Five Tactics Apple Can Use to Win the Streaming Wars
Disney+ won its first head-to-head against Apple TV+. Here’s why Apple still has a path to victory.
Long, long ago, before Baby Yoda became a pop culture phenomenon, in a galaxy that spanned Hollywood and Silicon Valley, Disney and Apple were destined to merge their respective companies to create an unstoppable media empire. At least, that’s the provocative claim Disney CEO Bob Iger makes in his forthcoming autobiography.
In the waning days of 2019, Disney and Apple are no longer playing nice together. Last month, the two companies launched streaming platforms within two weeks of each other. In anticipation of the launch, Iger resigned from Apple’s board, signaling an end to a formerly cozy relationship.
To be fair, Disney is playing hardball with all of its potential streaming rivals. It’s blocked Netflix from running ads on the channels it owns. There was also talk that Disney+ would not play on Amazon Fire TV, although Disney and Amazon ultimately reached a deal to make this happen. As for Apple TV+, Apple plans to leverage its rich ecosystem by offering a free year of the streaming service with the purchase of many Apple products.
To the Victor Go the Spoils
One month after the launch of Disney+ and Apple TV+, the dust is starting to settle and a clear victor has emerged. In its first day alone, Disney+ signed up 10 million subscribers with mobile app downloads topping 22 million worldwide since the service’s November 12 launch. Meanwhile, Apple TV+’s original programs The Morning Show and See have failed to generate much buzz, despite signing big name stars like Jennifer Aniston, Reese Witherspoon, and Jason Momoa.
More Than a Pretty Face
Both Disney+ and Apple TV+ are relying on name recognition and nostalgia to sell their streaming services. While Disney has offered up a limited number of new series like The Mandalorian, it’s mostly relying on its huge catalogue of animated movies, the Marvel Cinematic Universe (MCU), and classic live action films like Mary Poppins and The Sound of Music, By contrast, Apple TV+ is hoping major star power will attract viewers to a limited catalogue of 10 original series.
So far, Disney’s approach appears to be the winning one. Subscribers are flocking to the Vault to take in beloved childhood classics, while many are taking a pass on The Morning Show despite the involvement of Friends alum Aniston. Although people have been sending Friends a lot of love during its run on Netflix, they’re not signing up for Apple TV+ based on Aniston’s celebrity draw.
It appears content really is king. Having stars of well-loved vehicles isn’t the nostalgia people are seeking. They want quality programming, both past and present.
Given the success of Disney+ and the rocky start to its own streaming service, does Apple still have a path to victory in the streaming wars? I would argue yes, but they’re going to have to recalibrate their strategy. Without further ado, here are five tactics Apple can use to win the streaming wars.
Tactic #1: Play to Your Strengths
When it comes to the streaming wars, Apple already has a lot of strengths to draw on. The price of Apple TV+ is right at a lean $4.99 per month after a free one-week trial period. The company is also offering Apple TV+ free to employees and to students with an Apple Music subscription. These built-in subscriber bases point to the overall strength of the Apple ecosystem as a means of promoting Apple TV+.
Tactic #2: Give Viewers an Unforgettable Experience
Apple’s focus on design and user experience is another huge potential advantage. As streaming services proliferate, viewers are looking for a streamlined viewing experience.
Research indicates that consumers are willing to subscribe to an average of four services per year and spend up to $42 per year on streaming entertainment. However, 33% of consumers have also expressed frustration with how difficult it is to manage multiple streaming services. Of those surveyed, 47% expressed interest in accessing their paid subscriptions through a single interface and 26% said they were “very interested” in this option.
Famous for products that deliver a design-centric user experience, Apple seems like a natural fit to offer a consolidated streaming interface with the ease of use that made Netflix the dominant force in the streaming market. Of course, Apple would need to persuade entertainment companies to stream content through Apple’s platform, which could be a tough sell with so many studios launching or preparing to launch competitive services.
Tactic #3: Corner the Market
Acquiring Roku or another company that offers a media streaming player is one way around this impasse as it would make Apple the dominant provider of media streaming players. As subscription costs and streaming options mount, Apple could also expand its a la carte offerings of downloadable programming via the Apple TV app, which might appeal to cord cutters tired of cable packages that offer one-size-fits all programming filled with shows many viewers have zero interest in watching.
Tactic #4: Find Your Niche(s)
For now, Apple’s strategy seems to be investing in high-cost, high quality original programming with broad-based viewer appeal. Nor is Apple alone. This strategy has served Amazon, Hulu, and Netflix well. However, this strategy carries a lot of risk with production costs for scripted programming running around $13–15 million per episode.
Moreover, the streaming market is currently saturated with original programming and a lot of offerings by tech companies aren’t gaining much traction with the viewing public, despite critical acclaim. Facebook Watch’s Sorry for Your Loss garnered plenty of praise, but limited views, and YouTube has decided to turn away from scripted programming over concerns about market saturation.
Rather than betting the farm on a few buzz-worthy shows, Apple might be better served by focusing on niche content for dedicated fandoms. Apple has already seen success with this approach with its breakout hit Dickinson, a revisionist take on one of America’s most beloved and idiosyncratic poets.
For this strategy to succeed Apple will need to avoid the pitfalls that have befallen niche streaming services like FilmStruck and DramaFever, which Warner Brothers shuttered in advance of launching its own streaming service. If Apple does go this route, diversifying its content portfolio will be key.
Tactic #5: Spend and Expand
Apple could also invest in a major studio to acquire valuable media catalogues. This is the tack Disney has taken with its $71 million acquisition of Fox and its investment in TV streaming service Hulu. However, Steve Birenberg, founder of Northlake Capital Management, believes that Apple is unlikely to pursue this option as it would deviate from the company’s focus on product service offerings.
A final option would be for Apple to expand its investment in interactive content and gaming to augment its entertainment offerings. Apple has already begun this process with the launch of Apple Arcade. However, Apple appears committed to separating its gaming and entertainment offerings into separate services to bypass the bloat that torpedoed iTunes.
In It to Win It
For the time being, Apple appears willing to play the long game and bankroll expensive original programming. The company renewed all four of its scripted shows before Apple TV+ even launched. As the first publicly traded company worth more than $1 trillion, Apple can afford to gamble on innovative programming.
Waiting things out may prove to be Apple’s most potent weapon. Even its chief rival, Disney+, has chinks in its armor. Although the service has wowed with some impressive numbers, Disney+ has a limited amount of original scripted content.
Meanwhile, its two most popular franchises — Avengers and Star Wars — are showing their age. Avengers: Endgame marked the end of life for several characters in the MCU and the main storyline in Star Wars has just concluded with the release of Rise of Skywalker.
What’s more, the high cost of producing original programming means that Disney+ is currently operating at a loss as the House the Mouse built ramps up investments in new content.
The Dark Horse in the Race
For gamblers intent on predicting a victor in the streaming wars, consumers are the dark horse in the race. Although expanding options and rising fees are making streaming less affordable, cord cutters are still getting a deal relative to cable, which can run a household more than $100 a month. More to the point, the diversity of options is pushing content creators to take chances on innovative programs. As the streaming wars heat up, it looks like consumers are the real winners.
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