Apple TV+ and The Beginning of Apple the Media Company – #AppleEvent

Apple today announced the launch of its much anticipated video service, Apple TV+, at its #AppleEvent in Cupertino, California. It has been a long time in the making for a combination of reasons, not least of which is a concern among TV networks of making Apple too strong a partner that they cannot control. They were burned once with Netflix, and Apple, with the scale of its user base, has the potential to be even bigger. However, timing is everything. Apple has built its current business on an early-follower strategy: rather than being first to a market it launches a category leader when that market is ready for prime time (eg iPod, iPhone, iPad). Apple Music was a later launch with regards to the streaming market and thus far, market-leader Spotify has around about the same market share now as it did when Apple launched. The question with Apple TV+ is whether Apple has timed its early-follower strategy right this time, or whether it is launching too late to be a category leader.

The case for re-aggregation

Four years ago, when MIDiA started working with TV companies we identified that the subscription video on demand (SVOD) market was already becoming fragmented, both in terms of overall choice and, because of exclusives, in terms of the number of services audiences needed to subscribe to in order to get all their favourite shows. This contrasts fiercely with the traditional model where one pay-TV subscription gives you access to everything. We are now in a situation where 23% of all SVOD users have more than one video subscription (see MIDiA’s forthcoming SVOD Stacking report for much more on this market trend). Besides the simple fact of potential bill shock, navigating your way through all of your video apps (paid and free) can be a clunky experience. Companies like Amazon are having a go at aggregating pulling these disparate experiences into a single destination and that terrifies Apple. Apple is used to being a holistic destination for its customers’ digital content experiences (e.g. iTunes, the App Store, apps on the iPhone). This explains both Apple’s last major update to the Apple TV experience (i.e. pulling all your video apps into a unified user experience) and the essence of Apple TV+.  Apple wants to differentiate itself in a congested marketplace by reinventing the role of the TV operator and the Electronic Programming Guide (EPG) for the streaming age.

It’s not what you know but who you know

Today’s announcements introduced not only Apple TV+ but also Apple News+, the forthcoming Apple Card and Apple Arcade—its gaming subscription service, underline an increasingly valuable unique selling point for Apple: privacy. In the post Cambridge Analytica era, privacy is becoming an increasingly important differentiator between all the rest and…Apple. Of all the tech majors, Apple is the only one that can genuinely state it does not intrude upon the personal data of its user base. The direct consequence of this is that Apple can focus on what MIDiA has already identified previously: creating a safe space for storytellers. In an increasingly competitive streaming video landscape, the ability to tell meaningful stories in an ecosystem that is both ad-free and protects audience privacy, creates a positive feedback loop for a premium device business looking to leverage its brand equity into the media landscape.

One more thing…Oprah

Apple usually saves the best for last at its keynotes, its ‘one more thing’. Today’s ‘one more thing’ was Oprah Winfrey announcing her participation in creating exclusive challenging content for Apple TV+ alongside launching a global, device-agnostic book club show. The quote of the day went to Oprah when she stated why partnering with Apple was a no-brainer:

“Because they’re in a billion pockets y’all”.

No other platform can offer a storyteller the device-based reach of Apple nor the brand integrity that making privacy a product implies. To reference another earlier MIDiA piece observation on Apple’s unique role in the digital economy: Apple is now able to act as the Medici of the digital era, able to patronise artists primarily for the sake of their artistic vision. 

And this is just as well, because though today’s flurry of announcements around Apple’s media offerings do not add up to a pivot as such, they do indicate a clear and present recognition of the need to increase engagement—to minimise the slow erosion of Apple’s market opportunity to pure-play competitors such as Netflix and Amazon, which already offers channel integration, home box office and SVOD under one platform, alongside artistically valuable content. Even Netflix’s recent Oscar success with Roma reinforces how much time Apple now needs to make up to compete directly with the global streaming leaders.

If today marked the arrival of Apple as a media company of substance, the next two years will define whether it is able to become the global successor to traditional pay-TV. It must resist being too restrained in taking bold bets in areas such as premium sports, which will be crucial to wean pay-TV audiences away from cable and Satellite.