Sunday , August 14 2022

Apple made his most bold blog ever. It may not be enough


Tim Cook & Co attend a demonstration business. The heading of the entrance was the headline of great celebrities, including Steven Spielberg and Oprah Winfrey, which was predicted by the company to the video streaming market on Monday. Apple (AAPL) It will be producing its own films and TV shows for a subscription service accessible on Apple devices and other streaming devices, including t Roku (ROKU). The service will be available this fall, but Apple did not say how much it will cost.

It is one of the most bold and bold bets in the company's history. The costs of making its Apple TV + streaming service a success will be huge. And there is a ton of competition that is deeply embedded there.

Apple needs this to work. The iPhone accounted for nearly two-thirds of the company's revenue last year. But iPhone sales have flattened since 2015, and fell by 15% in the last quarter of 2018, when the bottom fell out of the Chinese market.

For Apple TV + to be a game referee for Apple, it will need to compensate for those lost iPhone sales. That means it will need to bring billions of dollars – possibly tens of millions of dollars – in a highly cost-intensive business.

There is one problem, however: It has Netflix, Amazon, HBO Now, CBS All Access, and it has a collection of other streaming services to challenge.

What Apple is against

Netflix (NFLX) is the largest and most successful streaming company: It has 139 million paid subscribers, and is available in more than 190 countries. It's still growing, too. Nearly nine million subscribers added in the last quarter of 2018.

But the US, where the audience of Apple's largest and loyal audiences, is saturated. Only 1.5 million new Netflix subscribers of the last quarter came from the United States.

Amazon (AMZN) last year, it has over 100 million main subscribers, most of whom have access to the company's Mainstreaming Video & Video service. Hulu has 25 million subscribers. (AT&T (T) He has a 10% share in Hulu through WarnerMedia, who is also CNN's parent company.)
WarnerMedia, which is already offering HBO Now, has said it will introduce another streaming service later this year. Disney (ANA) It is widely expected that he stimulated his new Fox acquisition to produce his own streaming service. And that's on top of the dozen “thin bundles” streaming live TV offerings from Google, Sling TV, Sony, Hulu and AT&T.

So that's what Apple faces.

"While Apple can submit a larger list of original content than Amazon and Netflix during their respective launches, it could be argued that the streaming market has reached level [of] Saturation and consumer fatigue in the US, "said Colin Gillis, an analyst at Chatham Road Partners." Apple is late for the party. "

It's not a no-sum game: Many people subscribe to multiple services. Dan Ives, an analyst at Wedbush, predicts Apple's new service will win 100 million subscribers over the next three to five years.

Apple Event 2019: Publish everything in Apple's main presentation;

It helps that Apple already has a huge audience – 1.4 billion iOS active devices worldwide. It also seeks to distinguish itself from the competition by welcoming privacy and making its content friendly to the family.

And Apple doesn't just rely on its current supporters: It will make Apple TV + available to non-Apple customers, which is a huge deal.

Apple doesn't often open its walled garden. Most notably, Apple made a Windows version of iTunes in 2003 (over Steve Jobs's objections), according to biographer Walter Isaacson). That made the iPod an international feel, establishing Apple for its mega iPhone success.

How to measure success

Apple has managed to sell subscriptions, apps, films and other services to iPhone customers. Apple's services business, which included App Store, Apple Music, Apple Pay and iCloud, came with sales of $ 37.2 billion last year.

That's a ton of money: That would be enough to graduate No. 83 in Fortune 500 last year.

Apple TV + has the potential to grow the business of those services a lot. In a note to investors on Monday, Ives said he believed Apple TV + "will play a vital role in the growth of services in Wales." [Apple] for years to come. "

But streaming is probably not a big enough business to offset the slowdown in iPhone sales on its own. Apple said that most of its growth in service last year came from licensing, the App Store and AppleCare – not its streaming subscriptions, like Apple's Apple $ 10 a month.

Gillis estimates that Apple Music has 56 million subscribers, but only 10% to 15% of Apple's revenue services contributed. That means Apple Music is only 1% to 2% of Apple's overall revenue. Apple TV + may not do much more.

Apple may need to do more than fill a dentist. The company made $ 166.7 billion in iPhone sales last financial year. If iPhone sales remain on track with the first quarter of 2019 financial, Apple could lose $ 25 billion in iPhone sales. In this financial year, which started in October, Apple's iPhone sales have already fallen by $ 9.1 billion from where they were a year ago.

Compare that with Netflix, which made a total of $ 15.8 billion of revenue last year. That company had to spend a ton of money to get there: Its gross profit was only 10%. The apples gross profit was 38.3% last year.

"Apple's new video service isn't going to be a Netflix killer," Gillis said. "Apple is still the iPhone company."

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