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Free Content Could Be Key for Apple Streaming Strategy

Apple has yet to give a glimpse of its upcoming video streaming service, but that’s likely to change soon. The Cupertino-based tech giant is expected to unveil its new offering at an event on March 25, according to several February reports by media outlets including Variety. The event could shed more light on key details that still remain the subject of media speculation, such as what key features the service will offer and how much it’ll cost.

So far, it’s been reported that Apple’s forthcoming product will offer access to both its original content and other SVOD services. Some original content from Apple will reportedly be free and housed in the “TV” app, which is pre-installed on iOS devices like iPhones, while users will also be able to subscribe to other companies like Starz from within the app, according to CNBC. This potential a la carte SVOD element would mirror Amazon’s Prime Video Channels offering, which is becoming a bigger revenue generator and was recently mimicked by Roku.

Offering at least some original content on certain iOS devices for free is a wise move for Apple for several key reasons:

  • Free Apple shows could reach of hundreds of millions of consumers in the U.S. alone. This is because there were 189 million active iPhones in the U.S. alone as of December 2018, according to Consumer Intelligence Research Partners. The addressable market of the TV app is higher when factoring in the iPads, Apple TVs, and other devices that the TV app comes pre-installed on. It’s worth mentioning that Apple and Samsung recently struck a partnership that will bring a new iTunes movies and TV shows app to 2019 Samsung smart TVs in spring 2019, and Apple’s original content may be eventually be accessible on these devices as well.
  • Free accessibility can let Apple reach consumers other streaming services can’t necessarily reach. If Apple does house its original content inside the TV app for free, its shows could be watched by young consumers with an iPhone or iPad that don’t have access to a credit card. Because of this, Apple could reach a segment of young consumers that ask their parents for access to an SVOD service but are denied. This means Apple could sign up subscribers that might have otherwise spent time watching other upcoming SVOD services like Disney+ (set for a late 2019 launch in the U.S.).
  • Apple could eventually upsell consumers that regularly watch its free shows. Down the line, Apple could roll out a paid tier on its streaming service separate from the core original shows that it initially made available for free. This wouldn’t be completely out of left field from Apple, either — Apple is looking for franchises that could eventually serve as hooks to lure subscribers to a “Netflix-like” subscription service, according to CNBC. And there’s data to suggest that some consumers would bite on this type of offering. Eighteen percent of U.S.respondents expressed “some interest” in subscribing to an Apple video streaming service, according to an early 2019 survey by RW Baird.

Growing paid subscriber count by upselling free users could help Apple carve out its own lane in the video streaming market that’s already led by incumbents Netflix, Prime Video, and Hulu. And as the streaming video market becomes more crowded, it’ll likely become increasingly common for newer SVOD services to fight for eyeballs by making certain content accessible for free. NBCUniversal is expected to launch a streaming service next year that will be free to pay-TV subs of Comcast and Sky, for example.

Technically, neither NBCU nor Apple will be offering “free” content in the truest sense of the word if consumers have to pay for their devices to gain access to that content. But these companies are poised to making even more money off their audience by taking this important first step.

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