The entertainment streaming wars are heating up fast. Apple Inc. (AAPL), one of the world's largest companies with $1 trillion in market value, has operated largely on the fringes of the movie and TV streaming industry. But Apple will soon launch an aggressive strategy to sharply boost revenue and profit from entertainment streaming with its Apple TV+ content service, competing for a piece of a global viewing audience numbered in the hundreds of millions of people and growing rapidly. Apple raised eyebrows on Wall Street and the industry this week, according to Bloomberg, when the company said its streaming video service will debut at a subscription price of $4.99 per month, which undercuts by as much as 60% monthly prices offered by rivals including (NFLX), Amazon.com Inc. (AMZN), and The Walt Disney Company (DIS).
Apple's rising shares pushed its market value, once again, to more than $1 trillion in early afternoon trading on Wednesday, a level it first reached last year before pulling back.
- Apple TV+ to debut on Nov. 1 at price of $4.99 per month.
- Price undercuts competitors like Netflix, Amazon and Disney.
- Apple TV+ likely to have less content initially.
- Apple has deep pockets and competitive distribution edge.
What it Means for Investors
Apple also plans to offer a free 1-year streaming subscription to purchasers of new iPhones, iPads or Macs. This pricing strategy is likely to force Netflix, Amazon, Disney and other rivals to react in kind or risk losing large numbers of subscribers.
Netflix’s most basic plan starts at $8.99 per month and costs as much as $12.99 for its high-definition service. Amazon Prime customers can get an annual membership for $119 or pay $12.99 a month, while Hulu members pay $11.99 per month and Disney+ is set to launch on November 12 for $6.99 a month, according to CNBC. It's surely not lost on Disney management that Apple has chosen to launch its cheaper Apple TV+ service on Nov. 1, 11 days before Disney.
Apple's India Streaming Growth
Apple also isn't wasting any time in expanding into streaming services in India, the world's second most populous nation with more than 1.3 billion people, reflecting its global strategy. The company plans to offer its service at a price of 99 rupees ($1.40) per month, and said the subscription will include thousands of movies to either buy or rent, according to Bloomberg.
Content, however, may be Apple’s one weak spot. So far, the company has only announced a short list of new releases to debut on November 1. Despite the claim that thousands of movies will be accessible to subscribers in India, Apple has yet to indicate the total number of shows available in other markets during the first year and beyond.
But whatever that total number is, it is likely be less than the 5,800 shows and movies offered by Netflix, the 7,500 TV episodes and more than 500 movies that Disney plans to offer during its first year. Then of course there’s Roku Inc. (ROKU), which offers more than 10,000 free movies and TV shows on its on-demand, ad-supported content channel, according to Barron’s.
Despite its size, it's unclear how long Apple will be able to engage in a prolonged price war because Disney, Amazon and Netflix also are industry giants with formidable financial power and, in some cases, much more expertise than Apple in the world of entertainment streaming. But given the longterm slowing sales of Apple's flagship iPhone products, the company will be under enormous pressure to make its new streaming business a success.