Over the years, Apple’s strategy for success has changed dramatically. While Apple started its foray into the world of tech with the launch of computers, it moved into the world of music with the launch of the iPod, and then into the smartphone market with the revolutionary launch of the iPhone.
And while Apple has been riding the smartphone and mobile device wave for the past decade, it seems that Tim Cook and his team have changed tact once again. Apple has announced its move into the world of video with the launch of its new streaming service, Apple TV+. This move means it will be widening its reach once again, while challenging established OTT players like Netflix and Amazon Prime.
This move comes at a time when the value of streaming services is being capitalized on by numerous big players, like Disney entering the market with the launch of its Disney Plus service, as well as the launch of AT&T’s WarnerMedia. As Apple throws its hat into the proverbial ring, the ability to leverage its unrivalled mobile device market penetration will be key to the new service’s success.
But why has Apple made this move into the video market? And what will this mean for its beloved iPhone?
The Apple family
First of all, this should not be a surprise. Apple’s revenue from services have been steadily growing over the last few years. According to the company’s earnings release, in Q2, 2019, revenue from services grew to $11.45B, up from $9.85B a year ago.
No company has been able to master an ecosystem like Apple—in fact, you could say the launch of the App Store has been the most innovative and game changing development for Apple as well as the Smartphone industry as a whole. Apple’s ecosystem draws customers in and keeps them on-brand, encouraging them to purchase more Apple products that work together. For instance, with the latest Apple TV+, viewers will be able to access the service via the App store and use Apple devices to stream content. Apple has announced expansion of their app to Macs and to non-Apple devices such as smart TVs from Samsung, LG, Sony and Vizio. Roku and Amazon Fire TV streaming devices will also be supported, but no plans have been announced to support Android nor Windows devices.
Apple’s popularity is owed in part to its innovative and captivating marketing strategy. The excitement of new Apple devices, created by sleek advertising campaigns and futuristic branding, has been a key driver of sales since the first-generation iPhone. How better to launch a new TV streaming platform than having TV royalty Oprah Winfrey on stage singing its praises? The positioning of Apple TV+ in the current market will be essential to its success—but hard work awaits
The difficulty will be convincing Apple customers to pay a new subscription fee on top of their existing video services. This is where Apple again can leverage its supply chain, by including the streaming service in bundle packages along with services currently offered, such as Apple Music, or monthly post-paid mobile contracts.
While Apple is not seeing the immediate uptake of new iPhone models reflected in sales, it did report in January 2019 to have over 1.4 billion active Apple devices globally. Maintaining the availability of Apple devices is key to the success of Apple TV+. Apple is relying on the availability of its devices as a facilitator of the service; maintaining customers within the Apple ecosystem consuming content from one focused source.
What about the iPhone?
While branching into new markets has always been a weapon in the Apple armoury, ultimately, for Apple to continue driving its growth, the availability of cost-effective devices will be key.
The launch of the new service could coincide with an increase in iPhone trade-ins, as customers look to upgrade to devices capable of supporting high quality TV streaming. This is a great opportunity for customers to capitalize on the latent value of their old devices and upgrade to newer flagship devices. But it will also serve to grow and maintain Apple’s ecosystem, as devices are repurposed and re-sold into markets where affordability of new high-end Apple devices are a concern, thereby globally widening the availability of its services.
The launch of Apple TV+ is certainly not Apple saying goodbye to the iPhone. Although device sales in the overall smartphone market are slowing, the Apple ecosystem is growing stronger. Offering new services like Apple TV+ will engage customers on a new platform, encouraging them to remain within the Apple ecosystem and most importantly, continue their loyalty to the brand.