The delays around Apple’s original video content strategy are starting to get old and beginning to resemble Dish Network’s own tiresome wireless spectrum land grab.
Apple has about 24 original series in production, but it likely could have had more and probably could have delivered some of its original content sooner. A new report from the Wall Street Journal suggests that Apple and CEO Tim Cook have been fussy about explicit content, not wanting any sex, profanity or violence to jeopardize the valuable brand they’ve built up over the years. It’s a mindset that led Apple to 86 planned series “Vital Signs” and develop a set of somewhat strict guiding principles for producers.
It stands to reason that Apple would want to protect its product sales even as it seeks to boost its service revenues. During the latest quarter, service revenues passed $9.5 billion, which the company said was an all-time high. But it’s still way behind the nearly $30 billion in sales from the iPhone alone, not to mention the more than $10 billion combined in revenue from the iPad and Mac. And so Apple is playing it safe by building what it hopes will be a profitable video service while also not offending anyone who could potentially boycott their products.
But Amazon is in a similar position. In the latest quarter, Amazon posted more than $31.8 billion in product sales, and undoubtedly a sizable portion of that was Amazon hardware (be it Echo, Fire or another brand) or Alexa-integrated products from third parties. However it breaks down, Amazon has a huge sales machine driven by customer relationships.
Yet Amazon’s original series including the recent Emmy-dominating “The Marvelous Mrs. Maisel” contain all the trademark sex, profanity and violence that premium, non-network shows have become known for in the age of HBO and Netflix. So it’s a little unclear what Apple thinks it’s protecting its consumers from when clearly millions are already using Apple products to watch the kind of content the company finds incongruent with its brand. But regardless, Apple’s push for cleaner content could end up delaying again the launch of its streaming service, according to the Wall Street Journal. The launch was already pushed back once, from later this year to April 2019.
Of course, the content is only part of the equation. Apple still needs to decide how it’s going to serve that content to consumers. According to the report, the company wants its shows to live on its TV app where they could potentially be bundled with other services like iCloud storage.
Alan Wolk, co-founder and lead analyst at TV[R]EV, said Apple could be shooting itself in the foot with its distribution plans for its video service.
Calling this now: distribution is going to be their Achille's heel. If it's not an app on Roku/Fire TV/Smart TVs, no one is going to bother to figure out how to watch it. "Bundle with iCloud storage" has high WTF? factor too. https://t.co/3UcXlIWtyI via @WSJ— Alan Wolk (@awolk) September 24, 2018
“It’s sort of baffling” Wolk said of Apple’s apparent bet on bundling its video service with iCloud storage. He also questioned the logic of putting the video content on the TV app, which lives on so many mobile devices. “The notion that people are watching TV on their phones isn’t really true.”
Apple has a massive user base for its products, but by hoarding content and artificially limiting its access to only Apple products and apps, it’s cutting itself off from a much wider audience.
Wolk said that Apple TV's somewhat prohibitive price could also limit the audience for its streaming service.
"Back in the day when [Apple] realized that a lot of people couldn’t afford iPods, they came out with the Nano. So, it’s baffling that they've never come out with a lower price Apple TV especially given that Roku and Fire TV devices are so popular and sell for 1/6th of what an Apple TV costs," Wolk said.
Of course, Apple’s video distribution plans are still only hearsay, with no real details yet revealed by the company. And that’s becoming more of a problem not unlike Dish’s spectrum conundrum.
Dish spent billions of dollars at auction and stockpiled valuable wireless spectrum. Dish might have been able to sell that spectrum to a wireless network provider who could actually use it, and Dish might have fetched a nice price. But that ship seems to have sailed, and now Dish is up against FCC deadlines to deploy a 5G NB-IoT network on its spectrum.
In May, research firm Cowen portrayed a less-than-sunny outlook for Dish.
“Dish valuation continues to be centered around its lucrative spectrum portfolio, while quarterly results simply need to show the company is in good enough health (sub metrics, margin, FCF) to service debt maturities as Dish ‘ages’ the spectrum portfolio for an outsized investor payoff,” Cowen wrote in a research note. “In that context, Dish delivered good enough results in 1Q18 to prove outer-year sustainability, however T/TWX, CMCSA/SKY/FOX, and now S/TMUS is putting the Dish spectrum in the unenviable ‘always a bridesmaid, never a bride’ holding pattern which we believe is taking its toll on the stock.”
Now Apple similarly appears to be spinning its wheels on video while Amazon, HBO, Netflix, Facebook, CBS, Disney, NBC, Hulu, AMC, Discovery, Fox and others all continue to spend money on content that is finding audiences and/or industry prestige. Apple may not be dealing with a depreciating asset like Dish with its spectrum, but the longer Apple waits to unveil its video, the louder and more crowded the space gets, making it ever harder to be seen and heard. — Ben | @fierce__video