As Video Streaming Services Proliferate, Apple Knows Only a Few Will Survive

3 minute read
| Particle Debris

The Particle Debris article of the week tells a story about the future of streaming video services, what Apple is up against and suggests how it will win.

I’ll point to the experienced Dwight Silverman at the Houston Chronicle: “The golden age of streaming is about to end.” Notice that he didn’t say streaming would end. Just the golden age.

Jessica Jones, a Netflix Original, delivered in 4K/Dolby Vision

In the golden age, there are many studios contributing to just a few streaming services. You can cut the cord (to cable), view just about anything of interest, and not pay a whole lot each month.

Thet’s about to change, and it will affect how Apple approaches this marketplace. Silverman explains that with Disney+, NBC/Universal, and AT&T getting to the market, customers will be faced with the challenge to pick the necessary and sufficient services to sate their viewing appetite and preferences while not spending too much money.

But there’s another catch. Silverman writes:

And that Comcast/NBCUniversal service will be an interesting creature, free to Comcast cable subscribers and available for a fee to everyone else. It will feature original movies and TV as well as older content. And it will have ads, just as commercial and cable TV do. It won’t launch until early 2020.

The above is evidence that the companies planning these streaming services are well aware of the fact that competition for viewer dollars will be fierce, and they’ll need an angle, beyond the quality and value of the content, to entice customers.

This explains why we’ve heard rumors that Apple’s own original content will be free to Apple device users. Apple, indeed, all the players know that, amidst the glut of services and subscription fees, only the top three or four will survive. And survival will require more than favorable price and content. Making the service part of the customer’s current lifestyle and infrastructure will reduce friction and lead to lock-in.

According to Apple’s Tim Cook (and Wikipedia),”About 1.35 billion iOS devices have been sold worldwide as of March 2015.” And so Apple is in a unique position to entice and hold viewers for its own original content in a way that the studios are not. The studios and existing streaming services probably know this, and have probably resigned themselves to fighting for the number two and three slots. In my view, that’ll be a fight between Amazon, Disney+ and Netflix.

The Comcast/NBCUniversal service, free to its cable customers, looks like that kind of lock-in attempt, except that the traditional cable TV service and its associated hardware will be on the decline. Comcast will likely raise rates as an ISP all the while its “cable” TV service revenue declines. It’ll irritate customers, but few will have alternatives. That irritation will drive customers to Apple’s free service with joy.

If you’re doubtful about about Apple’s return on investment, don’t be. A mere billion dollars a year sustains $200+ billion in iOS (an a bit of tvOS) hardware revenue. It’ll catapult Apple to the number one spot.

The Martian - letterboxed, Apple TV
Pick only three services that get you most of your favorites. The Martian. Credit 20th Century Fox.

More Debris

I’ve used up a lot of space above, so I’ll simply point to some secondary, related streaming news.

Hulu drops price of cheapest streaming tier.” That’s one strategy: Panic.

Walmart reportedly abandons new streaming service to focus on Vudu. Subtitle: The retailer found it too risky to fight Amazon Prime and Netflix. That’s another strategy: Wise withdrawal.

Netflix says its focus is on customer experience, not the threat of Apple’s upcoming streaming service. A third strategy: Out-maneuver, out-create, and make the experience truly great. (Something Apple knows about too.) From Netflix:

There are thousands of competitors in this highly-fragmented market vying to entertain consumers and low barriers to entry for those with great experiences. Our growth is based on how good our experience is, compared to all the other screen time experiences from which consumers can choose. Our focus is not on Disney+, Amazon, or others, but on how we can improve our experience for our members.

So there you have it. The players and the strategies. Winners and losers. It’s going to be interesting to watch.

Wait! Will there be a new, original TV series documenting this streaming war? Streaming Tears. Coming to your screen in 2025, after the dust has cleared. Who will create it? The winner, of course.

Apple.

________________________________

Particle Debris is a generally a mix of John Martellaro’s observations and opinions about a standout event or article of the week followed by a discussion of articles that didn’t make the TMO headlines, the technical news debris. The column is published most every Friday except for holiday weeks.

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geoduck
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geoduck

We subscribe to cable, and have Netflix. If it were up to me I’d drop them both. My suspicion is that adding all this complexity, and cost, to passive TV may push a fair number of people to just say F-it and drop all of them. I know that when my wife was out of town for a couple of weeks last year I never bothered to turn the thing on.

Lee Dronick
Member
Lee Dronick

We have cable service in large part so that my wife can watch Undercover Cake Makeover and such. There are series that I enjoy Counterpart on Showtime. Otherwise I can watch a lot of the shows that I enjoy on Apple TV or over the air. I have a digital TV antenna and can receive 68 channels, San Diego, Los Angeles, and Tijuana,