On Monday, we'll finally find out where Apple's billions of dollars went.
That's the amount the company has earmarked for a video streaming service it has not yet confirmed. For years, rumors circulated that Apple would plunge into a market dominated by YouTube, Netflix, and other streaming companies. It is even discussed in the shows and celebrities. Still, Apple did not really say what all these partnerships are for.
Monday we'll see Apple host an event at the Steve Jobs Theater on its campus in Cupertino, California, to showcase its long-awaited video offering. The event starts at 1
For Apple, the launch of the service business for Apple is the very heart of a major event for the first time. It spent the first three days of this week in an unprecedented barrage of hardware announcements made by press releases, fromto and . In the last decade of Apple's eye-catching launch, none – not even the annual Worldwide Developers Conference – focused primarily on services.
The company must now highlight these offers. Last year, Apple was the first trillion-dollar American company, which was, however, fell short of three months later. The iPhone business seemed to be almost incessant until it stopped suddenly. Apple achieves about two-thirds of its revenue with the iPhone, but people stick to their devices longer. In countries like China, they are increasingly turning to mobile phones from Apple's rivals, such as Huawei and Oppo.
Apple knows that it needs to expand its activities beyond the iPhone, especially in the services business. The area, which includes the App Store and Apple Music, is in the air thanks to those who own the 1.4 billion active Apple devices. In the December quarter, Apple's service revenue grew 19 percent to a record $ 10.9 billion. Apple Music now has over 50 million paid subscribers. Apple has 360 million subscribers for all its services, 120 million more than last year.
Entering TV streaming is the next logical step for the company.
"They have said in the last nearly four years of [earnings] how much services they care about," said Technalysis Research analyst Bob O'Donnell. "They built on that."
That does not mean it will be easy. Apple is entering a crowded field and many of us are already paying money each month for multiple streaming providers. Is there room for another?
Apple declined to comment before his event.
From hobby to center
Apple has been engaged in entertainment for more than a decade. The company introduced its first Apple TV in 2007, the same year it launched the iPhone. In the early days of Apple TV, Apple positioned its streaming media box as a "hobby".
Apple finally updated Apple TV in late 2015 and released a new TVOS software that developers can use to create apps and a new remote that works with Siri. It was this new software that made Apple TV a stupid streaming box.
The update came at a time when consumers started giving up their traditional cable subscriptions in favor of smaller streaming packages. On-demand TV services such as Netflix, Amazon Prime, and Hulu provided thousands of videos for streaming, while services such as Sling TV, DirecTV Now, and YouTube empower people to watch live TV on the Internet. Increasingly, Apple TVs, Roku boxes and Chromecasts have been used to display this content.
Now Apple wants to make not only the hardware for watching entertainment. It also wants to do the content that people access.
The key to Apple's success in streaming is exactly what its service delivers. Nobody will pay for content he does not want to see.
It hit the market in 2017 with some original shows for its Apple Music service. These included Planet of the Apps, which was widely used, and Carpool Karaoke, which began as a viral segment on CBS's The Late Late Show with James Corden. (Editor's note: CNET is owned by CBS, which also produces the series.). Both flopped.
Apple has long been rumored to be working on a virtual cable service that allows subscribers to pick and choose their channels. But that has never materialized and it's probably not what Apple is introducing on Monday.
Rather, it expects to release a more Netflix-style service that includes its own content and videos from partners. Apple has allegedly sought deals with networks like HBO, Showtime and Starz to license a library of previously published content. (Note: Showtime is owned by CBS, the parent company of CNET.) It could also bundle other streaming services and reduce their revenues.
Netflix is not supposed to attend. "We want people to look at our content in our service," said Reed Hastings, CEO of Netflix. "We decided not to integrate into their service."
In terms of content, Apple has at least 30 projects in progress, five of which are ready. According to long-time Apple analyst Gene Munster, who now works for Loup Ventures, initial investment could increase from $ 1 billion to $ 4.2 billion by 2022.
Apple's announced partners include a multi-year deal with Oprah, Reese Witherspoon, M. Night Shyamalan and Steven Spielberg. The company has hired two top executives from Sony Pictures Television to lead the effort.
Show me the money
To show that services are really serious, Apple needs to make its new TV streaming offer work on third-party devices. And it can not be so expensive that no one subscribes. According to a Deloitte study, Americans who watch videos online are already attracting an average of three streaming services.
Some analysts believe Apple's service may be free for Apple device users, but it's more likely that the company will offer a free trial. For Apple Music, Apple offers an extended free trial and is standard on most streaming video services to give new users a free introductory phase.
One way that Apple can get more subscribers is to bundle its TV service with Apple Music or an iCloud account. Currently, Apple Music costs $ 9.99 per month, while iCloud storage for 50GB costs 99 cents a month (an amount lower than the current lowest capacity – 64GB – on Apple's new iPhones), $ 2.99 USD for 200 GB or 9 TB for 2 TB.
There is also Apple's alleged news subscription service, also expected on Monday, which could be combined with its music and TV offerings. The service is expected to be based on the Apple acquisition Texture, which is referred to as "Netflix for magazines" and offered full access to magazines and news agencies for a fee.
"Is that the straw that broke the back of the camel, which makes me think about what I'm already paying for?" Carolina Milanesi, an analyst at Creative Strategies, said. "If you bundle it, the value becomes more fluid."
Amazon bundles its music and video services in its two-day Amazon Prime mailing, which costs $ 12.99 for a monthly subscription or $ 119 for the annual pass. Some people pay the amount only for shipping, others want it for video service, music or other benefits.
To get us all to subscribe, Apple has to offer something we can not get anywhere else. We learn Monday if that's what was built.