The Apple TV+ Rollout

Bloomberg:

With its first foray into video subscriptions, Apple is weighing different release strategies for shows. The company is considering offering the first three episodes of some programs, followed by weekly installments, the people said.

Apple hasn’t announced pricing for Apple TV+, but is weighing $9.99 a month, the people said, which would match Apple Music and Apple News+

I have been expecting a $9.99 base subscription price for Apple TV+ ever since it was announced. Apple is pitching it as a premium video service and premium video services are not free, or free perks when you buy an iPhone or whatever some people were hoping. Apple is investing billions into original content because they want to make billions, driving Services revenue higher.

The question for me has always been how they get this off the ground. With a clear aversion to licensing a library of back-catalogue content, launching this service is always going to be tough. Can Apple really debut a TV subscription that offers 5-12 shows and expect people to pay for it?

The proposition for Apple TV+ in two or three years time is palatable, when the company has several seasons in the archive and a roster of shows and movies numbering in the hundreds. Those first months, the first year even, that’s the really hard part. The launch period is also when the service will have the most attention, the most scrutiny, it’s the time when people will make up their minds if Apple has got it right or wrong.

Bloomberg effectively says Apple’s TV+ will launch with at least five shows, and be priced at $10 per month. The publication says Apple is considering releasing the first three episodes of a show at once, and then transitioning to a weekly broadcast schedule.

I think the only feasible path for them is to price Apple TV+ at the $10 level, but pair it with a really long trial. We’ve seen them do three months for Apple Music, and one month for Apple News+. A three month trial for TV+ would mean the day-one accounts would get to see most of one season of a debut show, so maybe Apple’s plan is to get someone hooked on a storyline before actually taking their money.

What if Apple TV+ offered a six month free trial? This would be the longest trial for any Apple property to date, but it might just be what they go for. It gives Apple some breathing room to expand its library of aired originals, build buzz and start accruing viewer retention. Apple has said it will be adding new films and shows every month, so six months is a long enough time period that the service would actually have some meaningful intrinsic value by the time people actually had to start paying for it. They could time it so season two of of their hero titles, like “The Morning Show” and “See”, kick off just as the free trials come up for renewal.

Apple’s finance SVP Luca Maestri even hinted as much on the last earnings call. He was pretty open about saying “all these services there is a trial period upfront, it is going to be different trial periods” and “the road to monetisation takes some time”. I think he was priming investors to cool off a bit and to not expect the video service to contribute to 2019 holiday quarter earnings.

On a related note, this week Guilherme Rambo found code references to indicate that Apple is currently planning a $4.99 monthly price for the Apple Arcade subscription. I think there is a good chance that will change by next month’s announcement; it is just too cheap. Apple will not want one of the News/TV/Arcade trio to significantly undercut the others. News+ has set the $10 benchmark and TV+ certainly looks to be heading in the same direction. Arcade is a strong offering and warrants the premium positioning of its cohorts. $7.99/month is the lowest it will go.