Taking too long? Close loading screen.
Connect with us

Business

Has Apple’s Streaming Bet Paid Off?

Published

on

September 30, 2020 6 min read

This story originally appeared on PCMag

A year ago, the odds that Apple could buy its way into the elite club of video streaming services like Netflix and HBO were not in Cupertino’s favor. Even with almost $200 billion in the bank, the idea of Apple creating quality content that critics and viewers alike would happily consume seemed just beyond the technology company’s reach.

One year, and dozens of TV shows and movies later, Apple TV+ appears to have beaten the odds — for now. Its prospects seem brighter than those of Quibi, at least.

The streaming landscape was already crowded in 2019 when $4.99-per-month Apple TV+ and then Disney+ landed in November. This year saw the addition of HBO Max and Peacock. Apple TV+ probably isn’t going to topple Netflix anytime soon, but that shouldn’t be the goal, says Jeffrey Cole, Director and CEO of the Center for the Digital Future (CDF) at USC Annenberg.

“We’ve always thought that people are going to subscribe to two and a half of these services at most and whatever risk Netflix was at when Disney and Apple entered the scene has disappeared,” Cole says. “I think Netflix has locked its place in for the next couple of years.”

In a July letter to shareholders, Netflix acknowledged that “two of the most valuable companies in the world, Apple and Amazon, are growing their investment in premium content,” but said “instead of worrying about all these competitors, we continue to stick to our strategy of trying to improve our service and content every quarter faster than our peers.”

“The future of Apple TV+ can be a good one, but it has to be a permanent giveaway if you buy Apple equipment,” Cole says. “[Apple] just became a $2 trillion company and Apple TV+ is a rounding error, so I don’t think the future of the service is collecting five bucks a month.”

Who’s Subscribing to Apple TV+?

As of March 2020, the majority US consumers in all age ranges had at least heard of Apple TV+, according to Statista—though most had not subscribed.

Share of adults with an Apple TV Plus subscription in the United States as of March 2020(Image: Statista)

It was most popular with Gen Z (24 years old and younger), 11 percent of whom were subscribers. A month later, that had shifted slightly; 38 percent of Apple TV+ subscribers were age 25 to 34, and about 16 percent were 18 to 24, according to a separate survey.

When asked by Statista to name the services from which they’d purchased music downloads or streaming services in the past year, Apple TV+ landed at No. 10 with 12 percent. Netflix (82 percent), Amazon Prime Video (65 percent) and Hulu (51 percent) were the top three.

graph showing the most popular video-on-demand providers in the US(Image: Statista)

A major focus for video-streaming services big and small is original content. In PCMag’s review last fall, we noted that “Apple TV+ is impressive from a technical standpoint, but its current library of original content is not competitive with that of top-tier video streaming services.”

A high brand awareness suggests Apple is pushing the right marketing buttons, but it likely needs at least one must-watch, mass-appeal show or movie. To date, Apple’s most high-profile “get” — besides The Morning Show, perhaps — has been Tom Hanks’ Greyhound. When the movie’s theatrical debut was cancelled due to COVID-19, Apple opened its wallet and purchased the rights for Apple TV+ viewers.

[embedded content]

Not getting to see the film on the big screen was “heartbreaking,” Hanks told The Guardian. “I don’t mean to make angry my Apple overlords, but there is a difference in picture and sound quality that goes along with [switching from the cinema to TV],” he said. Hanks later clarified that Apple “saved the day” by acquiring the film.

“Apple TV+ and Disney+ have done well, but ran into the problem that their catalogs weren’t deep enough, they weren’t ready for the kind of viewing during a pandemic that Netflix was ready for,” says CDF’s Jeffrey Cole. “It’s one of the reasons why Disney had to divert programming like Artemis Fowl and Hamilton on to Disney+, and one of the reasons why Apple bought Greyhound.”

promotional photo for The Oprah Conversation on apple tv plus(Image: Apple)

Beyond Greyhound, Apple also produced a new, largely on-the-fly episode of Mythic Quest — shot remotely on iPhones with a working-during-quarantine premise. The pandemic also likely helped accelerate the debut of Oprah Winfrey’s weekly show, The Oprah Conversation (after she dropped plans for a Russell Simmons documentary earlier in the year).

Apple TV+ shows nabbed 18 Emmy nominations this year for The Morning Show, Beastie Boys Story, Defending Jacob, Central Park, Home, and The Elephant Queen. Billy Crudup won for his role in The Morning Show. Multiple wins for HBO and Pop TV’s Schitt’s Creek, however, meant streaming services were largely shut out of victories in the big categories in 2020.

Defending Jacob promotional photoDefending Jacob (Image: Apple)

Nearly all of Apple’s launch titles have been renewed for a second season. It’s also been making lots of new deals through spring and summer. It’s hard to know if any of these deals were greenlit out of urgency or would have proceeded regardless. One thing is sure, however: the amount of content Apple is creating or purchasing isn’t slowing down.

With almost $193 billion in cash on hand, Apple certainly has money to burn. But how to boost those subscriber numbers? Free subscriptions with product purchases certainly help; Apple just introduced two new iPads and a new flagship iPhone is expected next month.

Another option? Apple One subscription bundles. Announced earlier this month, Apple will soon launch three Apple One tiers, all of which include Apple TV+, starting at $14.95 per month for Apple Music, Apple TV+, Apple Arcade and 50GB of iCloud storage.

Can this help nab a few more Apple TV+ viewers, and attract some newbies into the Apple ecosystem? Time will tell.

Source

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

The Trump campaign celebrated a growth record that Democrats downplayed.

Published

on

The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

Source

Continue Reading

Business

Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

Published

on

The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

Source

Continue Reading

Business

Ant Challenged Beijing and Prospered. Now It Toes the Line.

Published

on

As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

Source

Continue Reading

Trending