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Apple's new video product - what value do video aggregators have anymore? The answer: zero

· apple,ott,video,netflix,tv

I just read the latest on the Apple OTT video offering. Having seen the details of pricing for HBO and Starz on the service, it feels like an 10+ year old idea way that's late to the market. Let's face it: the over-the-top market (OTT) is very mature at this point. Netflix's streaming offering is 12 year old. Amazon's bundled Prime video just hit its 8 year anniversary. Comcast, DirectTV, ESPN and others all have OTT offerings. The market isn't screaming for someone to step up and meet some huge unmet aggregation need, yet here we are, in March of 2019, with Apple finally launching their long-overdue video offering.

To the reader: The device above is something called a "television"

To the reader: The device above is something called a "television"

What do I think of it? It's not disruptively priced, it lacks important anchor tenants, and it doesn't come tied with a real critical mass of attractive proprietary content/series that consumers love and can't find elsewhere (they are late to the next-gen studio business, and are launching the same day word has come out that YouTube is pulling back from their own studio efforts). Will Apple use its iOS monetization engine and promotion/trial techniques to get a seven figure user base over the first year? I am sure it will. Will it turn out to be some important pillar to help it grow? No. Not even close. This will not be like Apple Music is. That product is reasonable priced, has a great critical mass of content (50 million tracks), and is a great mobile-centric service. There is no similar analogy here.

 

Apple has attempted over the last 8 years to convince the major studios to give it content at the same per subscriber economics that the big cable and satellite players have. These protracted dialogs have failed, because Apple continued to want to have those at-scale economics without making material subscriber commitments. Time has passed, and I am sure the video team at Apple has been told that they have run out of runway. The result is the launch of at best a lackluster me-too offering, and at worst an internal distraction to the more important issues the company faces to create the next step function of growth as the iPhone moves further out on the S-curve of maturity. I love so much of what Apple has done over the last 2 decades, but I worry that low margin, non-global (too expensive to tap into non-G7 markets), low-innovative ideas like this will start clogging the arteries of the company.

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