Apple’s plan for its new TV service: Sell other people’s TV services

After years of spinning around the television business, Apple is finally ready to make a big splash: on Monday it will unveil its new video strategy, along with some of the new big-budget television shows [19659002] that is being financed.

One thing that Apple will not do is make known a serious competitor for Netflix, Hulu, Disney or any other entertainment giant that tries to sell video subscriptions to consumers.

Instead, Apple's main focus is, at least for now: it will help help other people sell video subscriptions in real time and make a cut of the transaction. Apple can also sell its own programs, at least as part of a set of other services. But for now, Apple's original programs and movies should be considered very expensive gifts, not the main product.

That's a lot less exciting than "Apple Takes on Netflix in Streaming Wars," but it's an accurate description. Worse still for people interested in interesting stories: Apple already and has been helping people sell video subscriptions and for years to make a cut in the transaction.

The difference, according to people who have talked with Apple about their plans, is that instead of selling TV subscription applications surrounded by millions of other applications in their main application store, Apple plans to create a new store make it much more prominent for those who use Apple TV boxes and other Apple hardware. You can also offer your own packages, for example, you could offer a package of HBO, Showtime and Starz at a lower price than you would pay for each pay-TV service alone.

And, as it already does in its TV application, Apple will be able to show users what they are playing in the services to which they are subscribed and show them what they may be interested in.

All this could work. Apple has an installed base of 1.4 billion users, and some of them will buy what Apple promotes: see the success of Apple Music, which was launched seven years after Spotify but quickly accumulated 50 million subscribers due to a free trial period and real real. State on Apple devices.

Another reason could work: Amazon has already had a lot of success with its own version of the same idea. Facebook is also optimistic about selling television subscriptions and is pushing potential partners to subscribe so it can be released later this spring or summer, according to industry sources. Similarly, Comcast (which is a minority investor in Vox Media, owner of this site) is implementing "Flex", a service of $ 5 a month that gives you a lot of free content (some of which you can also get in other places). ) and the ability to easily buy HBO, Showtime, etc. Instead of offering exclusive content, Comcast offers subscribers a transmission box similar to Roku.

If you're a fan of the theory that "Apple can not innovate anymore", some of the above will give you more ammunition: Apple's big launch is a revamped version of something it's already doing, and something its competitors they are also doing. "It's incremental," he shrugs as an executive at a company that is working with Apple on the new and new video store.

But I am partial to the theory that Apple will not make another iPhone because the iPhone was once. -A lifelong product, which is the theory that Apple has been implicitly promoting for several years. As Apple's iPhone sales have slowed, Apple has been pushing the idea of ​​generating more "service" revenue by selling more software, entertainment and subscription services to people who already own Apple hardware.

Speaking of which, a brief detour to talk about the other service things we hope to see on Monday:

All of which sounds good. And potentially very lucrative. And, if you squint and wait, a potential new revenue increase for publishers, who could use one.

But that's not as fun as Apple taking Netflix. Let's go back to that and explain why it's not like that.

Yes, Apple could spend $ 2 billion a year on dozens of programs, which include brands like Reese Witherspoon, Steven Spielberg and JJ Abrams. And yes, you can even sell a subscription to those programs to people who use the service on another company's hardware, such as Samsung TVs.

But Apple's partners believe that Apple's main plan is to use the programs as a value-added gift, either for people. who owns Apple phones and other devices or for people who buy some of the other services that will be launched on Monday.

That makes sense. Because $ 2 billion a year is a lot of money, it's not much compared to the $ 10 billion a year that Netflix says it will spend on programming this year.

And, most importantly, Apple will launch from the beginning: Those new programs will be the that only shows that Apple has to offer, because it does not have a library of existing material, like Hulu and Netflix. And WarnerMedia and Disney will build on their own giant catalog of movies and TV shows when they launch their own subscription services later this year.

Apple could license many other things if they wanted, or just buy the entertainment. The companies that own those things directly. (In the past, for example, Apple had briefly discussed the purchase of Time Warner, mainly to get HBO). But at this moment, Apple's strategy seems to be to let other users fight each other while charging the rent for all of them. [19659022] Some details behind the scenes:

  • A change in coverage that is important for Apple and its partners: With the new store / video service, Apple will host and service the transmissions, which means that it will have primary access to the visualization . Data generated by its users. Under the previous model, the video streaming applications that Apple offered to essentially redirected users to their own hosting service. Users who work with Apple in the new configuration will have to feel comfortable if Apple has the main relationship with its audience.
  • That wholesale / retail relationship also means that Apple, not the users, can set the price for what it sells. It's likely that Apple will not sell, say, HBO for less than HBO sells on rival platforms like Roku. But he definitely plans to sell packs of paid TV channels at a discount, just as paid TV operators have always done.
  • Netflix has already said that it will not be part of the Apple store. But some other important names may be missing on Monday: an industry source says that Apple has not tried to get all the great subscription services on board, at least for its launch.

Update 3/21: Updated to include information on Comcast's "Flex" plan.

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