Video services

Apple Eyes $9.99 Price for Apple TV+ – Report

Apple's push into the wildly competitive and crowded subscription VoD world will take hold in November and start off at $9.99 per month with a "small selection" of shows, Bloomberg reported.

Apple has not announced pricing or an exact launch date for the service. But the company is expected to help prime the pump for Apple TV+ with a free trial, Bloomberg added, noting that the new SVoD offering is there to help Apple push toward $50 billion in annual service-related sales by 2020 (Apple reported $11.45 billion in service revenues in its fiscal Q3, up from $10.17 billion in the year-ago quarter).

A free trial for Apple TV+ would follow a typical game plan used by most SVoD services to get people in the door and take a look around. About 58% of US broadband homes that trial an OTT video subscription service convert to paying subscribers, according to Parks Associates.

Apple teased Apple TV+ in March, announcing plans to offer the service on devices outside its own ecosystem that will feature a slate of original series and documentaries, with big names such as Steven Spielberg, Reese Witherspoon, Jennifer Aniston and Oprah Winfrey.

Bloomberg said Apple is still deciding how to release show episodes, with a possibility that it will send out a set of episodes for a given series and then follow with a new episode on a weekly basis. The Financial Times reported this week that Apple has earmarked about $6 billion for original TV shows and movies over an undetermined amount of time. While that's a sizable sum and above earlier spending estimates in the range of $1 billion to $2 billion for Apple, that total will still be dwarfed by the expected 2019 programming outlay for media giants like Disney, Comcast/NBCU, AT&T/WarnerMedia and Netflix.

Joining the crowd
Apple TV+ will be entering a packed field of general entertainment SVoD services that feature both original and library programming. The reported monthly price would put Apple TV+ below the price of Netflix's standard plan ($12.99 per month), but above the price of Hulu's ad-supported SVoD service and the ad-supported version of CBS All Access, which both cost $5.99 per month. Apple TV+ is also expected to cost $3 more than Disney+, which will go for $6.99 per month when it debuts on November 12. Disney is also planning to bundle Disney+, ESPN+ and the ad-supported Hulu SVoD service for $12.99 per month.

WarnerMedia has not announced pricing on HBO Max, a new SVoD service that will combine content from HBO, Turner and other WarnerMedia properties. The Wall Street Journal reported last month that HBO Max will cost "slightly more" than HBO Now, which currently fetches $14.99 per month. Comcast-owned NBCUniversal also has an OTT service in the works that will be distributed to Comcast's and Sky's pay-TV subs and be sold on a standalone basis.

When CBS and Viacom officially merge, the combo is making it a point to accelerate its OTT strategy, possibly resulting in more SVoD service options.

While much is being made about the head-to-head competition between these services and Netflix, the market's leader from a global subscriber count perspective, the greater source of competition will likely come from the fight for the entertainment budgets and disposable income of consumers. And it could perhaps cause some of them to make hard choices about which ones to retain, which ones to dump and which ones to avoid all together.

Additionally, this audience fragmentation could leave all of these services exposed to high levels of churn as consumers take advantage of free trials or pop in to consume a series they like only to depart when they are done watching. While gaining subs and expanding the base will be key to all the players, retention will play an equally important role.

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— Jeff Baumgartner, Senior Editor, Light Reading

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