THE FUTURE OF VIDEO IS STREAMING
With more than $285 billion sitting around in cash, Apple could effectively launch a YouTube or Netflix rival overnight. While the Cupertino firm has, in all but name, confirmed their plans for a streaming service of its own, Apple is taking its time by investing in high-quality original content and preparing a worldwide rollout. The result, however, might not be what we first expected.
Video streaming is big business. Earlier this year, Netflix overtook its rival Disney for a short period, while Amazon Prime and Hulu are also growing. In fact, an incredible 59% of all homes in America have a streamingenabled screen, and with Disney planning its own streaming service and BritBox, HBO Now, CBS All Access and FilmStruck all growing in popularity, the days of cable television could soon be behind us.
This week, we’re casting an eye on Apple’s upcoming streaming product, as well as looking at how giants like AT&T, Verizon, and Disney are shaking up the streaming market like never before.
APPLE IS BUILDING ITS OWN ORIGINAL CONTENT ROSTER
Apple has made no secret of the fact it wants to launch its own video streaming service. Having already taken a bite out of Spotify’s customer base with Apple Music, the next logical step would be for it to do the same with Netflix. This month, the company revealed it had signed a “unique, multi-year content partnership” with Oprah Winfrey to “create original programs that embrace her incomparable ability to connect with audiences around the world.”
And Winfrey is not the only big name Apple has poached for its video projects. Stars Jennifer Aniston, Reese Witherspoon, and Steven Spielberg also joining the company to work on new television shows and movies, thanks to Jamie Erlicht and Zack Van Amburg’s arrivals at Apple, both fresh from Sony Pictures TV. As well as Planet of the Apps and Carpool Karaoke, which are already available to stream for free as part of an Apple Music subscription, projects in the pipeline include Calls, with Apple also picking up rights to the original French-language version, a children’s programming unit from Sesame Workshop, a drama series inspired by Hilde Lysiak, Little Voices, produced by J.J. Abrams and Sara Bareilles, Dickinson with Hailee Steinfeld, animated comedy Central Park, Swagger, a drama series based on Kevin Durant, a rival of Steven Spielberg’s Amazing Stories, Little America with Kumail Nanjiani and Emily v. Gordon and a series based on the Top of the Morning book with Reese Witherspoon.
While the shows in development are no doubt going to go down a storm when they’re released, the logistics behind Apple’s new streaming service are yet to be solidified. Rather than following the same model as other streaming companies, critics and analysts expect Apple to offer content for free via its TV app, using it as a hook sell subscriptions to TV services from third parties. Others believe that the company will bundle music and content into a monthly subscription service, offering Apple Music and its new original programming as part of a single package, even adding benefits such as AppleCare and storage to serve as an Amazon Prime alternative. The final model for Apple’s video division would be to offer a monthly TV package, with reports suggesting Apple is considering undercutting its major rival Netflix.
ACQUIRING A MAJOR STUDIO
For a number of years now, analysts have predicted that Apple would buy Netflix outright. In 2016, Mathew Ingram told Fortune that such acquisition would increase Apple’s growth and stock prospects, and add more strength to the company’s services arm. And just this year, experts at Citi bank said that there was a “40 percent chance that the merger will happen this year”. Now more than six months into the year, and with Apple announcing its own original content projects, the idea of a major takeover seem slim.
Tim Goodman from The Hollywood Reporter, however, says it’s too soon to rule out a buyout because Apple cannot expect users to pay $9.99 per month for just a dozen TV shows. Purchasing a streaming giant would give the company access to a catalog of thousands of television shows and movies, and partnerships with studios and creators. Netflix, for example, gives users access to as many as 4,335 movies and 1,197 shows at any one time. Tim argues that Apple could choose to swallow Sony, MGM or Viacom, or even execute a series of acquisitions from studios like Lionsgate, to gain access to more video content and “pad out” its streaming offering.
Of course, Goodman’s theories are just that: theories. Apple has, so far, made no indication that it wants to purchase a content studio, and instead may choose to build its own content empire from the ground up. While it did pay billions for Beats by Dre and its music streaming service, Apple did, effectively, build Apple Music to 40 million subscriptions without a real acquisition.
THE THREAT OF CARRIER STREAMING SERVICES
Fresh offthe back of its $85 billion acquisition of Time Warner, AT&T launched a brand new streaming service earlier this month. WatchTV, which will give consumers access to more than 30 live channels like CNN and TNT, is available on smartphones, tablets and smart TVs, serving as a genuine alternative to DIRECTV, Dish Network, and Verizon Fios.
The deal between AT&T and Time Warner was held up in court for months, following the Justice Department’s attempt to block it. The department argued that the two companies could harm competition and raise consumer pricing, but the companies argued that their partnership would give customers a better deal. WatchTV is the first fruit of the acquisition; costing $15 per month, it gives users access to 15,000 shows and movies on demand and is part of the company’s plan to combine their offerings in an attempt to attract millennial customers who prefer to use services like Netflix.
