Apple plans to roll out the Apple TV+ movie and TV subscription service by November, part of a drive to reach $50bn (€45bn) in service sales by 2020. The company will introduce a small selection of shows and will launch globally in over 150 countries.
It then plans to expand its catalogue more frequently over several months, sources said, after a free trial. The iPhone maker is entering an increasingly crowded field, led by streaming pioneer Netflix and Amazon.
In the coming months, Walt Disney, AT&T, and Comcast’s NBC Universal will debut new offerings in the US — all targeted at the growing ranks of viewers who are canceling cable-TV subscriptions or watching on mobile devices.
With its first foray into video subscriptions, Apple is weighing different release strategies for shows. The company is considering offering the first three episodes of some programmes, followed by weekly installments.
Netflix tends to release whole seasons at once for bingeing, while AT&T’s HBO and Disney’s Hulu often release episodes weekly. Apple TV+ will be one of five major digital subscription services in Apple’s portfolio, along with Apple Music, the upcoming Apple Arcade gaming service, Apple News+ and iCloud storage subscriptions.
The company also generates recurring revenue from products like AppleCare extended customer service and its bank-operated iPhone upgrade programme. It will also likely start pulling in revenue from the Apple Card, which began rolling out earlier this month.
Apple hasn’t announced pricing for Apple TV+, but is weighing $9.99 (€9) a month in the US, the sources said, which would match Apple Music and Apple News+. Netflix and Amazon Prime charge as little as $8.99, while Disney+ plans to seek $6.99 when its service debuts in November.
The Financial Times reported this week that Apple has set aside $6bn for original shows and movies. The budget for the first year of content was $1bn, but has since expanded, it said. That’s far less than what Netflix is expected to spend this year. Analysts forecast it will lay out more than $14bn on films and TV shows.
Apple is pushing into services to generate added revenue from its large base of iPhone, iPad, Mac, and Apple Watch users. Consumers have been slower to replace hardware recently due to higher prices, market saturation, economic headwinds and a lack of new, breakthrough features.
The company could head off a revenue slowdown by coaxing users to subscribe to the new services. The California-based company could also potentially boost revenue by tying services to the iPhone upgrade programme, which lets customers update to new models annually via monthly payment plans.
Apple’s initial slate of shows will include The Morning Show, Steven Spielberg’s Amazing Stories, See with Jason Momoa, Truth Be Told with Octavia Spencer, and a documentary series about extravagant houses called Home.
This week it released the second trailer for The Morning Show, starring Jennifer Aniston, Reese Witherspoon, and Steve Carell. The TV service will be part of Apple’s TV app, which comes installed on the company’s devices, and will also be accessible from third-party products, like Roku and Amazon Fire TV boxes, and Samsung televisions.
In the fiscal third quarter, services represented a record 21% of Apple’s sales, while the iPhone continued to dip below 50% of the total. Analysts have suggested Apple TV+ could top 100 million subscribers in the next half-decade, which would make it a major challenger to Netflix and Amazon.