Apple TV+, the company’s streaming video service launching Friday, is being positioned as a tuck-in present for its hardware customers.
During Apple’s fiscal fourth-quarter earnings call Wednesday, CEO Tim Cook described his company’s thinking behind making Apple TV+ for consumers who purchased a new iPhone, iPad, Apple TV, iPod touch or Mac beginning on September 10.
“Yeah, it’s a gift to our users and from a business point of view, we’re really proud of the content. We’d like as many people as possible to view it. So, this allows us to focus on maximizing subscribers, particularly in the early going. We feel great about doing that. We think it’s a bold move,” Cook said.
He also said that the $4.99 per month price will also be attractive for consumers not receiving the service bundled with a device purchase.
“The price is very aggressive as well. You think about the quality of content that you get for $4.99 and it’s amazing,” Cook said.
Apple posted quarterly revenues totaling $64 billion, up 2% year over year. Service revenues accounted for $12.5 billion, which the company said was an all-time high.
It’s still unclear what impact Apple TV+ will have on service revenues, but according to UBS analyst Timothy Arcuri, Apple reaffirmed the accounting of TV+ free subscriptions is unlikely to have material financial impact based on their assumption of take-rate.
Earlier this month analyst firm Wedbush said that Apple’s approximately 900 million iPhones active worldwide means that Apple TV+ could attract 100 million subscribers within three to four years. The firm also said that Apple TV+ could "disrupt" about 10% of Netflix’s target customer base in 12 to 18 months. But Apple could be placing some hurdles in front of would-be subscribers.
According to Ampere Analysis’ newest survey of U.S. consumers, there’s a lack of interest in Apple TV+’s content lineup, which is relatively limited compared with peers like Amazon Prime Video, Hulu and Netflix. The firm also found that many respondents said that they already have enough SVOD services, and that both factors could hold up Apple TV+’s growth. The service’s aggressive price tag is not seen as a barrier.