On Monday, Apple announced its Apple TV+ service, which will launch this coming fall. Many video streaming services both create their own content and distribute content from others, and Apple TV+ will be no exception: It will aggregate video content from TV networks including Showtime, HBO, Starz, CBS All Access and Cinemax, and Apple will also produce its own movies and shows on a $1 billion budget announced in 2017. Creative partners include none other than Steven Spielberg, Oprah, Reese Witherspoon, Jennifer Aniston and J.J. Abrams.
Apple did not disclose the subscription price, there are no trailers yet for the original content, and we don't have any sense of the app's design. Still, can we predict whether Apple TV+ will succeed in a very crowded video streaming space? I say yes, as follows.
The Potential
First, let's assess the potential of Apple TV+ with the information we have. Apple has already lined up some top TV networks, such as the ones listed above, to play an important role as a streaming aggregator. In addition, this third-party content will play directly in the Apple TV+ app, as opposed to directing play requests to the respective streaming service, which is what Apple TV currently does. With this added function, expect a top streaming experience that will lure many of Apple's avid and loyal users.
However, notably absent in the list are some top content providers, with Netflix being the most noticeable. Also absent is Disney, which will launch its own direct-to-consumer streaming service, Disney+, this fall. Then there is Hulu, which will be part of the bundle but reportedly will not play inside the Apple TV+ app.
Why haven't key content providers joined the Apple streaming bandwagon? Well, it could be that they are simply seeking the best deal by negotiating hard, because they can. But it could also be that they realize an Apple TV+ subscription could cannibalize their own subscriptions, so they may not join Apple TV+ as part of a concerted distribution strategy.
For example, of AT&T's Warner Media properties, which include HBO, Turner (TBS, TNT, CNN, among others) and Warner Bros., HBO was the only one in the Apple TV+ line up. By excluding most of its content, Warner Media may be protecting the launch this fall of its own streaming service. On the other hand, it could help Apple TV+ that HBO is in its channel list because it is a premium content brand that can drag consumers and other content providers to the platform.
Independent of the third-party TV channel lineup, Apple is likely to use original and exclusive content as a way to lure many subscribers to the Apple TV+ platform. And with top creative talent, there will be enough buzz among consumers and in social media to create a cascade of subscriptions.
The Prediction
Apple TV+ will have challenges coming late to the video subscription market, missing some stellar content as an aggregator, and facing unprecedented competition in original content from existing players like Netflix and from Disney+ and Warner Media, which will be launching practically at the same time. Yet it has a solid lineup of partners to create cool content, and perhaps most important, it has a massive user base. Oprah in the announcement hinted that Apple has a "one-billion-plus, strong" user base.
With that, let's do some simple, conservative math. Let's assume just 2% of Apple's one billion users subscribe to Apple TV+ in the next three years. That's 20 million subscribers, less than half of the 50 million users Apple Music has amassed in the last three-plus years. But it's close to the current 25 million Hulu subscribers, and four times the five million HBO Now subscribers. To me, these conservative estimates spell success.
By leveraging Apple's massive global user base, Apple TV+ will succeed. The only question is the extent to which it will make the streaming space bloodier starting in fall, together with the other two top entrants, Disney and Warner Media.
