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Apple to Unveil Streaming Service to Compete with Netflix

On March 25, 2019 at a massive Steve Jobs Theater event, Apple will be unveiling its streaming service to compete with Netflix, among other things. Apple users can tune-in to the event via their devices at 10 a.m. That’s the full extent of what we know about it.

In all, there are more questions floating around about this event than answers. It’s typical of Apple to keep an event of this magnitude under-wraps until the second it’s happening. Especially an event accompanied by the vague “Its show time” ad pictured below.

We know that Apple’s invitations to the event did not contain any details about the presentation to be given on the 25th, and therefore we have no information directly from the source. This has left a lot of the news stories about the event to speculation, and proposing questions to nobody in particular.

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Want More on the March 25 Event?

For the entire speculative experience, read about the event at iMore. The article speculates about everything the event may or may not cover—Products, the new streaming service, distribution and pricing of that service, Apple original content, the possibility of an Apple services subscription package, and more.

If you want a list of all of the unknowns about the event and new services, read about it at Wired.

“What shows and movies will be available at launch, and how regularly will new entries hit the library? Will it [streaming service] be its own product, or rolled into a larger subscription that encompasses Apple Music and Apple News as well? What demographic will it target? Will Apple make any of it free to people with iPhones and iPads and Apple TVs? Will it use the content subscription to drive you to other Apple services, like Apple Pay?”

– Brian Barrett, Wired

All fair questions, but I’m not sure if I see Apple as likely to deliver all of those answers at one time.

Here’s what we do know

There’s no other information about the event, but there is about the streaming service.

As far as the streaming service to compete with Netflix goes, we know two things so far. One, Apple will be putting out original content (Making their own shows and movies, just like Netflix) in addition to the existing content. And two, something with Oprah.

In an earnings call on January 29, 2019, Apple CEO Tim Cook told analyst Shannon Cross a little bit about Apple’s plans with video. Cross asked the question:

“Tim, can you talk a bit about video? You’ve signed a myriad of deals. There was announcement about the TBF directly on Samsung. So, perhaps when this comes out, you’ll be multiplatform. I’m just curious how you view the opportunity in video. And assuming you can just leverage the costs that you’ve made already, it should be accretive to margin, I would think.”

– Shannon Cross, Cross Research

CEO Cook answered the question, providing a lot of information. Here’s the part of his response where be most-directly addresses the question:

            “We’re gonna participate in that in a variety of ways. One of those is through Apple TV. And you’re well familiar with that product. The second way is AirPlay 2 which we have — as you just pointed out, we have support on a number of different third-party TVs. And we’re excited about that. It makes the experience in the living room with the people using our products even better.

We think that people are really gonna like that. Another way is, of course, all the third-party video subscriptions that are on the store. We’re participating in this today. And I would guess that that’s going to accelerate into the future as the bundle breaks down and people begin to buy likely multiple services in place of their current cable bundle. And then finally, original content. We will participate in the original content world. We have signed a multiyear partnership with Oprah. But today, I’m not really ready to extend that conversation beyond that point.”

-Tim Cook, Apple, Inc.

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As you can see, he ultimately says that he’s not going to discuss the topic further, but he gives good insight about Apple’s goals with the service. You can read the full call transcript, word-for-word. Which is pretty cool considering the caliber of the people in the conversation.

Not only did Tim Cook mention Oprah in the earnings call, there’s another solid piece of Oprah evidence from last year.

This June 15, 2018 Update from Apple’s Newsroom archives explains briefly Apple’s deal with Oprah Winfrey to create original content. The statement makes it even more clear that content with Oprah is coming. On top of that, the mid-2018 date gives us an idea of how far in advance Apple has been planning the streaming service…

… So why wait to unveil it?

Apple probably has an intricate financial strategy in place for the future. My guess is that this streaming service is at least a few years in the making and we are only hearing about it now because now is when Apple needs the new revenue.

In a January 2, 2019 letter to the Apple stockholders, CEO Tim Cook acknowledges two things that contributed to iPhone sales slowing by about 19% year-over-year.

First, Cook acknowledges the decline in the rapid growth of China. Meaning Chinese consumers bought less iPhones because they were less confident in their economy.

Next, Cook explained that in general, people are keeping their iPhones longer. That is, they are not upgrading every time another iPhone comes out. In fact, most people are now keeping their iPhone for 24 months. 24 months (2 years) is typically the amount of time cellular companies contract you to keep your current device before upgrading.

Now that those forces are at play, and Apple lost 19% of its iPhone revenue, they will be trying to come up with that revenue in another category. Perhaps services… enter Apple’s streaming service.

Of course, that may not be the reason, and with $245B in the bank (Billion, with a B) maybe Apple isn’t concerned about 19% of iPhone revenue at all.

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