Tim Cook just ended the rumors over Apple TV+! According to him, it's going to be an over-the-top streaming service just like major networks and content providers. Apple has been recently looking to enter the services market and wants to capitalize on the mass transfer to over-the-top from cable bundles.
This gives us some sense of pricing about the service which was launched back in March. Some people claimed that TV+ would be available to Apple device owners as a free, value-added service via the new TV app. Apple would earn its revenue by selling subscriptions to third-party services. Some even suggested Apple TV+ would come as a bundle with Apple Music and Apple News+.
But for now, we can rest the rumors as Cook has made it clear how the service will be priced.
The Perks of Over-the-Top Services
Services like Apple TV+ has become popular because of their a la carte feature of pricing. Instead of paying for a bundle of channels forced down on you, a la carte services only require charges for what you watch. So you can choose your content and pay for each piece making it economical for you.
The services are also cheaper because the content providers offer individual services while owing the right to all content. Cook said Apple TV+ would enter a market experiencing a huge move from cable bundle to over-the-top. He believes that most users will own multiple streaming services and he wants to convince them to make Apple TV+ one of the choices.
Apple will join the likes of Netflix and Amazon Prime who offer subscription-based service.
Original Apple TV+ Content
Apple TV+ promises to offer original content alongside a wide choice of movies and series. To give us an idea of what they are talking about, Apple brought in top celebrities to provide a sneak peek into their programming.
Many were happy to see Steven Spielberg, the famous director with a list of wonderful movies. Spielberg, who recently took a jibe at Netflix and Hulu appeared at the Apple star-studded event.
Other Hollywood celebrities like Jason Momoa, Steve Carell, Jennifer Aniston, Reese Witherspoon, Oprah Winfrey and J.J. Abrams, also joined the event. This gives us an exciting picture of the future projects.
Original content has been one of the most effective ways to attract customers. Streaming companies have invested billions of dollars to create enticing content that increases customer retention.
Netflix is popular for its acclaimed movies and series like House of Cards and Emmy-winners The Crown. Till now, Netflix has invested $8.9 billion on producing original content in 2017 and $12.04 billion in 2018. This year, the amount is expected to grow to $15 billion.
Amazon is also working on original productions and currently shooting a multi-season series based on the Lord of the Rings. The original show Marvelous Mrs. Maisel even won several awards at Emmys and Golden Globes. Amazon will spend $6 billion for original programs in 2019.
Possible Pricing Strategy
Apple has disclosed the nature of their pricing but hasn't said anything about the actual rates. Currently, Netflix, Hulu and Amazon charges $8 to $11 to customers in the USA for their streaming services.
Netflix is now trying out a low-priced subscription in countries like India and Malaysia. You can watch 480p content on your mobile for as little as $3 a month during the test period. Hulu also offered subscriptions for a year during Black Friday last year for $1 per month.
Amazon has adopted an aggressive pricing policy from its start with a single subscription for its video and expedited delivery service.
Apple should be charging similar rates if they want to capture the market. Affordability is the keyword in the video streaming industry and every player needs to play by this rule! You also pay for only what you watch, so costs should never be a worry.
Apple is Looking to Enter a Highly Competitive Market
Apple is looking to cash in on a potential market which already has other players in the lead. Video streaming services now have more customers worldwide than cable users- 613.3 million users compared to 556 million users. As people increasingly cut their cable connections, will Apple be able to capitalize?
Revenues from streaming services are set to overtake worldwide theatrical revenue in 2019, according to Ampere Analysis. The current video streaming market of $22.6 billion is predicted to reach $306 billion by 2020, says Pricewaterhouse Coopers!
The already overcrowded market has over 100 players fighting to grab a share of the pie. As Cook believes, most users subscribe to multiple streaming services. The majority (89%) of streaming content subscribers have opted for Netflix, while most of them subscribe to other services- an average of 2.5 streaming subscriptions per video streaming customer.
Among the users who subscribe to a single service, 25% belong to Netflix followed by Amazon Prime at 6%. The number of subscribers at each platform is also huge providing opportunities for increasing revenues.
In 12 years since its inception, Netflix has been able to gather 139 million subscribers spread across 190 territories and nations. Amazon Prime is available in the same number of nations with a subscriber base of 100 million people under its bundled services. Hulu is only available in Japan and the US, accounting for 25 million subscribers.
We also have other players like HBO Now streaming with 5 million subscribers. Showtime, CBS All Access and Viacom’s Noggin are relatively new in the market.
Apple needs to deliver solid content in order to win over customers. With so many top names of Hollywood on its team, the company might turn out to be a competitive player in video streaming. But only time will tell when Apple TV+ launches this fall!