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For A Few {Dollars} Much less: Apple TV+ and Arcade Pressures Everybody Else's Costs

Apple headed to the bargain bin this week when it came to pricing for both its game-streaming service and its subscription video service. No one’s worried about CEO Tim Cook covering his next meal with these reduced prices; after all, the company once again jumped above $1 trillion in market capitalization after the announcement.

But Apple’s pricing positions may ruin dinners for a few competitors who’ll need to review their business models in coming weeks.

Apple is still charging plenty of money for plenty of the products it announced Tuesday. Indeed, one Washington Post take was headlined “iPhone 11 First Look: That’s An Awful Lot of Cash for A Camera.” While true, I still can’t make a call with a Sony mirrorless camera, however capable they are at taking amazing photos.

But there are deals too, especially in the soon-to-be-crowded sectors of streaming video and games.

Let’s start with that $4.99 monthly price for Apple TV+, the service that will showcase some $6 billion worth of premium scripted programming such as The Morning Show

That high-profile series, about an embattled morning news program, reportedly has cost hundreds of millions to make, more than even HBO’s final season of Game of Thrones. Many other TV+ programs have been slow to arrive, which will make for a slim set of viewing options on debut day.

But that $4.99 undercuts Disney+, set to debut 10 days later for $2 a month more.

A near-bulletproof Disney+ is unlikely to be notably affected here, especially in the bundle Disney announced with Hulu and ESPN+ for $12.99. But for everyone else who’s jumping on the SVOD ship, Apple’s prices will only complicate their plans.

HBO Max already had seen a lot of pushback over a planned $17 a month price, for a service that won’t launch until April. Will AT&T need to cut prices to get adequate sampling and sign-ons?

And what does this price do for the business model of Comcast’s unnamed service, or that Vudu redo from Walmart?

I’d be particularly remiss if I didn’t wonder what this means for Quibi, which is already trying to raise more money beyond its initial $1 billion in funding, and just lost two senior executives.

The TV+ price is $3 a month less than the ad-free version of Jeffrey Katzenberg’s mobile-only service, and $1 a month less than the ad-supported version. And it, like HBO Max, isn’t scheduled to launch until April.

Now Quibi faces a far richer, far cheaper competitor that also happens to make the mobile devices on which Quibi would hope to find many viewers. And that competitor is already getting criticism for advantaging its own apps on the iTunes Store over those of competitors. None of this looks like promising.

Apple’s service will debut with a thin initial selection of shows, far less than Netflix, and even less than what Disney+ showcased last month at D23.

But at this price, I’m guessing many people are inclined to ump on and stay signed on, rather than churning on to the next SVOD option a few weeks later. And that just means less money for the next service to arrive.

Another key differentiator will be Apple’s international ambitions. It will debut in 100 countries. Disney+ will launch in a handful of countries initially, with plans to be widely available with two years. Quibi won’t be anywhere but the U.S. and Canada because of the complexities of international rollout.

And though I’m skeptical how much TV+ will affect Netflix, there is one place where its new offerings could really matter: in India. Apple is offering a bargain mobile deal for TV+ in India, the equivalent of $1.40 a month. 

That’s about half the price of the bargain India mobile deal that Netflix announced this summer. The Subcontinent, about to become the world’s most populous country, may be the most attractive growth opportunity for Western media companies, though it’s a complicated place to grow a media business.

If Apple can grab up some of the mobile audience that otherwise might opt for Netflix or other providers, it could crimp their growth prospects significantly. And after the market pasting Netflix took last quarter when it missed subscriber growth expectations, problems in India could lead to problems everywhere else.

We may see something similar play out on the game-streaming side, though it, like India, is another land altogether.

Arcade, at $4.99 per month, could undercut the business models of services from Google, Verizon and others, while providing access to around 100 games from big-name creators.

The difference here is in target markets. Google, Verizon, Ubisoft, EA, Steam and other streaming game services seem to be targeting hard-core PC and console “gamers” who want to be able play their chosen titles (and share their progress and winnings) on even a moderately competent hardware device, anywhere they are.

Apple, by contrast, seems to be setting up Arcade to connect to the vast market for mobile games, a very different demographic and mindset that traditional gamers.

Market analyst NewZoo says more than half the world’s $134 billion in game revenues last year came from mobile.

And Arcade’s subscription approach could ease some of the worst parts of the mobile market Apple and the iPhone helped spawn, however unintentionally. These days, most games free-to-play titles featuring in-app purchases designed to wring every nickel from compulsive “whales” among their consumer base.

If you’re playing, and paying, to feed your jones, you may welcome the option of spending $60 a year for all-you-can-eat access to a bunch of good to great titles. It may be disorienting to not have to pay to be successful in a game, but I’m guessing plenty of people would love the opportunity to find out.

It’s harder to confidently project where an Arcade-driven shift in market preferences might go, but it could impact not just Stada or Steam, but also mobile revenues for Activision, EA, Disney, Ubisoft, Jam City, and many other established publishers.

Once again, Apple may have quietly set off a trend., especially if the economy sours in coming months. Sinclair’s CEO Chris Ripley called the SVOD business a “sea of red” last year. Apple’s move may dump even more companies into that sea.


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