Apple TV+ meets rivals on originals, but lack of back catalog is big omission

Apple TV+ meets rivals on originals, but lack of back catalog is big omission

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“The number of streaming households that go out of their way to subscribe to Apple TV+ will be fairly limited initially due to limited content,” according to Michael Olson, an analyst at Piper Jaffray who covers Apple and Netflix Inc. Olson said a survey of 1,500 Netflix subscribers found 23% would subscribe to Apple’s offering and that interest is “moderate, not overwhelmingly high,” in part due to limited content. Video-streaming services typically start with a back catalog to “create early interest” before “transitioning” to originals, he said.

Apple TV+ is part of the Cupertino, California-based company’s strategy to generate more revenue from services and provide new ways to keep its loyal customers tied to the iPhone. Services generated sales of $12.5 billion in the fiscal fourth quarter, an increase of 18% from the period a year earlier, Apple said Wednesday. 

This image released by Apple TV Plus shows Jason Momoa in a scene from “See,” premiering Friday, Nov. 1, 2019, on Apple TV Plus. (Apple TV Plus via AP)

Apple is pushing its video service like it does its devices, airing commercials during prime cable TV hours, putting up billboards in major cities and showcasing coming shows on its website and social media. The company has clearly raised enough awareness to quickly gain subscribers. And Apple is doing something it has rarely done in the past: allowing the service to work on third-party devices like Samsung TVs and Amazon set-top-boxes, giving it a larger potential customer base. 

The concern about the lack of a catalog of reruns and old movies isn’t trivial and will make it difficult for Apple to fully compete. Disney+ will come to the market with the “Simpsons” and hundreds of Disney movies. HBO Max will have hit movies to stream like “Jaws” and “Erin Brockovich” and famous TV shows like “Friends” and “Big Bang Theory.” Netflix has blockbusters like “Seinfeld” and, until it moves over to Peacock, which has “The Office,” and a catalog estimated at more than 2,700 movies and 1,500 shows. Amazon.com Inc., which rivals Apple in consumer gadgets as well, has hundreds of older movies to stream on its Prime Video service.

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Netflix and Amazon Prime have both been building up their original content libraries for years, but they, too,  started out with slim pickings, including only a few original programs initially. Today, Netflix is estimated to stream more than 1,200 original titles. Disney, NBC, and HBO’s services also have the built in advantage of giant content arms within their own companies, something Apple lacks. While Apple has thousands of movies and TV shows available on iTunes for single download purchases or rentals, it hasn’t shown the willingness to turn those deals into a subscription component for TV+.

Proponents said Apple’s service wasn’t designed with a back catalog of shows in mind, but with pricing a few dollars below services such as Netflix with giant libraries, consumers may find the lack of old favorites a clear omission.

With its pricing strategy, Apple has shown it recognizes the limitations of the service. At $4.99, it costs much less than Apple Music, Apple News+ and the company’s top cloud-storage offering, and in a move unprecedented for Apple, is bundled free for a year with any new device purchase. By necessity, it’s also far cheaper than most of its rivals, though HBO Max will also be free to some AT&T subscribers. Apple Chief Executive Officer Tim Cook said Wednesday the service is priced at $4.99 a month to encourage as many subscribers to sign up as quickly as possible. And, in a rare statement, the company said the service and pricing strategy would be immaterial, at least initially, to its financial results.

So far, the reviews of Apple’s first slate of original shows indicate why a backlog of content is so important. Variety called “The Morning Show” with Jennifer Aniston and Reese Witherspoon a “streaming misfire” and the Hollywood Reporter said “See,” starring Jason Momoa, “isn’t close to a good show.”

This image released by Apple TV Plus shows Jennifer Anoston in a scene from “The Morning Show,” debuting Nov. 1, launching the Apple TV Plus streaming service. (Apple TV Plus via AP)

Still, Apple is banking on its service being good enough for its loyal users to pay for it a year from now, and even if the company can get just a quarter of its new iPhone buyers to sign up after a year, Apple TV+ will be a multibillion-dollar addition to its growing services arsenal. 

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