living room to mobile devices and a “content anywhere” consumption pattern for consumers.

    With about a billion mobile devices in use around the world, I see no reason for Apple to push content distribution outside of its product paradigm for a marginal increase in potential subscribers. Better to attract new customers to the company’s high-value, high quality products through enhanced services than make a concerted effort to expand distribution for no other reason than to appear to address a theoretically larger market of consumers.

    2
    June 30, 2018
    • Gregg Thurman said:
      I don’t think it matters how Apple decides to distribute its content.

      Android buyers are predominantly CHEAP, preferring ad supported services (or very low cost) vs paying out of pocket for quality. So the number of Android users that will pay for Apple content will be very small. In study after study, survey after survey, iOS users (representing only 15% of total users) make >70% of online purchases.

      Movie rentals on iTunes cost about $5 per, and as a key element in Services is growing about 20% per annum. Two iTunes rentals will pay for an entire month of Netflix drek.

      I see Apple content competition as HBO and the like, not Netflix.

      Would I pay $10 to rent an Apple produced movie? You bet. $10 is less than the cost of a single theater ticket. Two rentals per month totals $20 per month, so a $20/month all you can eat subscription would be very reasonable.

      With 4K AppleTV and HomePod integration I think the infrastructure for an exceptional subscriber experience is being established by Apple, an experience that Android users would enjoy, but not willing to pay for.

      So give access to everybody, it won’t matter, because only Apple’s traditional target market will use it, and most importantly, be willing to pay a premium for it.

      0
      June 30, 2018
  2. John Kirk said:
    What would Apple gain by making their content available to all? They’re not Netflix. They’re not Spotify. Gaining subscribers is not their business model, it’s ancillary to their business model which is making great, intuitive software and monetizing it through integrated hardware.

    I think Apple’s television content serves the same purpose as Apple Music. It keeps you from wanting to leave. It’s not a draw. It’s not a stand-alone enterprise.

    If Apple starts thinking they’re a movie studio, they’ve lost their way.

    1
    June 30, 2018
    • Robert Paul Leitao said:
      John:

      I agree. What’s the benefit to Apple for being one more content source and a content source outside of its product and services platform? In other words, what solution would that provide to Apple or consumers to what existing problem or challenge for the company?

      1
      July 1, 2018
      • John Kirk said:
        The words mean a lot coming, as they do, from you, Robert.

        I’m not at all sure what Apple is doing. But I think I have an idea of some things they will NOT be doing. Now, I’ll have to sit back and wait for time (and Apple) to prove me right or wrong.

        0
        July 1, 2018

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