INSIGHTS

  • Kirby Grines

For Apple, the future of TV may be bundles

Updated: Sep 8

And the advantages for Apple and the disadvantages for media companies

Last year, I wrote about how Apple TV was considering bundling TV+ with other Apple TV channels in What Bundling Services Means to Disney and Apple in the Frenemy Economy, and it appears that Apple is teaming with ViacomCBS for the first bundle, which would offer a generous discount of about 50% for customers who buy CBS All Access and Showtime together. Per a Bloomberg report, subscribers to Apple TV Plus (which costs $4.99) will be able to get both CBS All Access and Showtime streaming services for an additional $9.99 per month. That’s a bit less than half the price of subscribing to CBS All Access ($9.99 per month with no ads) and Showtime ($10.99 monthly) separately.


It’s been long-rumored that Apple was going to introduce a mega-bundle that includes Apple Music, Apple TV+, and more in a single subscription. 9to5Mac initially found evidence supporting this based on iOS 13.5.5 beta code.


As the company’s in the midst of reinventing itself as a services company, bundling services is probably the best way for Apple to amass as many subscribers as possible.


Apple Music, which recently added two new online radio channels and renamed its flagship station Apple Music 1, has done daily well and currently accounts for around 60 million subscribers. This is mainly because the app’s pre-installed on iPhones and in the pockets of millions of people.


On the other hand, that strategy hasn’t worked out so well for Apple TV+. Depending on who you ask, the service has anywhere from 10 to 33 million customers.


In addition to its test of bundling Apple TV+ with Apple Music, Apple has previously held conversations with record labels about the possibility of offering an entertainment super-bundle. Those conversations got were met with skepticism when some labels feared that margins could take a hit if the company undercut the $10 monthly price it currently charges for its music service.


Nonetheless, Apple still controls its bundling destiny. While the company will have to license music rights and share revenues with record labels, Apple solely owns the rights to the content currently being distributed on Apple TV+. And by the way, those programming costs are fixed.


Theoretically, Apple could bundle music and TV together for $12.99 per month, which shouldn’t put much pressure on music rights holders to offer a discount.


It’s Showtime!

Apple debuted Apple TV+ and the launch of the Apple TV Channels program at an event called “It’s show time” in March of 2019. Perhaps they were hinting at something else, such as a future bundle of Apple TV+ and Showtime? Let’s just file that one in the coincidence column.


According to Bloomberg, Apple is teaming up ViacomCBS on a bundle that combines TV+, Showtime, and CBS All Access.


Per the report, Apple TV+ subscribers will be able to get CBS All Access and Showtime for an additional $9.99 per month, which is about less than half the price of All Access ($9.99 per month w/ no ads) and Showtime ($10.99 per month ) separately.


For Apple

This move is incredibly smart and will drive TV+ customers, generate first-party data, and get more people using The Apple TV App, which in my opinion, will be Apple’s holy grail as it relates to TV in years.


For ViacomCBS

Without a doubt, ViacomCBS will see an increase in subscribers; however, it’s important to note that subscribers do not always equal customers. And in this case, Apple will own the customer relationship and subscribers will simply be paying for access (pun intended) to All Access and Showtime. ViacomCBS will be giving away margin, direct-customer relationships, and first-party data, which is the only grail for any OTT service.


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