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Analysts: Apple kickstarts 2019 SVoD evolution

March 25, 2019

In anticipation of the scheduled Apple announcement, the Digital Media and Entertainment Team at research and knowledge-based consulting company Futuresource Consulting have shared their thoughts on what is expected to be new SVoD service launch.

“It’s a move that has been anticipated here at Futuresource Consulting and across the industry for a number of years now,” they say. “We’ve been playing out the scenario in our recent Futuresource Video Insights reports and evaluating the market impact.”

According to the team, the Apple SVoD service will play a key role in the evolution of SVoD in 2019, particularly in the US. “This, combined with the high-profile Disney+ service, expected later in the year, will create something of a renaissance. And with more than 20 million Apple TV owners worldwide, who have demonstrated an insatiable appetite for content and a high capacity for entertainment spend, there’s a ready-made loyal audience just waiting to switch on. Factor in Apple’s new partnership with Samsung confirmed earlier this year, placing an exclusive iTunes content app on the South Korean manufacturer’s TVs and it has a solid base to build on. As nearly 80 per cent of Netflix users say that watching the service on a TV is their preferred way to view, it’s a smart move. Watch out for future partnerships as the game plays out, with pay-TV integration also a possibility,” they suggest.

“Apple will be nothing without the necessary content markers. Even with its well-entrenched fan base, a strong and wide content offering will be needed from day one. Comparisons with Netflix’s content will be inevitable, and Apple will require a powerful portfolio to attract and retain subscribers. They’ll need to plan continued forays into exclusive or original content, but given Apple’s likely key subscriber demographic, these customers will be taking Apple as an additional service, rather than cannibalising their existing video subscriptions,” they advise.

“Looking to the wider landscape, we don’t expect the service to impact growth of the leading players, Netflix and Amazon Prime Video. Futuresource research shows there’s a continuing customer acceptance of multiple subscriptions. In the USA, there are nearly 80 million households with SVoD services, and on average each of these households takes two services. Our research suggests that this will trend towards three subscriptions in the coming years, although this will be marginally lower in Europe. However, the sheer number of SVoD services available could see consumers become more comfortable with trial memberships and special offers, dipping in for short periods and then cancelling subscriptions as they become increasingly aware of the number of services they are taking,” they say.

“There’s also an opportunity here for Apple to become a content super aggregator, similar to how Amazon is carving out the landscape with Amazon Channels,” they add.

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