Apple has been quietly developing video content for over a year now. Every time Apple holds a media event we expect them to talk about an update on the phone, however, the trillion-dollar company is so much more than the famous device.
Since Apple has been investing heavily in the video streaming a.k.a media business, they have also grown their services like iTunes and iCloud and built a production studio from scratch. For now, Apple has already integrated some video content within Apple Music which is essentially its premium music subscription service which now has more than 50 million subscribers.
Perhaps it is important for us to note that while the iPhone is the largest revenue driver for Apple, the growth in sales is now slower. Apple is now planning for its business beyond the iPhone, which will help spread their distribution across the globe.
We think that is a great move, as Apple has the strongest loyalists. They recently bought Shazam to generate closer ties to music publishers and songwriters. However, Apple’s push into the media doesn’t stop with music and video. Apple also acquired a subscription-based digital magazine named Texture, earlier this year.
It is being speculated that Apple’s big push into media may be larger than Spotify’s and Netflix’s media business combined. A bundle of all their services could help push their business to $37 billion in revenue alone by 2025 according to an analysis by Morgan Stanley’s Katy Huberty.If we were to compare this with Netflix and Spotify, Netflix will generate $15.85 billion in revenue while Spotify will bring in $6.11 billion in revenue.
To this Gene Munster, who is a tech analyst and managing partner of Loup Ventures said –
“Original content is going to be a big deal for Apple. It could be as big of a business like Netflix, or bigger.”
What will work in Apple’s favor is that they already have an active installed base of 1.3 billion devices. Hence, it is safe to say, that when they roll out with their video streaming platform, they will still have a huge head start in comparison to Netflix and Spotify.
The other thing that will help them have an upper hand, is bundling their media subscription offerings. Apple could bundle its services to its advantage which will not only help its video service get off the ground but, also attract investors from across the globe for tie-ups like the texture magazine.
Apple has planned to spend roughly $1 Billion on original video content. They definitely have high-quality productions in their pipeline. However, when compared to the $12 billion, Netflix has planned to spend on their content in 2018, Apple will have to come out with really quirky pieces. How could Apple counter that?
Apple could win the price war to get a step ahead of Netflix. But, Netflix is not the only medium they have to worry about. There are a lot of OTT platforms that are growing who now have access to large video budgets. Bundling their services may entice consumers at a large as they will offer a larger value than the ones that currently exist in the market.
While a bundle will give Apple an extra benefit, Huberty has predicted that going ahead with a bundled option will provide a 64% revenue bump when compared to offering single services. She is expecting that Apple will have both kinds of offerings for its consumers, be it bundled or standalone, which will result in a revenue of $22 billion to $37 billion in 2025. Now that is definitely larger than Netflix and Spotify combined.
We can’t wait for the Apple video service to launch. How about you? Tell us below!
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