“Yesterday Apple officially announced a press event that will take place on March 25 at the Steve Jobs Theater in Cupertino HQ to announce the long-awaited streaming video service that will compete with the likes of Netflix, Disney, Hulu, and others as Cook & Co. officially enter the streaming content arms race,” Wedbush analysts Daniel Ives and Strecker Backe write in a note to clients.
“The new streaming video content service, which will likely officially launch in the fall, is still in the late planning stages and will include a host of content partners (e.g. HBO remains the biggest X variable) as well as original content from Apple with the company currently in production deals with Oprah, Reese Witherspoon/Jennifer Aniston, Steven Spielberg, and a handful of other projects as the company is spending roughly $1 billion on original content this year. However the company is definitely playing from behind the eight ball in this content arms race with Netflix, Amazon, Disney, Hulu, and AT&T/Time Warner all going after this next consumer frontier investing significantly more dollars ($20 billion combined and counting per annum) on content,” Ives and Backe write. “While acquisitions have not been in Apple’s core DNA, the clock has struck midnight for Cupertino in our opinion and building content organically is a slow and arduous path, which highlights the clear need for Apple to do larger, strategic M&A (a24, Lionsgate, Sony Pictures, CBS/Viacom, Netflix, MGM) around content over the coming year to ‘double down’ and drive the services flywheel especially with its new video subscription service set to be rolled out.”
Ives and Backe write, “If Apple executes with minimal speed bumps and aggressively acquires content given the company’s massive installed base and unmatched brand loyalty we believe reaching 100 million subs in the medium term (3 to 5 years) is a realistic goal that could translate into a $7 billion to $10 billion annual revenue stream over time for Apple and further cement its installed base and halo effect.”
Read more in the full article here.
MacDailyNews Take: With Apple Music already over 56 million is under four years, we see a 100 million subscriber goal for a video streaming service that will appeal to more people than music as eminently achievable within 3-5 years – especially if Apple offers value bundles that allow subscribers to combine services (Apple Music, Apple Video, iCloud storage, etc.) for a lower total price than paying for each individually.
It’s almost show time!
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