Apple unveils ambitious new video service intended to take on Netflix
Reporting from Cupertino, Calif. — Apple on Monday delved into the crowded market of streaming video, announcing an ambitious service that will feature its own original series and films, as well as content from its partners.
The ad-free subscription service, called Apple TV+, will launch in the fall and be available in more than 100 countries. It marks the tech giant’s most ambitious efforts to date to expand its foray into Hollywood and take on Netflix in the fiercely competitive streaming arena.
“Great stories can move us and inspire us and they can surprise us and challenge our assumptions,” said CEO Tim Cook at a news event Monday in Cupertino. “We believe we can contribute something important to our culture and society with great storytelling. So we partnered with the most thoughtful, accomplished and award-winning group of creative visionaries who have ever come together in one place, to create a new service unlike anything that’s been done before.”
Apple did not disclose the price of the service.
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The push is part of the company’s efforts to grow revenue in services to roughly $50 billion by 2020, as its flagship product — the iPhone — suffered declining sales in its last quarter.
Over the years, Apple has launched other new products including the Apple Watch, wireless headset AirPods and smart speaker HomePod, but none of those products has eclipsed the iPhone, which makes up more than 60% of Apple’s annual sales.
By launching a streaming video service, Apple will be entering a crowded market of streaming services, including Netflix and Amazon Prime Video, that are spending billions of dollars on content. Netflix, seen as the leader in streaming services, has roughly 140 million paid subscribers and is expected to spend $15 billion on content this year.
It will also compete with newer entrants with larger original content libraries, including Disney and WarnerMedia, which are expected to launch their streaming services later this year.
Apple is trying to differentiate itself from those competitors by building the hardware and software behind its service. The company said on Monday that it will launch a new version of its Apple TV app that will make it easier for users to sort through their shows and get recommendations based on their viewing habits.
The service will work with Apple TV, which may help boost sales for the hardware that has lagged behind competitors like Roku and Amazon Fire. Apple represents about 13% of the U.S. connected TV market this year, compared to Roku’s roughly 37% market share and Amazon Fire’s 29% share, according to estimates from research firm eMarketer.
Apple also said its TV app will work with other TV manufacturers such as Sony and across other platforms such as Roku.
“Our vision for the Apple TV app is to bring together your favorite shows, movies, sports and news and make them available on all your devices so you can spend less time looking for something to watch and more time enjoying it,” Cook said.
But in the end, many analysts say what will determine whether people will pay for the service is whether it has hit shows. Think HBO’s “Game of Thrones” or Hulu’s “The Handmaid’s Tale,” programs that have drawn more people to pay for subscriptions.
The Cupertino tech giant has a long history of making hardware — iPhones, iPads and Macs. But it is a relatively new player in the world of original productions.
Apple is expected to spend $1 billion to $2 billion a year on its original content. The company has roughly two dozen shows in production or development, many of which were touted during Monday’s event with a roster of stars making appearances.
Among the most anticipated shows in the works is a J.J. Abrams-produced true-story drama starring Jennifer Garner. There’s also Golden State Warriors star Kevin Durant’s “Swagger” and a series featuring Hailee Steinfeld as the poet Emily Dickinson. The company is also working with Skydance Media on an adaptation of Isaac Asimov’s “Foundation” saga, which is expected to be Apple’s gamble on a “Game of Thrones”-esque series. Also underway is a thriller series with M. Night Shyamalan.
On Monday, several stars including Reese Witherspoon, Jennifer Aniston, Jason Momoa, and even Big Bird came on stage to pitch their shows and encourage people to watch them. No full-length clips were shown of their shows.
Steven Spielberg received a standing ovation. He encouraged people to check out his show, a reboot of the 1980s broadcast anthology series, “Amazing Stories.” “We want to transport the audience with every episode,” Spielberg said.
Kumail Nanjiani pitched “Little America,” which features stories about immigrants. “We wanted to focus on immigrants doing everyday life stuff,” Nanjiani said. “These are not immigrant stories. These are human stories that feature immigrants.”
Oprah Winfrey, who is working with Apple on two documentaries, including one called “Toxic Labor” on sexual harassment and assault in the workplace, also touted her partnership with Apple.
“I am proud to be a part of this platform where I can connect with people around the world to create positive change,” Winfrey said.
Many industry insiders and analysts are skeptical whether Apple will succeed, citing the company’s cautious approach to entertainment and its lack of experience in the arena.
But some analysts are bullish on Apple, saying it already has a loyal fan base, with 900 million active iPhones worldwide, providing a potentially vast distribution network for content.
After its launch in 2015, Apple Music, the company’s streaming music service, accumulated more than 50 million paid subscribers. While that number is smaller than rival Spotify’s 96 million subscribers, Apple Music’s growth shows how quickly Apple can amass a significant business.
“You got to strike when the iron is hot and monetize your install base,” said Daniel Ives, a managing director of equity research for Wedbush Securities.
Services, a business category that includes Apple Music and mobile payment option Apple Pay, generated $37 billion in revenue the last fiscal year, up 24% from the prior year.
Cook on Monday said Apple takes the same approach to its services as its products, that the services are easy to use, designed to keep personal information private and secure and have “an uncompromising attention to detail in design and engineering.” The information in the services is also curated, personalized and “designed to be shared with your entire family,” Cook said.
On Monday, Apple announced other new services to add to that category, including a new publishing platform called Apple News+ that will charge $9.99 a month for access to 300 magazines, including Essence, the Atlantic and Health. It will also include the L.A. Times and the Wall Street Journal, as well as other online news publications such as TechCrunch. Apple said.
The company said it is also launching a new credit card called Apple Card. Users can sign up on their iPhones and the service lets them track their spending and get cash rewards. The mobile payments business hasn’t taken off as quickly in the U.S. as some analysts had originally expected. While Apple Pay is now available at 70% of merchants in the U.S., consumers still use mostly credit cards and cash to pay for things.
The company also launched Apple Arcade, a subscription service available this fall that will provide access to more than 100 new and exclusive games that can be playable offline. Pricing was not announced at the press event.
Twitter: @thewendylee
