At first the launch of streaming services in late 2019 / early 2020 seemed very serendipitous. What better time to capture an audience than a global lockdown? Apple launched with a handful of shows leaving viewers at risk of going right through them and being left with little else to keep them paying and subsequently leaving. Apple doesn’t disclose subscriber numbers let alone turnover but a recent report from Variety shows that recent use is low amongst subscribers with its “must-have” rating suffering, leaving the service in a weak position for retention.¹ Based on its Emmy performance, the quality of Apple’s programming is not in question. The problem is pipeline.
As the impact of Covid-19 was felt across productions, Apple announced in March that all its shows produced by outside studios had been suspended. Slow Horses, its production with Uma Thurman and Gary Oldman, stalled in March and only resumed pre-production in late September. Unlike Amazon, Netflix and Disney, Apple tends to avoid filling its library with backcatalogue inventory unless it is behind creating a new season such as The Long Way Up, Fraggle Rock or Snoopy. This means Apple needs to keep as many subscribers as possible on board for when new shows are released over the coming months as production slowly catches up.²
Apple needs to keep as many subscribers as possible on board for when new shows are released over the coming months as production slowly catches up.
It’s harder to get someone to resubscribe after they’ve made the decision to leave, especially as the already mature streaming space continues to provide more competition.
The real reason you’re getting more free TV
There is a bigger play behind keeping subscribers on board — Apple One. With the launch of the service bundles just weeks away, it’s essential Apple maintain subscriber numbers for each of their services so that when households come to decide “is Apple One worth it?” they already have AppleTV+ in the consideration mix.
Apple One is a bundle that others should fear. And some clearly do — Spotify was quick to make allegations of anti-competitive behaviour following the keynote announcement. Apple One makes it clear that Apple TV+ isn’t competing with Netflix, YouTube and Disney+, but Spotify, Peloton Digital and Stadia. Locking customers into the bundle could present a huge win.
Apple’s first source of revenue remains hardware, and a bundle is arguably a mature product for loyalists. But whilst a bundle may not be important to switching hardware customers from competitors, it may certainly help switch a Peloton digital subscriber to Apple Fitness+. Apple is taking a page out of its own rule book acknowledging that a compelling package reduces churn and locks customers into an (already expansive) ecosystem that has proven itself critically successful to customer retention. And as buyers slow down their iPhone upgrades to every 4 cycles, a wide ecosystem subscription package may well provide the incentive to return to an annual upgrade thereby bolstering Apple’s lead revenue stream once again.
Retaining customers in the face of streaming giants may seem like the first reason Apple is giving you more free TV, but it is just a lever in a bigger move. Apple One and its consequent gains beyond streaming, is the real win.
¹ Pricing also comes into play. As a free 12 month gift to Apple device buyers, it appears that a large swathe of the estimated 33.6m Apple TV+ subscribers don’t pay for the service at all. Apple is a great example of price affecting the value perception of a product, however even under the halo of Apple’s master brand this works both ways. It’s likely that free subscribers feel less for the service than had they paid for it.
²This also provides an explanation as to why they have reverted to weekly content releases rather than dropping entire seasons in one go — they need to keep people tuned in as they slowly release new content.