Apple could launch a Netflix competitor early next year, although success is no guarantee
A number of times we have told you that Apple is aiming to hit $50 billion in services revenue by 2021 from 2017's $30 billion. The company is forced to focus on services as iPhone shipment growth is waning. In fact, Apple will no longer release the number of handsets it sells during its quarterly earnings reports. So it is up to services like Apple Music and the revised Apple News to bring in subscription dollars. The latter is expected to offer premium magazine subscriptions from the Texture app that Apple purchased earlier this year.
The numbers mentioned in a CNET story reveal why Apple can do very well with a new focus on services revenue. With more than 1.3 billion iPhone units active around the world, the owners of these handsets are all possible subscribers to whatever services Apple offers. At the end of its fiscal fourth quarter in September, Apple had 330 million subscribers shelling out cash, up 50% year-over-year. These paying subscribers generated revenue of $37.2 billion during Apple's 2018 fiscal year.
To build up more momentum in the category, there is speculation that Apple will launch a streaming video service early next year. This could be a competitor to several of the big video streamers out there now including Netflix, Hulu and Amazon Prime. But just placing the Apple name on such a service is no guarantee of success. After all, late next year the Disney+ video streaming service is expected to be launched. And the House of Mouse not only has a brand that rivals Apple, it also has a large inventory of films and cartoons that are appropriate for children and adults. However, if the rumors are right, Apple will launch its service in the beginning of 2019, allowing it to come to market before Disney.
Apple has reportedly spent $1 billion to have content developed by high profile Hollywood types including Steven Spielberg, the master of the last-second twist M. Night Shyamalan, and Oprah Winfrey. The company also signed up two top executives from Sony Pictures Television to help create new shows for the service.
Apple Music has been a huge success for the company. After all, despite Spotify's huge head start,Apple took over the top spot in U.S. subscribers from Spotify during this summer. That was just three years after Apple started offering its streaming music service. But streaming video is much different since each major player has its own original content that draws paying subscribers. Even if Apple does everything right in terms of creating and marketing a streaming video service, ultimately its success could boil down to original shows that it greenlights for production.
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