Apple hopes its new streaming service will make a splash
Apple gatecrashes the fast-growing global streaming business on Friday with the launch of Apple TV+, offering a free service on all new Apple devices for the first year.
The Silicon Valley giant has pulled out all the stops to promote the service, which launches in 100 countries on Friday, with the stars of its flagship new series The Morning Show, Jennifer Aniston and Reece Witherspoon, spearheading the publicity push on both sides of the Atlantic.
Apple has earmarked about $6bn (£4.6bn) to produce original programming over the the next few years – compared to the BBC’s annual TV budget of £1.7bn – but its library will be just a fraction the size of Netflix and Amazon which spend a combined $20bn annually.
The phone and computer giant, however, is aiming to be a prestige brand, akin to the strategy employed successfully for decades by Game of Thrones to Chernobyl-maker HBO.
Apple has paid $240m for two series of the Morning Show comedy drama - Aniston’s first TV series since leaving Friends - and hopes to attract fans by releasing fewer, high quality original shows than the Netflix juggernaut.
The new service hasn’t exactly got off to a flying start with the first four shows released to critics – including the $15m-per-episode sci-fi See with Jason Momoa and Dickinson, a comedy drama about a young Emily Dickinson – receiving pretty average reviews.
To counter the lack of content firepower, Apple has a two-pronged strategy. It will offer the cheapest service – at £4.99 it is significantly cheaper than Netflix’s most popular UK tariff of £8.99 – and it will give it away for free for a year to customers who buy a new Apple device, which includes more than 100m new iPhones every year in the US and Europe alone.
But the potential total market is huge: there are about 900m iPhones in use around the world and 500m other Apple devices.
“They have come to the video market very late and Netflix really has stolen a march,” says Neil Campling, head of global technology, media and telecoms at Mirabaud Securities. “They are pricing it very cutely as they are aware that their offering is probably substandard in a very crowded market. Giving it away for free will to a degree mask whether it is seen as a success or failure in the first couple of years.”
Netflix, which earlier this year raised its prices in major markets including the US and UK, is already beginning to feel the heat. Campling believes 2019 could mark the first time in the company’s 22 history that it adds fewer new subscribers than the previous year.
Nevertheless, with a $15bn annual budget Netflix has plenty of content firepower to unleash as new rivals emerge. This month will see the return of The Crown, a flagship series for the service and its fans, as well as Martin Scorsese’s potential Oscar contender The Irishman, which stars Al Pacino, Robert De Niro and Joe Pesci.
In less than two weeks’ time Disney will make its move into streaming with Disney+ due to debut in the US and Netherlands on 12 November. The world’s biggest entertainment company is flexing its content muscles on day one with the debut of the $100m Star Wars live action TV series, The Mandalorian.
No launch date has yet been set for the UK because Disney still has TV and movie licensing deals in place for its content to air on Sky.
Disney’s vast content library – from the Marvel universe, Pixar films, family fare from Toy Story to Frozen and TV hits such as The Simpsons – make it arguably the biggest threat among the new wave of streaming launches. It’s also priced to pull in viewers: in the US it will be $6.99 a month, almost half the cost of Netflix’s most popular US package of $12.99 and not much more than Apple.
Other new streaming services are coming soon. By the end of the year ITV and the BBC will introduce Britbox, a £5.99-a-month offer that promises a best-of-British experience from Victoria to Love Island.
Next year there will be two more: HBO Max (which won’t be launching in the UK) and NBC Universal’s Peacock, leading to a growing belief that consumers are heading towards subscription streaming burnout.
Analysts believe that overall, including traditional pay-TV, the number of services viewers will be willing to pay for will settle at three to five.
“People can only watch so much and I believe that we’re on the edge of multiple subscription fatigue,” says Henry Daglish, chief executive of media agency Bountiful Cow. “I think they will find it much harder than they think it might be.”
Apple’s cheaper price point is a way of building an audience quickly, according to Tom Harrington, a senior research analyst at Enders Analysis.
“They’re trying to get to scale very quickly,” he said. “They’re basically giving it away for free. Apple wants to make the app a destination and once you’re there you sign up for third-party subscription and then Apple takes a cut. It’s a gateway to entertainment.”
Netflix’s recent missed subscriber targets are not a positive sign for Apple, according to Harrington, who says for UK users, Apple TV+ will be an additional bonus or secondary streaming service – not something that replaces Netflix.
“They’ve got scale, they’re making more than anyone else, they understand what shows work in streaming – more than anyone else does,” he says of Netflix. “But in developed markets like the US and the UK, growth is difficult and if growth is slowing for Netflix, and you’re coming in and being supplementary to them, it’s going to be hard for you.”
Cost of major streaming services
Netflix standard tier: £8.99 a month, £108 annuallyContent Stranger Things, The Crown
Amazon Prime (based on cheaper
annual tariff) £6.58, £79 Content Good Omens, Man in the High Castle, The
Grand Tour
New launches:Britbox £5.99, £72 Content Love Island, Gavin & Stacey, VictoriaDisney+ £5.99, £72 Content Star
Wars, Avengers, The Simpson, AvatarAppleTV+ £4.99, £60 Content The Morning Show, See, Dickinson plus shows from Oprah Winfrey, Steven
SpielbergHBO Max $15, $180 Content Friends (US only, for now), Big Little Lies, Harry Potter and Lord of the Rings, the DC universe including Batman and
SupermanNBC Universal £7, £84 (estimated) Content US version of The Office, films such as Jurassic Park and Fast and the Furious