Will Apple’s $1 billion investment towards video streaming services fuel its next phase of growth?

It seems everyone wants a stake in the video streaming pie! After Disney shocked the world with the announcement of its video streaming service, it is the turn of Apple to throw its hat in the ring. With this announcement, Apple will join the likes of Netflix, Amazon Prime Video, HBO and a host of local streaming services that are battling for viewer screen time.

This announcement shows Apple’s commitment towards creating its own programming for its users. Earlier this year, the Cupertino-based tech giant had tested the waters with its ‘Carpool Karaoke’ and ‘Planet of the Apps’ which launched on Apple Music. According to a report, Apple plans to launch around 10 original shows with this budget. It remains to be seen how Apple would launch this new service, but a separate video streaming app is quite likely.

Apple maybe a tad late in entering the video streaming space. With Disney also planning a launch soon, it is likely that the market will be dominated by content-heavy players such as Netflix, Amazon Prime Video and Disney. To add to it, Apple also faces competition from newer platforms such as Facebook, YouTube and Twitter. This leaves Apple competing for a very small chunk of the pie, unless it is able to deliver a mega-hit like Game of Thrones or Breaking Bad.

That being said, Apple is one of the few companies that can make it happen. Apple already has an enviable ecosystem of devices and services. While Apple Music has helped the company fill a small void, it’s video streaming service might offer a crucial value-addition to its users making it perhaps the only complete ecosystem of its kind. It may also help the company own a large part of the consumer’s living rooms – a crucial need for Apple if it wants to become the smart home hub of the future.

In addition, amidst declining revenues from iTunes and flat sales of smartphones, the video streaming space may give Apple a new way to monetise the ecosystem till it is able to deliver its next blockbuster hardware product. It will also be able to get its video service off the ground quickly since it can push the service to the existing iOS users quite easily through updates.

Apple’s current investment of $1 billion does look paltry compared to streaming giant Netflix who easily spends six times the amount on content alone. However, Apple may just be testing the waters before going in for the big dive. With its huge cash reserves, Apple is in a better position than Netflix or Amazon to pump more money to expand its video programming footprint.

The bigger challenge for Apple, of course, would be to create world-class content for its users. It’s first attempts at original content – ‘Carpool Karaoke’ and ‘Planet of the Apps’- were nothing to write home about. Apple has taken the right step by hiring former Sony Pictures Television executives Jamie Erlicht and Zack Van Amburg to spearhead its video programming efforts. These two experienced executives have their work cut out as they hunt for the next big programming idea.

More interesting to understand would be Apple’s long-term vision about its video streaming service. Netflix offers a pure-play video subscription service with the simple goal of making viewers spend more time on the platform. Amazon offers it as a value-add for its Prime subscribers. Disney will likely bundle its streaming service with its experience around movies, merchandise and theme parks.

How will Apple use the content? Will it use it to propel sales of Apple devices? Or will it launch a new subscription service to bolster revenues? Or even offer it free to lure more users into its ecosystem and monetise them with their smart home services? The possibilities are many, and if Apple has to succeed with its newest pet project, it better have a good answer in mind!

The author has a keen interest in consumer technology and has published a lot of articles on various online platforms. He is currently a part of Cerillion Technologies, a London-based software company.

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