Aiming for reinvention, Apple eyes streaming, services

Apple looks to begin a fresh reinvention on Monday as it rolls out Hollywood stars for its new streaming television service, part of a broad shift of direction for the California technology giant.

Having seen a pullback in the once-sizzling smartphone market, Apple will seek to diversify by getting deeper into the television business, and with the likely launch of a subscription news service.

The iPhone maker, which has officially been mum on its plans, was expected to bring in Jennifer Aniston, Reese Witherspoon and "Star Wars" director J.J. Abrams to a launch event at its Silicon Valley headquarters.

"It seems fairly obvious they are launching a new video service," said Techsponential technology market analyst Avi Greengart.

Big questions to be answered include how compelling content will be; how much the service will cost, and what makes it unique in an increasingly crowded streaming television market, according to the analyst.

"If the content is compelling enough, people will subscribe," Greengart said.

"This is not new, but it is hard to do well."

The event comes with Apple under pressure to diversify its revenues amid sluggish growth in smartphones, which have delivered the bulk of Apple's profits for the past decade.

While iPhone sales remain enviable, growth has stalled. Meanwhile, money Apple takes in from selling services or digital content has climbed.

The Cupertino-based company recently stopped disclosing iPhone sales numbers with quarterly earnings releases and has taken to stressing the money-making potential of selling services, apps, music, movies and more to the millions of people using its devices.

The new service will be "a pivotal step for Cupertino in further driving its services flywheel and entering the 'streaming content arms race' which is clearly starting to take form," said Daniel Ives of Wedbush Securities in a research note.

Ives said he believes Apple's services business will be "worth roughly $400 billion on a standalone basis."

- Crowded stage -

In streaming, Apple is taking on not just Netflix and Amazon but some of the biggest names in the media-entertainment world.

Walt Disney Co. has announced its new streaming service Disney+ will launch this year, as will another from WarnerMedia, the newly acquired media-entertainment division of AT&T.

The new entrants, with more expected, could launch a formidable challenge to Netflix, which has some 140 million paid subscribers in 190 markets, and to other services such as Amazon and Hulu.

These rivals are coming into the segment which has been transformed by the spectacular growth of Netflix and a growing movement by consumers to on-demand television delivered over internet platforms.

Subscriptions to online video services globally climbed 27 percent last year to 613 million, eclipsing cable television subscriptions for the first time, according to the Motion Picture Association of America.

- What's new in news? -

Apple is also widely believed to be set to launch a subscription news service described as a "Netflix for news" with partners in the media world.

A New York Times report said the Wall Street Journal would be part of the Apple service likely to cost $10 a month, but that many other news organizations including the prestigious New York daily and the Washington Post were balking due to Apple's demand for a 50 percent slice of revenue.

According to Bloomberg News, the website Vox would also be part of the Apple News effort.

The move comes amid deepening woes for the news sector facing a difficult transition to the digital world where few people want to pay for information and advertising is problematic.

- Adding to the mix -

Along with investing some of its considerable war chest in original shows, Apple could try to spice up its streaming service by adding in benefits such as access to its music library or online storage capacity at iCloud.

Amazon uses that kind of tactic, making its video service available as part of Prime subscriptions that include free shipping on purchases from the e-commerce colossus and loyalty program discounts at its Whole Foods grocery shops.

For its video service, Apple may be investing as much as $2 billion a year in original content, according to BTIG Research analyst Richard Greenfield, but that will be less than Netflix and some others.

A big question remaining is whether Apple will offer its content free for its device owners, and how it will work with third-party television services, according to Greenfield.

Laura Martin, an analyst with the research firm Needham & Co., said Apple's prospects are strong as it shifts from being a "product" company to an "ecosystem."

Martin said in a research note Apple can count on 900 million people with at least one Apple device to feed this ecosystem of services which includes Apple Pay, music and other digital content.

"Apple's business model is essentially a subscription business model," Martin said.

"Apple's access to more than 900 million unique users globally, most of them among the wealthiest individuals in the world, plus its culture of creating hardware and services with proven commercial appeal makes it well-positioned."

Apple's rivals in streaming video
Washington (AFP) March 24, 2019 - Apple is expected to take on streaming rivals like Netflix and Amazon as Hollywood giants Disney and WarnerMedia also move into the space.

Here is a rundown of the key players in the market.

- Netflix -

Netflix is the undisputed leader in streaming television with some 140 million paying subscribers in 190 countries and territories and hit shows like "The Crown," "House of Cards" and "Stranger Things."

Netflix gained popularity with "catalog" shows and movies from Hollywood and television studios but has been investing heavily in its own content in recent years. It may be vulnerable, according to analysts, if it loses access to these shows since it does not have other revenue from services or products to subsidize its streaming.

- Hulu -

Hulu ended 2018 with some 25 million subscribers in the US for its various streaming plans, some of which are ad-supported.

That marked growth of nearly 50 percent for the service launched in 2008 by the major TV and film studios to compete with Netflix.

Hulu has followed Netflix into original shows including "The Handmaid's Tale" and "Castle Rock."

But a big question is how the shakeup in the media industry will affect Hulu. Disney now owns 60 percent of Hulu following a deal with 21st Century Fox, with Comcast's NBCUniversal holding 30 percent and AT&T's WarnerMedia 10 percent. With each of these firms moving into their own streaming services, Hulu's future is uncertain.

- Amazon Prime Video -

Amazon does not disclose the number of Prime Video subscribers, but it could be used by the 100 million members in more than a dozen countries.

Like Netflix, Amazon may also lose content from studio libraries in the coming years but it too has its original shows and movies including the Oscar-winning "Manchester by the Sea."

Amazon may be less vulnerable to new competition because its revenue base comes from the broader base of services and not streaming.

- Disney+ -

Now the biggest powerhouse in the media-entertainment world, Walt Disney Co. will be launching its Disney+ streaming service this year.

Disney will have as much as 40 percent of US box office receipts following its deal for the assets of 21st Century Fox combined with its own studio and ABC television programs, giving it a vast library that includes the "Star Wars" and Marvel superhero franchises.

Some analysts predict Disney will be able to ramp up globally to compete with or overtake Netflix within a few years but the transition to streaming means moving away from its longtime business model.

- WarnerMedia -

Telecom giant AT&T acquired the media-entertainment giant Time Warner and renamed it WarnerMedia, with the intent of moving into streaming with the rich content assets of Warner Bros studios, premium channel HBO and Turner broadcasting.

This service launching in 2019 will have the rights to hits like HBO's. "Game of Thrones" but it remains to be seen how much of the Time Warner catalog -- including shows like "Friends" and the Loony Tunes cartoons -- will be taken back from rivals like Netflix and Amazon.

- NBCUniversal -

The media-entertainment unit of Comcast, NBCUniversal has said it will launch an ad-supported streaming service in 2020.

The group which has the library of Universal Studios and the NBC broadcast network will be betting that viewers will opt for a free or discounted service with ads instead of paying $10 to $15.

This model -- which may also be adopted by WarnerMedia or Disney -- could fuel a new market for "addressable" or targeted ads which are based on data from viewers in the same manner as Google and Facebook.

- Others -

CBS already has a standalone streaming service for its own television programs and another for its Showtime premium channel. Others such as Viacom, Paramount and Starz may be seeking a way to get into the market, but could face challenges of consumers overwhelmed by the number of subscription services available.

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