Apple Inc. (NASDAQ: AAPL) has set March 25 as the date when it will unveil details of its new streaming service that is designed to compete with Netflix.
The company behind the iPhone has said that it plans to take on competitors such as Amazon and Netflix with a new streaming service and magazine subscription bundle. The company plans to use the same upcoming event to also preview additional "Apple Pay" features, including a new iPhone credit card partnership with Goldman Sachs Group Inc (NYSE:GS)
As consumers hold onto their handsets longer and sales of the iPhone slump, Apple is turning to services that can provide recurring revenue as the company’s next growth area. Apple forecasts sales from its streaming service will top US$50 billion a year by 2021.
The upcoming video service, which will likely be integrated into the iPhone, iPad and set-top box’s TV app, will include two new features: shows funded, bought or developed by Apple, and programming from outside media companies. Apple is currently in talks with AT&T Inc (NYSE:T), the owner of HBO; CBS Corp. (NYSE: CBS) and the Showtime network Starz, among others.
The current Apple TV app already lets customers access services such as HBO. But people who buy those individually are kicked to Apple apps to view shows and movies. Keeping customers inside Apple, a strategy that’s worked in music, could help deliver more than 100 million subscribers within the next five years. Apple forecasts total App Store subscriptions will top 500 million by 2020, up from 360 million today.
Netflix (NASDAQ: NFLX) and Hulu, two established streaming companies, aren’t slated to be part of Apple’s new service because they don’t want to hand over control of their users’ experience or viewing data. Netflix has stopped letting customers subscribe via the App Store, cutting Apple off from a lucrative share of revenue.
While video will be the centerpiece of Apple’s March 25 announcement, the company also plans to unveil its magazine service. The new offering, which Apple employees have been testing for months, will allow consumers to subscribe to a bundle of magazines and newspapers. It’s a similar offering to the app "Texture," which Apple acquired a year ago.
