Can Apple Break Into the Streaming Wars?
WHY YOU SHOULD CARE
Because Netflix and Amazon aren't sweating yet, given Apple's early mixed reviews.
By Alex Barker, Anna Nicolaou and Patrick McGee
The reviews came in swift and harsh. “Dull, dreary and dubiously written,” declared USA Today. A “disappointing creation,” said Entertainment Weekly.
The show the press was scolding was Succession. Once critically derided, the HBO show is now among the most acclaimed television series of recent years.
Apple executives will be hoping that the company’s new video streaming service Apple TV+ follows a similar trajectory after garnering decidedly mixed reviews for its original lineup.
With its launch on Friday, Apple is looking to take on Amazon, Netflix and upcoming entrants such as Disney+ and HBO Max with a slate of expensive and star-studded new series. The most prominent is The Morning Show, one of the most costly TV series ever made, a #MeToo-era drama featuring Jennifer Aniston, Reese Witherspoon and Steve Carell as hosts of a popular TV talk show.
From what I’ve seen, The Morning Show is not going to sustain huge growth on a subscription service. They’re really far behind [Netflix and others].
A HOLLYWOOD FINANCIER
Apple’s move into video streaming is part of a wider push to capitalize on its access to hundreds of millions of iPhone users, propping up its revenues even as smartphone sales decline. The strategy is working: On Wednesday, Apple said iPhone sales fell by 9 percent last quarter, but overall revenue rose, with its Services division accelerating 18 percent to $12.5 billion.
With Apple TV+, the company will aggressively undercut its rivals with a $4.99 monthly price — something CEO Tim Cook described to investors this week as “a gift to our users.”
But with negative reviews calling into question Apple’s ability to lure subscribers, the service is already off balance. “All the pretty people in the world can’t keep you hooked when the purpose is this muddled,” said IndieWire of The Morning Show, rating it a C-minus.
Long accustomed to selling premium products at uncompromising prices, Apple’s TV venture has cast it in a very different role: the maverick newcomer hoping to break through a crowded market with a bargain.
After years of denying the rise of internet television, traditional media groups are fighting back against Netflix and other tech groups that have upended their business. The largest media companies in the world — Disney, AT&T’s WarnerMedia and Comcast’s NBCUniversal — are all in the midst of launching their own rival streaming services to do battle with Netflix.
The result is a deeply competitive landscape characterized by fierce bidding wars, soaring content prices and huge volumes of content.
Amid the bevy of offerings, Apple, which has never before ventured into scripted series, has been a big question mark in Hollywood — even among the producers making shows for its service.
One Hollywood executive who has been working with the company says that he’s struggling to understand what Apple hopes to accomplish with TV+, and which audiences it’s targeting. “I don’t know who the Apple offering is first and foremost designed for,” he says.
Meanwhile, a Hollywood financier who has sold several shows to Apple says: “From what I’ve seen, The Morning Show is not going to sustain huge growth on a subscription service. They’re really far behind [Netflix and others].”
However, the financier points out Apple’s financial advantage: Despite how much it paid for The Morning Show — about $250 million for two seasons, according to several people familiar with the matter — “they could throw it in the garbage and it would be a footnote in their financial statements.”
Apple’s earnings in the past 12 months amounted to $260 billion, but Wall Street is still closely watching the TV+ strategy. Shares in the company fell almost 3 percent a few weeks ago after a Goldman Sachs analyst voiced concerns that free trials would dent margins.
Critics have also argued that Apple’s TV strategy has at times appeared directionless. In addition to The Morning Show, its first series include a dystopian fantasy, a 19th-century coming-of-age story and an alternative-history space race.
According to people familiar with the matter, the company said no to more than 1,200 projects before greenlighting the first four to six scripts, while it has enlisted seasoned executives to steer its programming, including Jamie Erlicht and Zack Van Amburg, Sony Pictures veterans who played instrumental roles on hit shows such as Breaking Bad and The Crown.
And Apple’s sheer scale should make it difficult to count out. Its $4.99 a month price compares favorably with $13 for Netflix’s most popular plan and $15 a month for HBO Max — and it’s free for a year for anyone who buys an Apple device. If even a fraction of the 200 million people who buy iPhones each year take up its offer, TV+ would become one of the biggest players in television.
One of the biggest problems for Apple is that the market could be headed for saturation. In recent weeks the streaming wars have reached a fever pitch, as WarnerMedia on Tuesday unveiled to investors its big streaming bet HBO Max, while Disney has been on a marketing blitz ahead of the debut of Disney+ in November.
With an unprecedented amount of content to stream, it’s not clear whether consumers will shuffle between services or sign up for multiple ones. Analysts believe that most viewers will sign up for between three and five video streaming services in total. Netflix, which already has more than 150 million subscribers, is unlikely to lose its perch.
Wall Street is confident in Disney’s product, which will launch on Nov. 12 with a vast library including popular franchises such as Star Wars and Marvel. But the jury is still out on WarnerMedia’s HBO Max, which is charging more than its rivals but has an unparalleled catalog including Harry Potter, Friends and Game of Thrones.
Apple’s chief disadvantage is its thin library. While Disney, Warner and NBCUniversal have thousands of beloved films and shows to offer, Apple is entering the marketing with a handful of series that have received a lukewarm reception.
It may be that this foray into TV is more experimental than reflecting a settled strategy. One senior industry figure describes it as a way for Apple to “get its feet wet” and understand the business before making a bigger decision, potentially including an acquisition.
Meanwhile, Apple Chief Financial Officer Luca Maestri says streaming was part of a long-term play, and not designed for a quick payout. Referring to TV+ and Apple’s Arcade gaming service, he says: “We feel very optimistic about how these businesses will return over time.”
Early Apple TV+ Bets
The Morning Show
A star-studded drama about a news anchor (Jennifer Aniston) who struggles to keep her place after her co-host is fired for alleged sexual misconduct and a new rival emerges in the form of Reese Witherspoon. “Flashy, but somewhat frivolous” was the critical consensus on Rotten Tomatoes.
Game of Thrones’ Jason Momoa stars in a dystopian drama set 600 years in the future, after a virus has decimated humankind and left all survivors unable to see. Reviews were generally unfavorable: Slate called it “violent, grim and exceptionally silly.”
A comedy-drama following the teenage life of 19th-century American poet Emily Dickinson, played by The Edge of Seventeen’s Hailee Steinfeld, this is the best-reviewed of the Apple TV+ shows so far. The Hollywood Reporter described it as “Euphoria by way of Little Women.”
For All Mankind
Reviews were mixed for this alternative history in which the Soviets land on the moon before the Americans, propelling an epic space race. “Even walking a different path, For All Mankind still finds ways to take one step forward and a giant leap back,” wrote IndieWire.
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