Inside The Apple TV+ Strategy
Or how Apple TV+ keeps breaking free from the Apple ecosystem but for what?
Time’s up for the Apple fortress.
Apple TV+ keeps breaking free from the Apple ecosystem, one where Apple builds a self-sufficient device & content ecosystem and locks you in it.
Apple TV+ may have started as an essential pillar of the Apple ecosystem (remember when it was offered for a year for any new Apple device bought?) but this strategy was short-lived as Apple ultimately found out that they couldn’t win alone like they did with mobile, despite their instant access to 2.2B active devices globally.
Today, Apple TV+ is device agnostic and within the last 5 years, it has built an impressive 3rd-party distribution network. Where did it take them? Let’s find out.
Today at a glance:
How Apple TV+ Came To Be
Their Distribution Track Record
The State Of Play
What The Future Holds
📌 I will host MIPCOM’s AVOD & FAST Summit taking place on October 22nd. If you can’t make it, then fear not, Yann Colleter, The Streaming Lab, and I will be sharing our hot takes from MIPCOM 2024 during the next Streaming Made Easy live webinar on October 29th. Register here.
How Apple TV+ Came To Be
Announced during a special event titled “It’s show time” in March 2019, Apple TV+ entered our living-rooms in November 2019 across 100 countries as the new home for the world’s most creative storytellers.
Priced at 4.99$ a month (with a 7-day trial) and bundled (for a year) with the purchase of any Apple device, it offered 9 originals from the get go plus a limited slate of licensed programs. Programs were localised in 40 languages and audio descriptions were available in 8 languages.
Apple TV+ was built in the Apple TV app which was live across Samsung, Fire TVs, LG, Roku, Sony and Vizio.
A solid launch execution but Apple was late to the game. Simple as that. Netflix already had 158.3M subs, Prime 150M and the space was getting more crowded by the day (Disney+ launched on November 12th 2019 and gained 24M US subs right out of the gate).
The aggressive launch pricing was indicative of their understanding that they were the challengers this time around. Thing is: licensing and producing video content is expensive (20B$ spent so far according to Bloomberg analyst Lucas Shaw) making the pricing and the freebies unsustainable long-term.
Apple TV+ now costs 9.99$ a month. I bought a new iPhone last month and it did not include Apple TV+ (but included Apple Music, Arcade and Fitness for 3 months).
Their Distribution Track Record
With 2.2B active devices worldwide (as announced during their Q1’24 earnings), why did Apple TV+ need to grow its 3rd-party distribution network?
Because video streaming is consumed on the big screen (79% of US TV households now own a smart TV and 62% of TV HHs stream weekly on a smart TV according to HUB Intel) and it is Apple’s weakness in the device front, a topic I covered in the 1st edition of Streaming Made Easy:
Let’s take a look at how they grew their distribution footprint:
✅ Apple started with stand alone app distribution deals with CTV platforms, with whom they built device bundles (Apple TV+ with the sale of 3rd-party devices).
✅ They then focused on Telecom and Cable companies which enabled them to be offered as an add-on or be bundled with mobile, broadband and TV packages or with fellow streamers: T-Mobile (U.S.) – Apple TV free with Magenta or Magenta MAX plans; EE (UK) – Six months free Apple TV with a 12-month commitment; Comcast (Xfinity) (U.S.) – Apple TV available as a bundle with Netflix and Peacock.
✅ AVOD, SVOD and Pay TV partners now offer Apple TV+ as an add-on: Canal+ (France), Sky (UK, Germany, Italy), The Roku Channel (US) and now no other than Amazon Prime Video Channels (U.S., EU, LATAM).
The latter is a big deal because it speaks volume about the State of the Streaming Wars. It is seen as a sign of weakness on Apple’s part and a sign of victory for Amazon whose line up is finally attracting mainstream brands and services and not just specialty SVOD services. Now, Amazon comes with its challenges and opportunities.
Next up for Apple: YouTube TV and YouTube Primetime Channels?
✅ In April 2023, Apple TV+ took it one step further with a hard-bundle partnership with Canal+ where:
→ All C+ subscribers now get Apple TV+ without the need to buy an add on subscription to access their programs.
→ Apple gets a branded corner.
→ Their programs are integrated in the interface and in search like any other MyCanal program. The only difference is that they have a left hand corner logo on each visual.
Why the move? Apple TV+ gets instant access to 9.8M of French C+ subscribers (2023). They are most likely paid a CPS (cost per subscriber) and the level of prominence they get boosts discoverability and time spent.
What does that tell us? With Netflix, Prime Video and Disney + as the market leaders in most markets, it's hard to grow your base alone. Success in streaming means now more than ever one must accept to surrender some control.
The State Of Play
With such a distribution network, high-quality originals, MLS and MLB rights, the firepower and deep pockets of Apple, how come Apple TV+ doesn't even make it in the Gauge?
Apple doesn’t disclose subscriber numbers but estimates put them at 25M globally. For reference, Crunchyroll, an Anime Specialty SVOD, surpassed 15M subs in August 2024.
It seems that Apple TV+ is stuck between Mainstream and Specialty SVOD services, and it shows in their churn rate.
Here are 6 things they should work on:
→ Positioning: Apple TV+ should pick a lane based on the data they have and answer simple questions: Who is my target audience? What do they watch? Is there a genre I could double down on and become the Specialty SVOD to that genre?
→ Quality over quantity:
This curated approach aimed to be pragmatic (they started from scratch) and position the service as a premium destination for high-caliber shows and films except it’s not good enough to attract subscribers. A narrow selection may not attract subscribers looking for variety and with fewer titles, keeping subscribers engaged long-term becomes more difficult.
As Apple decides to cut down on costs, fewer originals but more library titles would make the most sense.
→ Pricing
I would stop with the price increases or combine the next increase with the launch of a cheaper ad-supported tier (it’s been a long time coming).
→ Bundling
Instead of bundling with Netflix and Peacock, I would bundle Apple TV+ with Specialty SVODs to supplement the programming e.g. Britbox x Apple TV+ ?
→ User experience
Despite recent efforts to revamp the Apple TV app, I’m stilll lost when navigating the app between what’s Apple TV+ and what’s coming from iTunes or 3rd-party apps.
→ Marketing
It pains me to say it but where’s the Apple magic and firepower when it comes to marketing shows? I’m a huge fan of their shows (Ted Lasso, Slow horses, Severance, Pachinko etc.), they honestly take several spots in my annual Top 10 and yet I find myself stumbling upon these shows (last example this week with Disclaimer which is very promising!). There is so much foot traffic in their stores, they have so many digital touch points, we shouldn’t miss out on any new releases, right?
What The Future Holds
Apple TV+ is to Apple what Prime Video is to Amazon: a piece of a bigger pie.
Product revenues at Apple weighed 71.6% of total revenues while service revenues grabbed the remaining 28.4% (according to their company’s full year 2023 earnings). Thing is product fell by 5.97% (vs 2022) while service grew by 7.59% plus margins are better on the service side.
So the story goes that Apple TV+ needs to grow its subscriber base but not as much as a standalone business like Netflix does, as long as the overall service segment keeps growing healthily.
In case it doesn’t though, Apple should pause right now and reevalute its Apple TV+ strategy. First thing on their list? Turn it into a super aggregator à la Prime Video Channels. They know the value of that since they just gave in to Prime.
That’s it for today but before you go:
Enjoy your weekend and see you next week for another edition of Streaming Made Easy!
I’m getting a lot of love from the Channel 4 team on this week’s article. You guys rock. Thank you ❤️