This Is Why Apple Will Lose the Streaming War

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Apple is about to announce its own streaming service. The media speculate that the plan will cost consumers $9.99 a year, though there may be an introductory offer that is free. Apple’s total investment in the effort will be in the billions of dollars, as it hopes to give a boost to its Services segment, the growth of which is meant to offset falling iPhone sales. It is Apple’s entry into a field so crowded, and jammed with established brands, that Apple cannot buy its way in or use its powerful brand and hardware distribution platform to get into the first tier.

The largest barrier to Apple is the “big two” of streaming, which together have a base of subscribers that numbers over 250 million. Amazon has over 100 million of these via its Prime shopping, free shipping and member awards service. Streaming is another part of an annual subscription that costs $12.99 a month, or $119 a year. Amazon already has made investments of hundreds of millions of dollars in original programming, and it will lift that well into the billions. It has the equivalent of its own in-house production operation.

Netflix, the other company that rules the streaming industry, has an even bigger footprint. It has 160 million subscribers worldwide, about 60 million of which are in the United States. It has three levels of subscription, which run from $8.99 to $15.99, depending for the most part on how many screens people want to use when steaming. Netflix may be investing more in original programming that Amazon. It has gone deeply into debt with a bet that this will bring it more subscribers, as well as hold the ones it already has. Also, like Amazon, its brand as a top-tier streaming service has been established for years.

At the next tier of streaming companies, Hulu is owned by Walt Disney and Comcast’s NBCUniversal. It offers live programs, TV shows and movies from a number of studios and TV networks. The service price starts at $5.99 a month.

WarnerMedia (which owns HBO), Disney (which owns Marvel and Pixar) and NBCUniversal all plan subscription services of their own. The most anticipated of these is Disney+, which will launch November 12. It has pulled programming from other streaming services so it will have an exclusive library of its blockbuster films. Disney believes this will be enough to build up tens of millions of subscribers.

Below these tiers are a number of other services, including PlayStation Vue, FuboTV, Pluto TV, The Criterion Channel, YouTube TV, Acorn TV and Britbox. Indeed, the market is crowded. There is a flood of new streaming services headed our way.

Apple is the last company to the party, and it is already full to overflowing. They have picked services according to existing preferences. It does have a huge base of potential streaming customers. However, most of these people already have a service, or two or three.

But Apple is a strong brand — it is in the company of the world’s most valuable brands — and the company believes that people who own iPhones, Macs and iPads will use its streaming services.