ZCZC
BFF-18
US-IT-LIFESTYLE-MEDIA-APPLE
Aiming for reinvention, Apple eyes streaming, services
SAN FRANCISCO, March 24, 2019 (BSS/AFP) – Apple looks to begin a fresh
reinvention on Monday as it rolls out Hollywood stars for its new streaming
television service, part of a broad shift of direction for the California
technology giant.
Having seen a pullback in the once-sizzling smartphone market, Apple will
seek to diversify by getting deeper into the television business, and with
the likely launch of a subscription news service.
The iPhone maker, which has officially been mum on its plans, was expected
to bring in Jennifer Aniston, Reese Witherspoon and “Star Wars” director J.J.
Abrams to a launch event at its Silicon Valley headquarters.
“It seems fairly obvious they are launching a new video service,” said
Techsponential technology market analyst Avi Greengart.
Big questions to be answered include how compelling content will be; how
much the service will cost, and what makes it unique in an increasingly
crowded streaming television market, according to the analyst.
“If the content is compelling enough, people will subscribe,” Greengart
said.
“This is not new, but it is hard to do well.”
The event comes with Apple under pressure to diversify its revenues amid
sluggish growth in smartphones, which have delivered the bulk of Apple’s
profits for the past decade.
While iPhone sales remain enviable, growth has stalled. Meanwhile, money
Apple takes in from selling services or digital content has climbed.
The Cupertino-based company recently stopped disclosing iPhone sales
numbers with quarterly earnings releases and has taken to stressing the
money-making potential of selling services, apps, music, movies and more to
the millions of people using its devices.
The new service will be “a pivotal step for Cupertino in further driving
its services flywheel and entering the ‘streaming content arms race’ which is
clearly starting to take form,” said Daniel Ives of Wedbush Securities in a
research note.
Ives said he believes Apple’s services business will be “worth roughly $400
billion on a standalone basis.”
– Crowded stage –
In streaming, Apple is taking on not just Netflix and Amazon but some of
the biggest names in the media-entertainment world.
Walt Disney Co. has announced its new streaming service Disney+ will launch
this year, as will another from WarnerMedia, the newly acquired media-
entertainment division of AT&T.
The new entrants, with more expected, could launch a formidable challenge
to Netflix, which has some 140 million paid subscribers in 190 markets, and
to other services such as Amazon and Hulu.
These rivals are coming into the segment which has been transformed by the
spectacular growth of Netflix and a growing movement by consumers to on-
demand television delivered over internet platforms.
Subscriptions to online video services globally climbed 27 percent last
year to 613 million, eclipsing cable television subscriptions for the first
time, according to the Motion Picture Association of America.
– What’s new in news? –
Apple is also widely believed to be set to launch a subscription news
service described as a “Netflix for news” with partners in the media world.
A New York Times report said the Wall Street Journal would be part of the
Apple service likely to cost $10 a month, but that many other news
organizations including the prestigious New York daily and the Washington
Post were balking due to Apple’s demand for a 50 percent slice of revenue.
According to Bloomberg News, the website Vox would also be part of the
Apple News effort.
The move comes amid deepening woes for the news sector facing a difficult
transition to the digital world where few people want to pay for information
and advertising is problematic.
– Adding to the mix –
Along with investing some of its considerable war chest in original shows,
Apple could try to spice up its streaming service by adding in benefits such
as access to its music library or online storage capacity at iCloud.
Amazon uses that kind of tactic, making its video service available as part
of Prime subscriptions that include free shipping on purchases from the e-
commerce colossus and loyalty program discounts at its Whole Foods grocery
shops.
For its video service, Apple may be investing as much as $2 billion a year
in original content, according to BTIG Research analyst Richard Greenfield,
but that will be less than Netflix and some others.
A big question remaining is whether Apple will offer its content free for
its device owners, and how it will work with third-party television services,
according to Greenfield.
Laura Martin, an analyst with the research firm Needham & Co., said Apple’s
prospects are strong as it shifts from being a “product” company to an
“ecosystem.”
Martin said in a research note Apple can count on 900 million people with
at least one Apple device to feed this ecosystem of services which includes
Apple Pay, music and other digital content.
“Apple’s business model is essentially a subscription business model,”
Martin said.
“Apple’s access to more than 900 million unique users globally, most of
them among the wealthiest individuals in the world, plus its culture of
creating hardware and services with proven commercial appeal makes it well-
positioned.”
BSS/AFP/GMR/1056 hrs