Other major mobile carriers are also attempting to launch services, with T-Mobile announcing plans for an “Uncarrier TV” streaming service to launch later in 2018, and Sprint offering free Hulu passes to persuade users to take out a new line.
But it’s Verizon, a company that holds 35% of the wireless carrier market in the United States, that has shocked business analysts the most. Speaking in May, CEO Lowell McAdam said that the company’s plan was to “partner with those that are in the linear game” and “let them be good at what they do,” rather than launching their own on-demand video platform. “We’ll add digital content into that mix, and we’ll position ourselves for where we become more of an over-the-top video culture versus the linear model that we have today,” he added.
DISNEY ALSO WANTS A SLICE OF THE ACTION
When The Walt Disney Company acquired BAMTech for $1 billion back in 2016, a company that specializes in the technology behind streaming services, it was clear that the entertainment giant was on the brink of announcing its own video service. Journalists were right, and that announcement came just a year later when in August 2017 Disney revealed that it wanted to “become the exclusive home in the U.S. for subscription-video-on-demand viewing of the newest live action and animated movies from Disney and Pixar”. The company also confirmed its partnership with Netflix, which offered exclusive rights to films such as Moana, Finding Dory, The Nightmare Before Christmas, Lilo & Stitch and Zootopia, would be coming to an end before the service launches in 2019.
While Disney is expected to pull all shows from its rivals Netflix and Amazon Prime before its Fall 2019 launch, the company did reveal that R-rated shows and movies would remain on Hulu to maintain Disney’s “clean” image. 30% of Hulu’s stock is owned by the company.
Disney’s service is still more than a year away from launch, yet despite there being no name at present, details have already emerged regarding original content. Deadline reports that the company plans to launch five shows and five movies as part of its initial streaming rollout, with shows costing $25 million to $35 million for 10 episodes. More ambitious shows will cost up to $100 million per season.
Shows expected to launch as part of Walt Disney’s Netflix rival include “Don Quixote,” “Lady and the Tramp” (which will be directed by Julia Hart) “The Paper Magician,” “Stargirl,” “Togo”, “3 Men and a Baby,” “Sword and the Stone,” and “Timmy Failure”. Also set to be part of the initial lineup is “Magic Camp”, directed by Mark Waters, a “High School Musical” TV series, an animated TV series based offof Monsters Inc., and a live-action Star Wars series. Unlike Amazon and Netflix, which have spent hundreds of millions of dollars investing in formats and brand-building, Disney is in a unique position to springboard offof its already established franchises, which will no doubt act as a selling point for fans of its brands.
MEDIA GIANTS ARE MAKING BILLION-DOLLAR MOVES
Apple has yet to make the idea of an acquisition public, but its competitors are not waiting around. In mid-June, Disney upped its proposed bid for a majority stake in 21st Century Fox from $52.4 billion in stock back in December to an eye-watering $71.3 billion in cash and stock, beating rival Comcast’s $65 billion offer. The deal would give Mickey Mouse access to the 21st Century Fox television and film studios, as well as cable networks FX, National Geographic and regional sports networks. On top of that, it would entitle Disney to one-third ownership of streaming service Hulu, to which it already has a share of, and international TV distributors like Europe’s Sky and India’s Star.
The unprecedented takeover is not the only major company pair up, with telecommunications giant T-Mobile US Inc. advancing talks and announcing a $24 billion merger with Sprint Corp. Just like the Disney and Fox pair-up, the merger will have to be scrutinised by regulators, but the partnership would allow the companies to take advantage of T-Mobile’s 600MHz band of spectrum and Sprint’s plans for the 2.5GHz band to create “the highest capacity mobile network in US history”. While the two companies are yet to launch their own streaming services, the joint company would have over 100 million customers across the United States, which could give it serious leverage if rumors of a T-Mobile rival to Netflix come into fruition.
A FRAGMENTED FUTURE FOR VIDEO
While Netflix, Amazon Prime, and YouTube have changed the way we consume content, the next few years will truly shape the market and allow for more competition and consumer choice. When Apple launches its Video service, it will be made available on almost 600 million devices giving it a serious chance of domination. Similarly, with Disney’s impressive back catalog of content and a new investment in TV shows and movies, its Netflix-rival is sure to make some waves. And that’s without mentioning challenges from other sources, like MoviePass, giving consumers the chance to watch any movie at any theatre for just $10 per month, or YouTube, which has just announced its new Premium service giving users access to ad-free content and original programming, as well as Memberships, which allow fans to pay $5 per month for exclusive content and unique channel benefits. Facebook and Twitter have also upped their video game, offering live streaming of the World Cup and new full-screen video functionality to allow for long-form video content.
Whether you’re a fan of the changes or not, there’s no denying that the future of video content is bright; albeit fragmented. The days of a single Netflix subscription are over; if you want access to all of your favorite content, you’ll soon require multiple subscriptions. Time to cough up!