It's no secret that Apple is assembling a video service to rival the likes of Amazon Prime, Netflix, and Hulu. With more than a dozen shows reportedly in development and a multi-year deal with talk show megastar Oprah Winfrey, an Apple Video announcement is seemingly imminent, possibly even arriving alongside the new iPhones in September.
What is decidedly more secretive is how we'll get the new service and how much it will cost. A new report in The Information attempts to shed some light on the first part. Sources tell the publication that Apple is planning to bundle all of its services into one giant subscription, combining Apple Music, iCloud storage, and a new magazine-style news service with its video offerings.
Based on what we've read and Apple's latest acquisitions, this rumor makes sense. Basically, it would be an Apple version of Amazon Prime (without the 2-day shipping), offering a little something for everyone. And if it's priced right, it just might work.
The high cost of streaming
Right off the bat, let's take a look at what the various streaming services cost per year:
- Amazon Prime: $119/year
- Netflix: $132 for HD streaming, $168 for 4K
- Hulu: $96/year with ads, $144 ad-free
- YouTube Premium: $144/year
- Spotify: $120/year for Premium
- Apple Music: $99/year
Most streamers probably subscribe to at least two of these services (not to mention HBO, Showtime, etc.), so it's not a stretch to say people are willing to pay upwards of $200 a year for streaming content.
Now let's look at the most recent subscriber numbers we have for each service:
- Amazon Prime: 100 million
- Netflix: 125 million
- Hulu: 20 million
- YouTube Premium: N/A
- Spotify: 75 million
- Apple Music: 40 million
(YouTube Premium is too new to measure, but based on estimates for YouTube Red and Google Play Music, the two services it supplants, it likely has fewer than 10 million paying customers.)
So, where would an Apple mega bundle fit on this list? To figure that out, let's break down what would be in such a bundle:
Apple already charges $99 a year or $10 a month for its music service, with access to 45 million songs, curated playlists, and cloud storage for up to 100,000 songs.
We don't quite know how this will look, but Apple is developing a number of TV shows, including high-profile content from Reese Witherspoon, M. Night Shyamalan, and Steven Spielberg. Assuming Apple offers all titles in 4K without commercials, we're looking at $10 a month, minimum, and maybe even as high as $15, depending on the catalog.
Earlier this year, Apple purchased digital newsstand Texture, an all-you-can-eat magazine subscription service with more than 200 popular titles, including People, ESPN, and Vanity Fair. Apple already runs a News app that aggregates content from newspaper, magazine, and web publishers, so it's likely this new service will be a premium tier of that free service. Texture charged $10 a month for access and an Apple subscription would likely be similar, assuming it follows the same format. If it's less about individual issues and more about access to revolving exclusive content, however, it could cost less.
The cheapest iCloud storage plans cost $0.99/month for 50GB or $2.99/month for 200GB.
Add it all up and you've got a $30-plus-per-month service, or upwards of $360 a year. We all know that wouldn't fly, even if Apple threw in a terabyte of cloud storage. Apple's bundle may be unique, but convincing people to spend twice or three times as much for a streaming service is a non-starter.
My best guess is Apple will offer all three services for $10/month individually, and then bundle them all into an Apple Media service with 100GB of cloud storage for $20 a month, or a discounted rate of $200 a year. That's a whole lot more than its competitors, but the option to buy each service individually takes the sting out of it.
You'd be getting a whole lot more than Netflix, Spotify, and even Amazon: a full music catalog. Premium content from major magazines and in-depth news stories. A library of shows with A-list actors. If on top of that Apple offered six months or a year of free streaming to Apple TV buyers, it could be one of the most attractive bundles around.
Quality over quantity
The linchpin of Apple's new service, of course, is video. Cord-cutters and cable subscribers alike are rabid for high-quality streaming video. A dozen or so new shows from the biggest company in the world would certainly pique their interest, especially if it were priced right.
But price won't matter if no one wants to watch it. Apple's current video offerings, the tepid Carpool Karaoke and let's-not-talk-about-it Planet of the Apps, aren't exactly must-see-TV. I'm willing to bet that most iPhone users are barely aware of their existence. Apple's new video service will certainly be more visible, but Apple needs something to hang it on. It doesn't need all of its shows to be stellar; it just needs one.
Netflix and Hulu will tell you that. Netflix wouldn't be the video giant it is without House of Cards, and Hulu wouldn't have 20 million subscribers if The Handmaid's Tale hadn't won eight Emmys. Price is one thing, but there needs to be value associated with it. Amazon sells customers on free shipping. Netflix and Hulu woo subscribers with hit shows. Apple needs to offer a similar temptation if it wants to compete. Premium news content and iCloud storage is a start, but there needs to be something specific that you can only get from Apple.
And remember: Apple has one thing all of these other services don't have: exposure. A full-fledged service needs a dedicated avenue for delivery. Whether Apple used its existing TV app to store all of its shows or re-introduced Videos, it would have a built-in audience of hundreds of millions of people who needed only to tap to start watching. If there were a Stranger Things-sized hit in the mix, Netflix might need to start looking over its shoulder.