Excerpts from the notes I’ve seen. More as they come in.
Timothy Arcuri, UBS: China Demand Still Weak; New Video Service Likely To Be Announced. We expect Apple to launch a new video streaming service. Apple has consistently indicated that its strategy is to have compelling and targeted content, and believes multiple streaming services can co-exist. We believe Apple could also introduce a subscription service for News and potentially gaming this year. A News subscription service is more of an aggregation model, but could be successful as consumers are interested in articles from different publications but unwilling to subscribe to more than a few. Gaming is also apt to be an aggregation model. Buy. $185.
Daniel Ives, Wedbush: Get Out the Popcorn. If Apple executes with minimal speed bumps and aggressively acquires content given the company’s massive installed base and unmatched brand loyalty we believe reaching 100 million subs in the medium term (3 to 5 years) is a realistic goal that could translate into a $7 billion to $10 billion annual revenue stream over time… The company is definitely playing from behind the eight ball in this content arms race with Netflix, Amazon, Disney, Hulu, and AT&T/Time Warner… While acquisitions have not been in Apple’s core DNA, the clock has struck midnight for Cupertino in our opinion and building content organically is a slow and arduous path, which highlights the clear need for Apple to do larger, strategic M&A (a24, Lionsgate, Sony Pictures, CBS/Viacom, Netflix, MGM) around content over the coming year. Outperform. $200.
Ben Bajarin, Creative Strategies: Apple and Good Enough Services. I have attended nearly every Apple media event since 2001. What intrigues me the most about this one, is it will likely be the first where the entire focus and emphasis is on something other than shiny new hardware. Yes WWDC is a software event, but that is also a developer event, not a media event. Media events are traditionally where Apple releases new hardware products and the software, or services, and story is the supporting cast. This event is likely to be quite different. The event invite is about as clear as it gets saying “It’s Showtime.” As I had to clarify for one reporter, no Apple is not buying Showtime. However, as I’ve explained before, I do feel what Apple is looking to do with their original content strategy is likely to be closer to Showtime and HBO than Netflix or Amazon Prime.
My take: So far, I’m not sensing a lot of sell-side excitement. In fact, according to Ives, the new streaming video content service is still in the “late planning stages” and likely won’t officially launch before fall.