Apple’s Long, Winding Road To Streaming Video Ends

Going into today’s big unveiling, there are still more questions than answers
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On Monday (March 25), Apple is expected to finally unveil its long-awaited video streaming platform at a press conference at its Cupertino, California, headquarters, an event many believed would feature some big-name celebrity talent attached to the service’s billion-dollar original programming slate.

Apple's Steve Jobs Theater in Cupertino, Calif. 

Apple's Steve Jobs Theater in Cupertino, Calif. 

Leading into the splashy entrée, though, there were far more questions than answers as to what the new service will look like, which streaming services it will directly compete with and whose devices it will play on.

“I have no better guesses than what others have written,” said Michael Greeson, president and co-founder of The Diffusion Group, a boutique OTT research and analysis shop. “I’m taking a wait-and-see attitude toward the announcement, as I’ve been burned with pre-announcement prognostications about Apple’s video efforts before.”

For the better part of the last decade, Apple executives have been talking off the record about plans to honor the vision of the company’s late co-founder, Steve Jobs, with a disruptive new video service. “Apple’s lofty plans to build an online television service are coming into sharper focus,” read a Wall Street Journal headline from 2015, describing a virtual MVPD-like service.

Apple had also been in talks with Comcast about a new video service that would combine the tech giant’s expertise in user experience with the MSO’s strength in broadband infrastructure, the WSJ noted at that time.

Nothing became of the Comcast talks. And by the time Apple started what would become cumbersome negotiations with media companies to program a virtual multichannel video programming distributor, Dish Network and Sony had already come out with Sling TV and PlayStation Vue.

These were just a few instances over the last few years in which Eddie Cue, Apple’s senior vice president of internet software and services, was reported to have been leading the company into a major streaming service launch.

How many times has this happened?

“I’m not sure,” Greeson responded, “but it would take two hands to count them all. There have been a lot of fits and starts over the years.”

What We Do Know

Going into Monday’s presser in the Steve Jobs Theater — taglined in Apple invitations as “It’s show time” — it’s certain that the new service will be backed by a modest original programming slate, overseen by former Sony Pictures Television executives Jamie Erlicht and Zack Van Amburg, who report to Cue, who reports to Apple CEO Tim Cook.

According to The New York Times, Erlicht and Van Amburg, working out of Apple’s Culver City, Calif., studio headquarters, have already “blown well past” a $1 billion production budget set aside for originals. In all, the Times said, Apple has ordered roughly two dozen series from creatives including Oprah Winfrey, J.J. Abrams, Damien Chazelle and Chris Evans.

The first company to surpass $1 trillion in market capitalization before flattening sales reduced its valuation to a current level of around $918.5 billion, Apple’s content budget is only a fraction of Netflix’s, which spent $8 billion on series and movies in 2018.

Notably, we also know that Apple’s new service won’t have anything to do with Netflix, as Netflix CEO Reed Hastings said the world’s top streaming service will steer clear of the upstart.

Beyond these key facts, we’re going to learn an awful lot from Apple’s show and tell, starting with the new service’s basic business model.

Is it a subscription video-on-demand (SVOD) service, like Netflix or Amazon Prime Video? Will it be all or partially ad-supported? Will it package a skinny bundle of live programming networks like Sling TV or DirecTV Now? Will it aggregate subscription services, a la Amazon Prime Channels?

Conversations with Apple insiders point to the service blending originals — and rentable and sellable movies, TV shows and music in the iTunes Store — with apps from third-party SVOD and AVOD suppliers. There might even be music apps, such as Pandora, Spotify and iHeartRadio. Notably, Comcast just introduced a similar model, Xfinity Flex, a $5-per-month service targeted to internet-only customers.

“Besides the original content slate, I’ll be looking closely at the extent to which it mirrors uber aggregators like Prime Channels and Roku’s new curated app store,” said Greeson, going out on a limb to offer some prediction.

Another key question: What devices will be supported by Apple’s new platform? Will it be just for iOS mobile devices (the iPhone and iPad), Apple TV and MacBooks? Or will it play in the broader spectrum of consumer electronics, including Android mobile phones, and Roku and Amazon Fire TV OTT devices?

Notably, Apple launched the “Apple TV” app two years ago, which is designed to curate and organize, based on users’ algorithmic consumption patterns, all of the TV iPhone, iPad and Apple TV users watch. Will the new service be a replacement, or extension, of that Apple TV app?

Other notable questions: What will the new service cost? Morgan Stanley predicted a potential $8 monthly fee, while Goldman Sachs projected $15 a month. And when will it launch? There are conflicting reports ranging from the spring to the fall.

Yes, there are a lot of unanswered questions. But a decade after Apple launched what was arguably its last truly transformative product, the iPhone, and with revenue down 5% in the company’s fiscal first quarter, look for Apple to pull out quite a few stops when the clock hits “show time” Monday at 1 p.m. ET.

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