Industry analysis: Apple TV+

26 Mar 2019 
Industry analysis: Apple TV+

This week Apple announced the launch of its own TV streaming service, bringing the tech giant into an already crowded online video market dominated by the likes of Netflix and Amazon Prime.

The subscription service will offer access to the content of other video providers (including HBO and Britbox) as well as billions of dollars worth of investment in original content, featuring Hollywood stars such as Steven Spielberg, Oprah Winfrey and Jennifer Aniston.

Here, industry bosses share what they think of the news and what it could mean for the future of online video.

See also: Apple launches Woke TV

Liz Duff, head of media and investment, Total Media

Viewers are faced with a paradox of choice, as an increased range of choices does not necessarily lead to higher satisfaction with the outcome of a decision - if anything, choice may impede our ability to enjoy and appreciate what we have.

Generally new players need to have a differentiated product to gain share, but Apple is entering the market with the advantage of experience about building hype around new product launches and driving demand.

Going ad-free is a great way to entice new users but retention is key and they’ll need to sustain this. The main challenge therefore will be ensuring the content they deliver is of high enough quality to justify this hype beyond the launch stage.

Apple has currently left the price question shrouded in mystery, but this will be key for consumers. Ultimately it will come to a point where if ad-free subscription costs are too high to be appealing, users will have to accept ad-funded models.

Key to the acceptance of this will be ensuring ads don’t jar with the user experience. Over the next year we’ll likely see more players enter the market, but longer term it is likely we will see a consolidation of the big players, which will be kinder on consumer wallets.

Luke Bozeat, COO, Mediacom UK

Rumours of Apple’s new streaming service come hot on the heels of other huge companies announcing similar platforms in a battle for more eyeballs, for longer. In short, it’s not just Netflix that Apple is competing against; ITV and BBC invested in BritBox last month, Snap Originals introduced TV-like programming on mobile and Disney+ will capitalise on a traditionally younger audience.

As Apple looks to pour money in the video streaming market – and is in a strong position to do so – it will have to invest in original content that sets it apart from the plethora of choice available from both current and upcoming platforms.

However, original content might not be enough of a differentiator to persuade consumers to sign up. We might yet see Apple move down an Amazon Prime-esque route, offering customers exclusive discounts on its hardware and software in a bid to win over subscribers, and a new way to enjoy the Apple “experience”. With so much investment from a company not known for content creation, this is a big risk, and one that will take time to understand the audience’s needs and wants.

Having a huge user base already helps, but a strategy based on content partnerships with Hollywood directors and primetime platforms like HBO might yet be another long-term boon for the company. In a battle to create and host the best TV shows and films in town – and with so much content to choose from – the consumer may prove to be the ultimate winner here.

Dallas Lawrence, chief brand officer, OpenX

One billion dollars in content alone will not guarantee success in the crowded OTT market. Apple must consider that in the OTT world, original content is not necessarily king. According to a soon-to-be-released study commissioned by OpenX of over 2,000 people that use at least one OTT service, not a single Netflix, Hulu or Amazon Prime original series made it in the list of the top 10 favourite shows. Content is important but it will not differentiate enough.

The new research also shows that OTT users already feel overwhelmed by their content choices today meaning a new market entrant needs to do more than just offer more content, they need to disrupt the model and provide something better for users. OTT users are also device agnostic using on average of three different devices to stream their content. They do not want to be tied to one proprietary device or platform.

One area where Apple will find receptivity in the market is around what appears to be an effort to build a new ‘skinny bundle’ model for content. Users do not want 200 channels. The 15 /10 rule applies to most OTT users: They want a maximum of 15 channels and they are willing to pay around $10 per channel for the ability to access that content when and where they want it. If Apple can crack the skinny bundle code and deliver a unique and holistic OTT ecosystem for consumers they could very well become the primary disruptive force in streaming video.

** Please note, the research referenced in this comment is from US consumers.

Mark Hudson, head of business intelligence, TVSquared

Apple’s stated commitment of not sharing user data with advertisers and offering ad-free content obviously puts this offering “off limits” to traditional advertisers.

Their partnerships with Sony, Samsung, ROKU, Visio, Amazon and others extends the reach of the service and platform but will have to compete with other players in the space offering pretty much the same accessibility to premium content, apart from productions Apple has exclusive agreements with. It remains to be seen if those offerings are enough to boost their subscription base and differentiate Apple TV+.

All in all, it opens up Apple TV to a larger audience that was formerly dependent upon owning Apple hardware. They have over 1.5 billion users worldwide that will now have this app automatically with an update. Even though this will be a subscription-based service, it will be the content that will pull consumers in. And they have to compete with Amazon who has a reported $15Bn devoted to program production themselves.

Apple is more likely to be successful alongside the likes of Amazon’s OTT offerings, HBO, Hulu etc. It could be dominant in the long run but not with respect to Ad-Supported OTT services.

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