Apple plays the underdog in streaming wars

Apple is working from a very different script as it takes aim at Hollywood.

Jennifer Aniston and Steve Carell in a scene from The Morning Show. Picture: Apple TV+

Apple became a colossus by redefining gadgets including the smartphone, the tablet and the smartwatch. As it takes aim at Hollywood, it is working from a very different script.

Overnight, the company launched the Apple TV+ video service, its contender in the battle between media and tech giants for people’s streaming dollars. Apple TV+ is starting with nine programs, including a buzzy drama about television news called “The Morning Show” featuring Jennifer Aniston, Reese Witherspoon and Steve Carell. Other offerings include “See”, set in a future when humans lack sight, and “Snoopy in Space” for children.

Apple’s enormous size, $US100bn ($144bn) cash hoard and fat profit margins mean it can afford the costs of developing and distributing new content. And the more than 900 million iPhones and 500 million other Apple gadgets in use worldwide give it an enormous built-in base of potential TV+ customers.

But entertainment takes Apple well outside its wheelhouse, and much about its approach to the streaming wars departs from its usual strategy.

Apple is used to charging far more for its iPhones, iPads and Macs than rivals do for their products. It controls its own ecosystem of hardware and software products and carefully rolls out new versions of its gadgets once a year at most.

With TV+, Apple is charging less than competitors and pushing its service aggressively on other platforms. A company accustomed to hits is entering a world where TV shows and movies fail with regularity. And the secretive Silicon Valley titan is contending with critical scrutiny in Hollywood that far exceeds the business’s importance to Apple’s bottom line.

Critical reviews of the offerings on Apple TV+ have been mixed. Time said “The Morning Show” lacks the depth and spirit of top TV shows, while New York Media’s Vulture called it a “glossy, largely compelling new series”. Hollywood-focused Variety’s critics found fault with other Apple shows, saying none was “stellar enough to justify someone buying in to a whole new streaming service”.

“Honestly, the world should give Apple a little leeway,” said “See” executive producer Francis Lawrence. “Nobody can be perfect 100 per cent of the time.”

Hollywood is central to chief executive Tim Cook’s effort to refashion Apple as a services company as sales have slowed for its original products. Sales of its bread-and-butter iPhone fell 14 per cent for the fiscal year ended in September, dragging the company’s total revenue down 2 per cent to $US260.17bn.

The hardware heavyweight, though, has a threadbare entertainment library. So its service will cost $US4.99 monthly for subscribers and will be free for a year with the purchase of a new iPhone, iPad or Mac.

Netflix, which charges $US12.99 a month for its most popular service, pioneered the category and offers more than 1500 shows and 4000 movies. Walt Disney will charge $US6.99 for Disney+, which launches 11 days after Apple’s offering, with popular franchises such as “Star Wars”.

And WarnerMedia said on Tuesday it would charge $US14.99 a month for HBO Max, set to launch next year with classics such as “Friends” and original fare.

Apple struck deals to make its Apple TV app available on Roku, Amazon Fire TV devices and smart TVs from Samsung Electronics

Mr Cook called the offering a bold move during a Wednesday call with analysts. He said the price was aggressive because Apple wanted as many people as possible to view the shows. “This allows us to focus on maximising subscribers,” he said. Apple is also rolling out its programming in a way that straddles Netflix’s all-at-once strategy with the one-episode-a-week style of HBO and others. Initially, it will offer three episodes of some shows, such as “For All Mankind”, about the US space program in a world where Russia landed first on the moon, and add a new episode each subsequent week. Others, such as “Dickinson”, about a young Emily Dickinson, will be available in their totality.

Apple is famously fastidious about its brand. So far, its slate of shows features themes of resilience and aspiration. The focus — combined with an aversion to over-the-top gratuitous sex, violence and language — has led some Hollywood creators to question whether Apple TV+ will be as risque as Netflix, FX or HBO, whose programs often embrace the underbelly of culture and society.

If Apple can amass 50 million subscribers for TV+, about as many as it has for its music-streaming service, it would add $US3bn in annual sales, estimates Toni Sacconaghi, an analyst with Bernstein Research. That steady subscription revenue would help reduce iPhone dependency — though it is tiny compared with Apple’s $US250bn in total annual sales.