Apple, like Disney, is using TV to drive other parts of its business
Apple and Disney are diving into streaming TV, and they're positioning it as a gateway for consumers to discover and stick with their varied product portfolios.
See is one of nine originals that will be available on Apple TV+ when it launches
Yesterday (10 September) saw Apple introduce its subscription streaming service, Apple TV+, for the staggeringly low price of $4.99 a month. The platform will launch on 1 November, nearly two weeks before Disney releases its video streaming product, Disney+, on 12 November for the slightly higher cost of $6.99 a month.
“All of these incredible shows for the price of a single movie rental," Apple chief executive officer Tim Cook said during yesterday's 'special event' in Cupertino, California. “This is crazy."
However, Apple TV+ will have dramatically fewer titles than Disney+, which will house 300 movie titles and a host of original programs at launch.
Meanwhile Apple TV+ will only feature nine shows to start, including The Morning Show with Jennifer Aniston and an unnamed program from Oprah Winfrey. Apple does have plans to add five more shows in the coming months, with CNET tallying its future slate to more than 30 originals.
But where Apple and Disney do align is in their ulterior TV motive: to keep consumers in their ecosystem.
Apple is offering Apple TV+ free for a year with the purchase of a new Apple device. Tuong Nguyen, senior principal analyst at Gartner, said this is inline with Apple's services and content strategy and is meant to "bolster the Apple experience."
"The pricing is an appropriately aggressive move given that they are entering an increasingly competitive field, with a library of content that may not be as full as some of their competitors," he said.
Disney has made a three-year subscription of Disney+ available for only $3.92 a month if the customer also signs up to become a member of D23, Disney’s official fan club. Now Disney is offering discounts on two- and three-year Disney+ deals to Disney Visa cardholders.
Similar to how Amazon includes its TV offering, Prime Video, in its Prime subscription service, Apple and Disney appear to be treating TV as a means to grow other parts of their businesses. For Apple, it’s device sales; for Disney, it’s the company’s range of products and experiences.
Investor and former Amazon Studios head of strategy outlined this strategy for providers of subscription video services.
My macro market summary - The Streaming Wars: Its Models, Surprises, and Remaining Opportunitieshttps://t.co/Kjedfs1Lop pic.twitter.com/SVpyqUbg5H— Matthew Ball (@ballmatthew) September 11, 2019
Sarah Stringer, senior vice-president, head of innovation at Carat USA, added the Apple launch was another way for it to expand its data footprint outside its own ecosystem, evident in its May deal to integrate Apple TV into Samsung smart TVs.
"Apple TV+ allows them to create brand opportunities beyond their own platforms," said Stringer, "and it will be interesting to see if this is an opportunity to Trojan Horse data from arguably their competitors who will be streaming their content to understand what’s happening behind competitor doors.
"It’s really a similar strategy to what we’re seeing with their credit card launch. They’re likely to have more data beyond their own ecosystem to understand what their customers are doing."
Importantly, Apple has the capital freedom to use TV as an experimental way of driving consumers to other parts of its business, rather than setting it up as a standalone profit-driver.
The tech giant is reportedly spending around $6bn on original content for Apple TV+, but that’s only a fraction $210.6bn it has cash-in-hand.
Disney’s content budget, excluding sports, is around $16bn, but analysts project Disney will only spend around $500m on original content for Disney+ in 2019, as reported by Variety.
Disney, meanwhile, scored a record annual profit in 2018, led partly by growth in its parks-and-resorts division, according to the Wall Street Journal.
With the proliferation of Disney+ (fans crashed the D23 site when signing up for the promotion), Disney could conceivably build a nationwide direct-to-consumer marketing tool.
For example, the entertainment group can know which subscribers are watching which Disney princess, and then market those subscribers a Disney park with marketing materials featuring that Disney princess.
The battling content providers will next need to promote their streaming services, which Stringer sees as a battle over media placement.
"Ensuring you have a media network where you can showcase the power of your own brands will become all the more important," said Stringer. "Apple has done this by buying out-of-home billboards for long term residency, so having video and gaming channels that allow them to push their own brands and equity is a way to mitigate being shut out or funding competitors."