About a week from now April 12 HBO Now, their standalone streaming offering, will have its first big moment the premiere Game of Thrones (FYI – the most pirated show EVER). Their exclusive launch partner – Apple TV. This announcement closely coupled with Apple’s own announcement for their streaming TV service. Apple’s new service will likely feature about 25 channels, including ABC, CBS, Fox and ESPN.
No, the TV world isn’t crumbling but Apple has succeeded in plucking one more log from an already shaky foundation. In the epic battle for TV, could Apple actually win?
Of course this is super exciting news for media nerds like myself who just can’t wait for the superior TV experience on the horizon. However, will Apple succeed? And more importantly, now that Business Insider has set expectations, can they actually achieve $2.4 billion in revenue their first year?
** About this “exclusive” partnership, I just read SlingTV will also offer HBO NOW for the premiere (a loophole created by Dish’s legacy business?). Check out the article –> Sling TV to add HBO prior to ‘Game of Thrones’ return
How Could Apple Stumble?
Pursuing the very wise advice of Clayton Christensen, let’s talk assumptions and which ones need to be true to rake in $2.4 billion in one year. The chief assumption, 7.2 million people (reverse engineering from $2.4 billion at $30/month all year) are willing and ready to adopt these services. Now, let’s take a look at the reasons why people might hesitate before jumping onboard.
The Competition
The new Apple service has to steal attention (and dollars) from several competitors both new and legacy. Apple needs to create a lot more cord-cutters and fast. Now, many of the traditional players (Comcast, DirecTV, Verizon FIOS, etc.) have their customers locked in contract for at least 2-years to receive the best bundles and the lowest rates. Apple will essentially ask these customers to break contract and incur early termination fees.
Check the details on this Comcast XFINITY bundle – 2-year contract and early termination fees
Of the new players, Apple’s streaming service will compete for wallet share in a tight market. Their closest competitor SlingTV (offered by Dish network) has already confirmed a cheaper $20/month price and top networks like ESPN, TNT and CNN. But, Apple also has to deal with the other subscription-based streaming properties including their new frenemy HBO Now. After all, you’re not getting rid of HBO or Netflix because you have Apple’s service. But, can you really afford to layer services or are you back at the same price point as traditional cable?
The competition gets tighter and tighter as more companies test their standalone streaming content offerings
The Bundle
It’s still a bundle! Yes, Apple offers a smaller bundle based on channels consumers actually deem valuable. Yes, it’s live online TV service through a device you don’t have to rent for $10/month. But we’re still not at the ultimate “a la carte” option consumers are demanding. Traditional cable companies could counter with a lighter bundle to keep their customers. This is a good offering until someone else can one-up the experience and find a way to givers consumers that level of choice (or until they realize – like the legacy companies – a la carte might not make money).
The Experience
Apple’s streaming service will absolutely need TV Everywhere access. Now that all the major legacy companies are onboard with TV Everywhere, Apple’s service will look incomplete without it. Because unless Apple TV has DVR, you’re still missing out on content anywhere and everywhere.
How Could Apple Win?
Despite my critiques, I think Apple could really win. It has a strong brand image associated with quality products, quality service and a quality experience from purchase to play. And, I’m sure the experience will run fantastically across the Apple ecosystem. Lastly, we all know I could talk about the holy grail of cable ESPN until I’m blue in the face. So I’ll save you the characters and just say…the first step to winning in this space is having ESPN. If they have ESPN and all the stuff I mentioned above, they’ll be the one to beat.
