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Apple Pitches Revamped Apple TV as One-Stop Content Aggregator

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Apple was the first to crack digital music. Can it repeat its success with video? In what is billed as Cupertino's biggest strategy change since the iPhone in 2007, Apple has announced its long anticipated move into streaming video subscription. It also launched a bundled news and mobile games service.

"This represents a landmark moment for Apple with a major event solely focused on services," says Paolo Pescatore, PP Foresight, Tech, Media & Telco Analyst. "It underlines a growing and strong focus on services as a future source of revenue growth. In essence Apple is seeking to become a Netflix of everything in services: music, news and magazines, video, and games."

Its video approach is two-pronged. Populated with original content, new subscription service AppleTV+ will be available inside a revamped Apple TV app that is already pre-installed on Apple devices. AppleTV+ is due in the autumn and will feature new shows from top directors and actors including Oprah Winfrey, Steven Spielberg, Jennifer Aniston, Octavia Spencer, J.J. Abrams, and others.

The revamped Apple TV app's Apple TV Channels feature will now allow you to subscribe to any channel individually, instead of via a cable service. Significantly, partners include Hulu and Amazon Prime as well as Showtime, Epix, HBO, and BritBox.

"The Apple TV app and Apple TV+ will effectively become the largest single SVOD catalogue available in the U.S.; acting as content aggregator for selected cable and SVOD platforms alongside Apple's iTunes," says Richard Cooper, Research Director, Ampere Analysis. "The combination of Amazon Prime and Hulu's subscriber base alone gives the service the potential to become largest single VOD platform in the U.S."

Apple TV will display premium movie and TV titles from all the services it encompasses alongside each other, along with AppleTV+ original content, making Apple TV+ far greater than the sum of its parts.

"The stronger revamped video service somewhat mirrors the strategy of rivals," says Pescatore. "These latest moves take Apple TV closer to a one-stop-shop destination for consumers with live TV, on-demand, and Apple's own original shows in one place."

The new look Apple TV will be available from May via a software update across iOS and MacOS devices, in addition to distribution on smart TVs from Samsung, Sony, LG, and Vizio, as well as Amazon FireTV and Roku.

On the plus side, Apple will look to take advantage of a massive 1.4 billion install base of its devices and can plug the revamped app into this ready market.

As Oprah Winfrey said at the event, "The Apple platform allows me to do what I do in a whole new way—because they're in a billion pockets, y'all. A billion pockets—that represents a genuine opportunity to make a genuine impact."

On the downside, of course, Apple has given rivals like Netflix—which is not part of the service, along with Disney—a huge head start. It launches into a market in which content production and acquisition costs are already stratospheric. Netflix, Amazon, Hulu, Disney,, and AT&T (WarnerMedia) are investing a combined $20 billion this year alone on content, while Apple's spend is reckoned to be about $1 billion.

While Apple sits atop a $245 billion cash reserve, analysts believe it will have to dig deeper to fund originals or even acquire a major video content company.

"Apple will spend a metric ton of cash on this endeavor, and unless they can turn Apple TV+ into a hit-making machine, will have to buy a library, an MSO, a wireless carrier, or successful SVOD business to win here," said Ian Greenblatt, head of TMT at marketing services house J.D. Power.

Fragmentation or Consolidation?

Apple's pitch to consumers for AppleTV+ was premium content and innovative first-class storytelling endorsed by the likes of Abrams and Spielberg.

Analysts seem split on whether this will impact Netflix. Pescatore thinks more content and media owners will pull programming off Netflix and that "Apple represents a key partner for them in reaching new audiences at scale across numerous devices."

On the other hand, while the service wants to be a one-stop SVOD shop, it's likely that the service will become one of many SVOD services from which consumers will pick and choose.

The propensity for this is quite high, particularly in the U.S., such that Apple's service won't impact the growth of Netflix and Amazon Prime Video. According to Futuresource Consulting, in the U.S., there are nearly 80 million households with SVOD services, and on average each of these households takes two services.

The analyst predicts a trend towards consumers taking three SVOD services in future, particularly in the U.S. and that the figure will be "marginally lower" in Europe.

Ampere's analysis has the average U.S. SVOD household paying for 2.6 subscription services. "The creation of a single point of access for such catalogues once again offers a compelling reason for US consumers buy into Apple's service ecosystem," Cooper suggests. (nScreenMedia puts the number of services per household even higher, at 3.4.)

Futuresource also predicted users will take out trial memberships and special offers, "dipping in for short periods and then cancelling subscriptions" as choice in the market continues to grow.

The rollout paves the way for the introduction of new business models: "In the future we might even see users pay for a service bundle and receive a new iPhone every year," suggested Pescatore.

No pricing was shared for the new streaming service. "Apple has the bankroll to undercut all other market participants with somewhat predatory pricing in order to build an audience and constrain competitor's cash flow," added Greenblatt.

One reason Apple is making this move is because the smartphone and overall devices market is stagnating. Lower than expected sales of the iPhone in the last quarter were blamed on the economic slowdown in China, but the issue is more chronic. People aren't replacing their devices as fast as they used to (in part because of the price levels for models like iPhone XS Max at $1,250). Reliance on iPhone sales is not considered a sound strategy, hence the need to ramp-up its subscription services business.

Apple News

Also announced is a subscription news service combining stories from newspapers, websites, and magazines into a new tab in the existing Apple News app.

Participants include The Wall Street Journal with media organizations expected to hand over a 50% cut of the revenue to Apple.

Apple Arcade

As prelude to launching Apple Arcade, a games subscription service for mobile desktop and Apple TV, Cook said 1 billion games had been downloaded from Apple's app store making games its most popular app category and iOS the most popular gaming platform.

Apple Arcade will feature 100 exclusive new games on launch and is accessed via a new tab in the app store. This service won't take on new cloud-based streaming offerings like Google Stadia. Instead, it will focus on iPhones and iPads and bundle together paid games from different developers that consumers can access for a monthly fee. No pricing was released.

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