Revolutionary Measures

Apple bets on reputation to drive streaming success

This week’s news that Apple is expanding into multiple new markets, including TV, gaming and finance is not unexpected. The market for iPhones is becoming saturated, with revenue from iPhone sales dropping 15% in the last quarter. So, increasingly Apple wants to be seen as a services company – it already has a successfully streaming product (Apple Music) and generated $10.9 billion of revenue from services, more than from selling Macs or iPads, in Q4 2018.

The announcement is also unsurprising for two other reasons. We now live in an experience economy, where people are more likely to rent or stream products and services than to buy them. And it joins a stampede of companies that want to be the digital provider of choice, for everything from entertainment and news to healthcare and control of your smart home.

black crt tv showing gray screen

Photo by Burak K on Pexels.com

This trend is turning digital companies that previously co-existed relatively harmoniously, such as Amazon, Apple, Google and others, into competitors. Combined with the rise of Netflix, this is disrupting the business models of existing content providers/film studios, leading them to scale up (witness Disney’s purchase of Fox) to try and compete.

Apple’s glitzy launch featured a host of A-list celebrities, from Oprah to Steven Spielberg and Big Bird from Sesame Street as it promised to spend $1 billion a year on original content. However, it is up against the likes of Netflix (which spent a reported $12 billion last year), and Disney, which counts best-selling franchises such as Marvel and Star Wars amongst its properties.

So can Apple succeed in streaming? After all, its existing Apple TV service has never really taken off. There are two factors it is betting heavily on:

1.Reputation as the champion of privacy
Throughout all the storms that have hit tech companies around privacy and use of personal data, Apple has aimed to position itself as the champion of the consumer. It has repeatedly stressed that it won’t share user data with advertisers, and even refused to allow the FBI to access locked iPhones belonging to criminals and terrorists. Apple boss Tim Cook continually reiterated the focus on privacy at the launch event, and clearly it is one of the ways it is looking to differentiate itself.

2.Market power
As Oprah said of iPhones “they’re in a billion pockets”, and Apple clearly has a huge, loyal fanbase to appeal to. That’s what has driven its services success to date, and even if it can only convert a small percentage of customers to its new offerings, it will be in the money. However, an awful lot of iPhones are in markets, such as China, where the new services are unlikely to be available, while most customers already have subscriptions to the likes of Netflix. The new Apple TV+ will allow consumers to bundle some existing services (such as HBO and Hulu), but not Netflix. And while it will be available on other hardware (such as Sony TVs), making it appeal to non-Apple owners may prove difficult.

So, when it comes to services and effectively its future revenues, Apple is essentially betting on its reputation rather than the deeper content reserves of its rivals. Can it take a bit out of streaming? Whatever happens expect a long and bruising battle as more and more companies try to differentiate themselves from the chasing pack and use communications and reputation to dominate the market.

March 27, 2019 Posted by | Creative, Marketing, PR | , , , , , , , , , , , , , , , , , | Leave a comment