Apple TV+ Is Here: Should Netflix Be Afraid?

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Apple just announced that its first all-original video subscription service, Apple TV+, will be available starting November 1, 2019. It also revealed the pricing system, with it, set to cost $4.99 per month, after a 7-day free trial. While the service itself is available across all Apple platforms through the Apple TV app, it will be free for one whole year to select Apple devices. People who will be buying any new Apple device – be it iPhone, iPad, iPod touch, Mac or Apple TV – they will be getting Apple TV+ free for a year. It will also be available on third-party products, like those of Roku and Amazon Fire TV.

Considering the fact that Apple device users were the early adopters of streaming video services, and account for a sizeable share of Netflix user base, is Apple TV+ a real alternative (read threat) to Netflix?

Let’s look into it in a little more detail.

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Apple TV+ vs Netflix

Apple TV+ being priced at $4.99/month for a whole family gives it a price point advantage over Netflix. In comparison, Netflix’s standard plan costs $12.99/month. In addition, new people getting the streaming service free for a year also gives it an advantage and will help it grow in sales.

For Apple and Netlfix both have a stronghold on the US market. Nearly 40% of the subscriber base of Netflix is in the US alone. On the other hand, Apple controls over 50% of the smartphone OS market in the US.

However, the one thing that Netflix has and Apple TV+ definitely won’t have is the sheer quantity of entertainment content available on the former service. Besides, Netflix has been investing hugely in original content for years now. In 2018 alone, Netflix spent a whopping $12 billion on original content.

As said by Tim Cook, Apple TV+ will be coming out with only a few shows upon launch and more shows will be added on a monthly basis. Hence, it will take some time for Apple to match the flavours of the content offered by Netflix.

The quality of these upcoming shows, however, cannot be undermined. Apple has recruited some big stars to do its shows, including the likes of Reese Witherspoon, Oprah Winfrey, Damian Chazelle and much more. As is evident, this service looks like it is mainly going to focus on the original shows that it produces instead of licensing content of preexisting shows.

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Apple’s launch date is also a thing to note since another of its potential rivals, Disney+, is scheduled to be launched on November 12, 2019.

AppleTV+: Looking Beyond iPhone

Apple has launched its video streaming service to take a step further of its target of reaching $50 billion in service sales by 2020. This is a trend which was also visible in the fiscal third quarter, where services made up 21% of Apple’s sales. In addition to that, Apple is doing its best to utilise its large and already existing device consumer base. The company itself has reportedly set aside $6 billion, with the budget for the content of the first year of content initially set at $1 billion, but later changed. In comparison, Netflix is said to spend $14 billion on the content for this year.

Hence, it is evident that Apple is trying to strengthen its services arm further more. A part of the reason might be to reduce the dependency on sales of iPhone which accounted for less than 50% of the total revenue last fiscal quarter.

Apple expects that the userbase of Apple TV+ will cross the 100 million mark in the next five years.

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