Dallas Lawrence, VentureBeat:
For Netflix, the streaming wars are life or death. For Disney, it’s about futureproofing the business and ensuring its incredible IP sustains its value in a changing media ecosystem. For Amazon, it’s about making Prime stickier. For Apple, however, streaming is really more of value add play — a vehicle for the world’s most valuable company to continue its evolution away from a pure hardware company into a services business.
This is a playbook Apple has effectively deployed in the past and one we are already beginning to see take shape as it competes in the streaming landscape. One only needs to look back at the Apple Music launch to understand the strategy. By building an ecosystem for Apple hardware users to seamlessly integrate music into their digital life, Apple managed to overtake Spotify’s subscriber growth in the U.S. and ultimately reach more than 60 million subscribers (and growing) for its music service. According to the most recent quarterly earnings released last week, Apple’s services business alone is growing at more than 20% annually — surpassing $12 billion in the latest quarter.
Just as Jeff Bezos once famously said that every time an Amazon original wins a Golden Globe it helps the company sell more shoes, with Apple News+, Apple Music, Apple Arcade, and now Apple TV+, Apple is building ever deeper connections into every aspect of the consumer content experience that will pay dividends far beyond the streaming wars.
I’m swayed by the argument that an arbitrary hardware-and-services company does not need a movie production business to succeed, but I am not persuaded that this makes sense as Apple’s strategy. The shows that have been released by the company have — “Planet of the Apps” notwithstanding — been greeted by warm but not effusive reviews. They’re fine. Some of them may even be even good.
But Apple doesn’t do fine or even good. They don’t sell Macs because they help maintain a sticky connection to their services; they don’t update the iPhone’s camera every year because they hope you’ll buy more iCloud storage. They’re the best products in their class. Sure — Apple doesn’t sell truly cheap versions of these products, but people are willing to hand over a much larger lump of money to the company with the knowledge that they’re getting a premium product.
Apple TV Plus doesn’t fit that archetype — not yet, anyway. This becomes plain if you compare it to the closest television equivalent to an Apple product that I can think of: HBO — a premium cable channel that features must-watch shows that are defined as much by their quality as their budgets, all without being interrupted by ads. Apple TV Plus is, so far, serving up fine shows with astronomical budgets, all for either a low monthly cost or, if you’ve bought a new Apple product recently, a free year’s trial. Are they going for subscription volume?
Apple TV Plus has just launched, and the app is more of a storefront for more established players in the streaming video market. They can get better at this, and they should. But I want to hear a reason for Apple to be in the streaming business beyond ARPU and subscription stickiness.