Apple's video service needs to hit Android & desktop to impact revenue, says Macquarie
Apple's video streaming service will be a "large-scale newcomer" to the market, but it needs to come to Android and Smart TVs to move the financial needle, says Macquarie.
Apple TV, TV App, and its iOS mobile TVs
Expected to be unveiled at the "It's show time" Apple event on March 25, the video service is largely believed to involve Apple offering free original content to customers, while at the same time highlighting third-party services users can pay to watch. According to Macquarie's analysts, in an investor note seen by AppleInsider, the service will make a "big entry in the over-the-top video landscape," though there are some unknowns the firm tries to answer.
Analyst Tim Nollen suggests that analysts should question how widely the service will be available, in that while Apple's primary aim is to "improve the user experience," it should be asked if this would need for it to be platform-agnostic or platform-exclusive in Apple's approach.
"Precedent set by Apple Music would support the former alongside any demands from talent for wider distribution, and making the service available on Android, desktop, and Smart TVs may help drive subs in the near term," Nollen suggests. Even so, the analysts "wouldn't be surprised" if it was limited to just iOS and Apple TV as a strategy to combat hardware churn.
Highlighting suggestion from others that Apple will offer "bundles" of channels at a cheaper price than buying them separately, analyst Ben Schachter believes Apple could offer a bundle of multiple services, including Apple Music and Apple News, as well as cloud storage. Raising previous discussions from Apple about "changing the way consumers access video," it is proposed this could mean new hardware or an innovative form of a guide-type service for consumers.
While Apple will become a new avenue for content distribution for content producers, analyst Amy Yong proposes the bundled channel offers could threaten traditional cable and satellite providers, as well as other streaming television services.
"We believe HBO and Starz content may be incorporated into the offering in an ad-supported/add-on capacity," suggests Yong. "With a tiered HBO-branded over-the-top offering coming, HBO content will likely be limited. For Lionsgate and Starz, Apple can provide an avenue for rapid international growth and also look to purchase original studio content."
The revenue potential for Apple could be quite substantial, as analysts previously suggested that, if it reached 100 million subscribers by between 2022 and 2024, Apple could be earning $10 billion in revenue from the service.
Macquarie maintains a "Neutral" rating on Apple stock, with a price target of $149. At the time of publication, Apple's stock price is at $194.
Apple TV, TV App, and its iOS mobile TVs
Expected to be unveiled at the "It's show time" Apple event on March 25, the video service is largely believed to involve Apple offering free original content to customers, while at the same time highlighting third-party services users can pay to watch. According to Macquarie's analysts, in an investor note seen by AppleInsider, the service will make a "big entry in the over-the-top video landscape," though there are some unknowns the firm tries to answer.
Analyst Tim Nollen suggests that analysts should question how widely the service will be available, in that while Apple's primary aim is to "improve the user experience," it should be asked if this would need for it to be platform-agnostic or platform-exclusive in Apple's approach.
"Precedent set by Apple Music would support the former alongside any demands from talent for wider distribution, and making the service available on Android, desktop, and Smart TVs may help drive subs in the near term," Nollen suggests. Even so, the analysts "wouldn't be surprised" if it was limited to just iOS and Apple TV as a strategy to combat hardware churn.
Highlighting suggestion from others that Apple will offer "bundles" of channels at a cheaper price than buying them separately, analyst Ben Schachter believes Apple could offer a bundle of multiple services, including Apple Music and Apple News, as well as cloud storage. Raising previous discussions from Apple about "changing the way consumers access video," it is proposed this could mean new hardware or an innovative form of a guide-type service for consumers.
While Apple will become a new avenue for content distribution for content producers, analyst Amy Yong proposes the bundled channel offers could threaten traditional cable and satellite providers, as well as other streaming television services.
"We believe HBO and Starz content may be incorporated into the offering in an ad-supported/add-on capacity," suggests Yong. "With a tiered HBO-branded over-the-top offering coming, HBO content will likely be limited. For Lionsgate and Starz, Apple can provide an avenue for rapid international growth and also look to purchase original studio content."
The revenue potential for Apple could be quite substantial, as analysts previously suggested that, if it reached 100 million subscribers by between 2022 and 2024, Apple could be earning $10 billion in revenue from the service.
Macquarie maintains a "Neutral" rating on Apple stock, with a price target of $149. At the time of publication, Apple's stock price is at $194.
Comments
What does it take to be an analyst? It doesn't seem like you need a lot of experience or pass success.
Heck Google Play developers only managed to get about $16B from Google last yet as their cut of the roughly $25Billion in Play Store revenues. How could any of them survive on that? Getting a few billion more from the other Android app stores isn't enough to make a difference even if the combination of all of them, particularly adding China, might roughly approach the total App Store revenues. They're still literally starving to death. Shocked all of it hasn't died yet.
You do not represent the entire mobile world.
iOS users spend 4X as much (per user) compared to Android users. This is a basic truth due largely to the fact that most Android devices sold around the world are low-end junk phones. All the tech blogs love to talk about your Samsung Galaxy, Google Pixel, LG G Series, OnePlus or other popular flagships, but these only represent a tiny fraction of total devices sold.
This is why Android as a platform makes far less money for developers when compared to iOS. It's also why developers don't bother bringing high-end Apps to Android devices or why Android on tablets is dead. There's just no money in it for developers.
Nobody said Google Play isn't making money or that Android developers are starving. But they make a fraction of what The App Store and iOS developers make. That's the real point.
BTW, where did you get that $25 billion figure from? Google is famous for not reporting Play Store revenues (and why would they as they pale in comparison to The App Store). So I'm really curious as to your source.
I always find it funny how Google loves to promote numbers until such time as it no longer looks good and they stop. Like they used to report device activations. Or total users on each Android version (which they changed to total visits to Google Play to make it appear more users were on newer versions). Or to stop reporting altogether last October when Pie wasn't being adopted as fast as Oreo despite Project Treble supposedly going to improve update times for newer versions of Android. Samsung also has similar tactics.
As for which platform is garnering more in total revenue there were stories as far back as three years ago saying that when Chinese Android stores are included Android app revenues actually outpace the App Store.
https://www.digi-capital.com/news/2015/04/android-makes-more-money-than-ios-including-china/
Where the truth lies is near impossible to discern AFAICT but going so far as to claim for a fact that Android as a platform makes far less for developers is not supported unless you have some sources proving so. Perhaps it exists, maybe you have that proof and I'm happy to follow whatever links you have that establishes it.
Here's a quick one I came across just now from a couple months ago.
https://techcrunch.com/2019/01/16/china-accounted-for-nearly-half-of-app-downloads-in-2018-40-of-consumer-spend/
Put pen to paper and you can figure out yourself whether Android app revenues as a platform approach or exceed those from the App Store at least according to that source.