Beachfront - leaderboard - 7-1-18
  • Watching Apple’s Video Ambitions Unfold Is Going To Be A Great Hollywood Drama

    Well, we finally got some news from Apple about its video ambitions at its big media event today.

    Apple’s updated TV app harkens back to the same formula that propelled iTunes in the music industry nearly 16 years ago: the visually strong user experience, integration of well-known brands/artists, seamless transactions and multi-device access. iTunes made sense of a messy music landscape - delivering breakthrough music portability (with the iPod) and billions of much-needed revenue to the music industry.

    Apple clearly sees a similar opportunity to bring coherence and value to today’s fragmented video experience and to drive incremental revenue for the industry. Although the same company DNA is evident in the updated TV app, the challenges Apple faces in video are far greater.

    The foremost challenge is that the success of iTunes was built on a transaction per unit model (99 cents per song). But only a small percentage of the video industry’s total consumer revenues are derived from transactions per unit. A much greater share of consumer revenues come from subscriptions - traditional pay-TV, premium networks and more recently, SVOD services.

    So the game plan with the new TV app is to help connect consumers with those services using Apple TV Channels which is a whole lot like Amazon’s hugely successful Amazon Channels (which launched 3 1/2 years ago), and to offer some enhanced features like curated recommendations, resuming play on other devices and “Up Next” lists.

    In this way, the updated TV app aims to be a seamless hub for viewers’ subscription video lives. Complicating things is that Netflix isn’t available, nor are many of the big multichannel or virtual pay-TV services (e.g. Comcast’s Xfinity TV, YouTube TV, Sling TV, etc.). So tens of millions of viewers will still exit the TV app to watch their favorite programming.

    Apple is addressing this issue by seeking to get viewers to spend more time in the TV app. It is doing this by creating its own original programming under the Apple TV+ brand, which will live in or adjacent to the TV app, for an additional monthly fee that wasn’t disclosed.

    A hit parade of Hollywood stars (Oprah Winfrey, Steven Spielberg, Jennifer Aniston, Reese Witherspoon,  J.J. Abrams, Jason Momoa and even Big Bird) gave exuberant testimonials to their upcoming Apple originals, all but suggesting they’d reserved their most creative, and in some cases, high-minded ideas for Apple TV+.

    Though it’s only been 6 short years since Kevin Spacey and David Fincher began the transformation of SVOD into a home for A-list talent with the premiere of “House of Cards,” we’ve all long since become accustomed to seeing well-known talent and their new programs show up in our Netflix, Amazon and Hulu recommended lists.

    So while big names, big budgets and a billion iPhone users (as Oprah excitedly reminded us), increase the odds of Apple TV+’s success, TV remains a hit-or-miss business. Because these new programs are such a critical part of Apple’s success in video, which is in turn a critical part of the company’s services future, the stakes couldn’t be higher.

    Today’s event was just a sneak peek into what Apple has in store. Apple didn’t even reveal the monthly price for Apple TV+, (it won’t be free after all), a clever option-retaining move to see how Disney+ is priced, not to mention other industry initiatives that crop up in the next 4-6 months before launch.

    Apple is entering the video business at last, far later than it should have. Whether its ambitions can ultimately move the needle for the devices juggernaut is going to be one of the best Hollywood dramas to watch unfold.

     
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