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.
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.
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.
I keep trying to explain to people who see Apple as catering to the wealthy that looking at the cost of hardware is only looking at half the cost. The other half is in stuff that runs on that hardware. In the Microsoft world, for example, the hardware was commoditized and the software is what made Microsoft it’s high margins. Steve Jobs flipped that on it’s head. He sold high margin hardware that gave high worth at a relatively low price on the software. But there’s an added advantage to building high quality, non-commoditized hardware; it lasts much longer, and over it’s lifetime is used by many more people as a consequence.
Yes, Apple builds expensive stuff, and gets paid handsomely for it. But you also get a ticket to ride when you buy into the Apple ecosystem. These movies and such are an example of the type of high quality rides you get at a reasonable cost.
My guess is that there will be a period of exclusivity, which is typical. But that’s it.
BTW, the term “walled garden” is usually meant as a pejorative. At the very least, it should be put in quotes, at least here on Apple 3.0….
I seriously doubt Carpool Karaoke is a draw for subscribers or in any real way much of a tangible value to Apple’s eco-system. I consider it a curious little show with episodes lasting about 15 minutes. I will occasionally watch an episode via of Apple TV between movies and more desired fare.
As someone who for years has extolled the virtues of Apple’s eco-system and the high value of the company’s privacy efforts, I’m a bit surprised you would spend much time watching anything on YouTube which is now filled with commercials and is well known as a service that tracks content choices and viewing habits.
Well, that got a laugh out of me!
The Paul McCartney YouTube is about the first YouTube I’ve watched this year, and maybe the 5th I’ve watched in the last 3 of 4’years – and boy am I glad I did! If you haven’t seen it, you’re missing something very spcial indeed.
My larger point still stands: I’m with you that Apple video media will be, rightly, within Apple’s paywall at first. But, like most everything else, eventually it’ll show up on Netflix….
I think Apple buying the Carpool franchise was a questionable move although the McCartney piece was terrific and if they do more like that I’ll be happy.
Releasing it on youTube, where, by there way, Apple has all of their support videos posted as well as their commercials (not reposts, this is Apple’s account) is excellent as it will hit many more people than subscribe to Apple Music (if that subscription is going to be the way to get at their video content).
I find YouTube useful for Apple support videos, “how to” videos provided by manufacturers for equipment installation and trouble-shooting, etc. and some news or interview items. Beyond that, I don’t use the platform. For entertainment content I subscribe to Hulu Plus, Netflix and HBO Now as well as other “channels” offered as apps on Apple TV. I’ll also stream movies offered through iTunes.
I’m an avid Apple Music subscriber and consider the monthly family plan cost dollars well spent. I don’t mind subscribing for quality content and expect Apple to enhance its Services offerings through a combination of additional content offered through Apple Music and perhaps a new content service. I’m interested in what Apple will offer soon as a subscription news service either as a component of Texture or as a separate subscription service.
I believe it’s best for Apple to offer its content services through it product and services platform. It adds to the value of the long-term customer relationship and considering the ubiquity of Apple devices, there are almost no barriers to consumer participation.
I’m not an Apple Music subscriber, I have no use for it. However, if they produce quality video content that I’m interested in and the only way to see it is through a subscription I’ll certainly consider it. Right now I don’t see anything in the rumor mill that they’re working on that would pull me in but I’m hopeful, as both a stockholder and a viewer.
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.
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?
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.