Analyst: Apple’s streaming video service won’t ‘move the needle’ for a while
At this point, there have been a slew of announcements related to the content Apple is commissioning and buying for its upcoming Netflix-like streaming service. The iPhone maker has lined up dozens of projects spanning both movies and original series that will see the company working with A-listers ranging from Oprah Winfrey to Steven Spielberg, Jennifer Aniston, Reese Witherspoon and Steve Carell, to name just a few. It’s part of Apple’s company-wide shifting of emphasis away from a focus on hardware sales and more towards the revenue-generating services that users actually rely on the company’s hardware for.
Ahead of a celebrity-studded reveal of its new streamer during an event at the company’s Steve Jobs Theater on March 25, meanwhile, a Jeffries analyst is out with some key predictions today about the service’s economics as well as its potential. Analyst Tim O’Shea thinks Apple will set the price for its Netflix rival at $15 a month — and that it will face a handful of big challenges at the outset, such that O’Shea went on to tell Business Insider it means Apple’s new service probably won’t “really move the needle” for a long time.
Among the challenges, Apple’s content budget is nowhere near what Netflix spends from one year to the next. Meaning, Apple will be heavily reliant at least at first on the third-party content it buys. However, many Hollywood studios and networks won’t be happy with Apple’s 30% cut of the revenue, and Apple needs as many of those players as possible to make its streamer a success. “There are only a handful of players that make content that matter,” Business Insider quotes O’Shea as explaining. “If you lose one or two of them, it makes your service much less attractive.”
What’s more, according to BI:
Regardless, we should get the first glimpse of what Apple is cooking up in this regard at the March 25 event, which is expected to include a showing of clips from some Apple streaming content ahead of an actual launch of the service later in the summer and possibly even the fall. All of which is to say, this is definitely an interesting time right now for companies in the streaming video space, as well as for customers who certainly don’t lack for plenty of bingeworthy content to consume.