SAN FRANCISCO/LOS ANGELES (Reuters) – Apple Inc is expected to finally lift the curtain Monday on a mysterious, the many years of effort to build a television and film offers designed to compete with the big media companies and the increase of digital services revenue as iPhone sales taper.
FILE PHOTO: The logo of Apple is seen in a shop in Zurich, Switzerland, 3 January 2019. REUTERS/Arnd Wiegmann – RC1889786FE0/File Photo
“It is show time” is how the iPhone-maker will be invoiced with the case scheduled for the Steve Jobs Theatre at its Cupertino, California, headquarters. Analysts believe that it will be the technology company the first optimistic start event that does not come with new gadgets or hardware.
Hollywood celebrities are likely to trek to the Apple house to greet the debut of a revamped Apple TV digital storefront. Apple has commissioned the programming of A-list names, such as Jennifer Aniston, Reese Witherspoon, Oprah Winfrey and Steven Spielberg.
The Apple original shows will be offered in addition to the ability to subscribe to the content of Viacom Inc. and Lions Gate Entertainment Corp Starz, among others, sources have told Reuters.
Apple will find yourself in a crowded market where rivals such as Amazon.com’s Prime Video and Netflix Inc. have spent heavily to capture the viewer’s attention and dollars with the award-winning series and movies.
The great tech war for the viewers ignited a consolidation wave between traditional media companies ready to take part in the battle. Walt Disney Co., which bought 21st Century Fox, and AT&T Inc, which bought Time Warner Inc., a plan to start or the testing of new streaming video services this year.
Apple’s jump into original entertainment signals a fundamental shift in the business. Sale of hardware money-makers of the iPhone, iPad and Mac were stagnant or flat in its most recent fiscal year. Without a category-defining new gadget is announced to the public, Apple is expected to rely on the sale of subscriptions and services, such as video -, music-and hardware insurance.
The revenue of the “services” segment includes the App Store, iCloud, and content-activities, such as the Apple Music – grew by 24 percent to $37.1 billion in fiscal year 2018.
The services segment accounted for only about 14 percent of Apple’s total $265.6 billion in revenue, but investors have pinned their hopes for growth on the segment.
Apple TV press is shrouded in mystery. Even the producers of Apple’s shows can be uncertain about many of the details about when and how the public will be able to see their work.
On Monday, Apple is expected to unveil an Apple-News-subscription option with the contents of the large publishers, and a new credit card with Goldman Sachs to strengthen Apple Pay.
NOT ON NETFLIX
While Apple is planning $2 billion on original shows of this year and has hired a Hollywood veteran to oversee them, it is unlikely that on Netflix and Amazon directly through the libraries of the older shows. Instead, the model is expected to look more like the App Store, offering paid subscriptions to other media companies, programming and keeping a cut of the revenue.
Prior to the launch, Apple offers negotiated that left Apple-bundle of sales and networking at a discount, to replicate a business model of the cable-TV industry, a source familiar with the matter said.
Apple’s goal, other sources have told Reuters, is to work with tv shows in one place to make it easier to find, buy and view. Apple has worked to make it easier to watch the shows on the traditional television manufacturers such as Sony Corp., VIZIO Inc., LG Electronics Inc and Samsung Electronics Co Ltd.
Apple’s pitch to Hollywood is that the potential reach of hundreds of millions of viewers. The company said in January there were 1.4 billion active Apple devices, 900 million iPhones. It has positioned that as leverage against Netflix 139 million customers worldwide and 100 million subscribers of Amazon Prime shipping program, including the video service.
But the Silicon Valley company has a history of making rapid progress to come from behind: launch of the Apple Music streaming service year after rival Spotify Technology SA, but has garnered 50 million listeners, nearly half of Spotify’s 96 million premium subscribers. And Apple in January said the Apple News service had 85 million active users after its release for less than four years ago.
Reporting by Stephen Nellis in San Francisco, Lisa Richwine in Los Angeles and Kenneth Li in New York; Editing by Nick Zieminski