Ripe Apple ideas never fall far from the content tree

This is just the beginning of the golden age of streaming. Yes, Apple took its time to jump on the flat rate streaming bandwagon. But now the company is coming at us with full force. And their products are here to stay.

A tiny event for the globe, a huge thing for the content industry: Apple+ and Apple Arcade have arrived. (If you are not familiar with all the details of Apples Fall 2019 content announcements, please read Tech Crunch’s detailed report on Apple+ here and on Apple Arcade here. — But never truly mind their attempts to judge on the content aspect of things :-) )

For me, the most exciting move by Apple connected to the market implementation of its Apple+ service is the company’s bold offer to give away a year of Apple+ subscription free of charge to everyone buying a new Apple device starting September 10, 2019. No further statement needed to underline the importance of content for the future of device producers and sellers.

Together with Apple Arcade, Apple aims to establish itself as its own true follow up player to its once market-dominating iTunes based software/download services, also developing further their already established AppleTV Ecosystem beyond the Set-Top-Boxes. And there is very little reason to believe this new plan would not work out well if not super great over time. (Just remember e.g. Apple’s long-standing customer base including hundreds of millions of active CC accounts. Or the ca. 1,4 billion Apple devices used around the globe — many of them in the hands of a rather financially affluent crowd … )

From that perspective, and given that Apple’s retail price for each service is just 4,99/month, I think it’s increasingly downright amusing that folks almost everywhere constantly debate how many streaming services there will be accepted by audiences around. Almost fearfully pointing out there is “another service for 4,99 coming.” As if 5 bucks would be an amount that truly buys you a lot of other things per month these days. (I fact, it’s hard to get a Kebap AND a soda for that kind of money once, even in the cheapest places of Berlin these days). As if the general spending for content would have been limited to a single 9,99 Euro/Dollar/ Whatever payment per month ever since … — Reality is rather the opposite and average spending between fifty and one hundred money units per month at least.

If there is eventually a market limiting factor, then it’s eyeballs and time. But given there are over 7 billion people on this planet and Netflix just serves a mere ca. 140 Million of them, I see plenty of growth potential globally. So, as long as the content is worth it, it will sell.

Also, Apple wouldn’t be Apple if they would not have thought this thru. Not only has the company started to shift a while ago already from being a device producer mostly toward being a full-range solution provider, including devices as much as services. In Q1/2019 alone, Apple’s service revenue was around 10,9 billion globally as The Verge explains in detail here.

Also, there is the fact that Apple again does avoid the trap to simply copy content monetisation models existing already. Tim Cook and his teams don’t want to compete with anyone selling content against advertisements, nor are they into the licensing game that made Netflix what it is today. In general, they are more up to competing with Disney and other Hollywood Studios or Amazon by going for their own, original content (For the long list of name drops see also TechCrunch write up mentioned above.) Apple can afford it. Apple does it. Brilliant.

With the interesting side effect that Apple could become the second company on this globe right beside Disney (and, maybe, in part, Universal or Warner) owning entire Added-Value-Chains from valuable content IP’s across the board of the entertainment industry. Plus, including the mostly charming add on of owning the devices screening, playing or accessing the content as well (I write mostly, because “Huge power comes with a huge responsibility.” Spider-Man — And handling hardware production is not all just fun and games. But that’s a different story. )

So, it might broader, deeper powers at play for why the stock market punished Netflix or Roku right away over competitor Apple’s Flat Fee announcements than just some fears about another streaming competitor entering the market.

Besides a clear commitment to original content, Apple also aims at “quality, not quantity”, as explained by Apple SVP Eddy Cue last year already. (Read here.)

No doubt, Steve Jobs, himself a lifelong enthusiast for such strategy, would have loved this. Meaning once more good fortunes and prospects for the financial futures of Apple (and with it, those content producers working with Apple). As he always supported quality content business moves like Apple once being the first company in the world selling the entire Beatles catalogue as a download format on iTunes. With this not only making the company legendary but bringing in Billions and Billions of Dollars to earn good profits for employees, stock owners or investors.