ByLinky Johnson 2019-06-02 349
Apple’s new service, announced at the March conference, is actually a software application that can profit from continued revenue while attracting and retaining more and more users staying in Apple’s hardware. on the platform.
Apple's service revenue growth in the first quarter of this year exceeded that of most of its hardware business, and this also led to higher profit margins. Apple just announced that its overall gross profit margin for the third quarter was 38%, but the service industry gross margin was as high as 62.8%. While developing original programming is a very expensive option, once you choose to do so, Apple can generate additional revenue with little additional cost. Once you have a fixed audience, you can make it a very large business model.
Compared to other new services, Apple's Apple TV+ is designed to create its own original content, rather than just a stage to help others show their talents. Because it's largely in iTunes and the App Store, it has the same status as Apple's Apple Arcade and Apple News+.
With the release of the latest tvOS 12.3 system on Monday, Apple's existing TV applications work more like their news applications, allowing users to subscribe to channels for various video services, including HBO, Starz, SHOWTIME, Smithsonian Channel, Popular programs from EPIX, Tastemade and MTV. But unlike Apple News+, which offers 300 monthly subscriptions, the upcoming Apple TV+ subscription service will feature Apple's original content as its main selling point.
In many ways, Apple TV+ is much like the video version of Apple's Apple Music. Apple launched its own streaming music service in response to consumers' shift from iTunes music downloads to online music appreciation. The new Apple TV+ is a similar move, with the goal of moving from movie downloads or rentals to Netflix's "satisfying" mode video streaming program.
Apple, known for its profitability, generates incredible cash flow every quarter. Why is this technology giant still wanting to get involved in the music and video streaming business? After all, these businesses are costly and have low margins.
Spotify has just made a profit in the 13 years since its inception. The company finally announced its first profitable quarter at the end of 2018, with a profit of $104 million, but in the third quarter, its 100 million paid music users took it. A total of $46 million in losses has been incurred. Spotify expects that the full year 2019 loss will be two to three times the amount of earnings in the fourth quarter of last year.
Another Netflix announced a profit of $344 million in the March quarter, but free cash flow was $460 million. Now Netflix has a debt of $12 billion and spends $12 billion a year to make more original content to sustain its survival.
Apple has launched Apple Music and the upcoming Apple TV+ subscription service to maintain content relevance. Similarly, it was originally entered into the music download business through iTunes, not to make huge profits, but to ensure that Mac and iPod users continue to use the format and download music under Apple's control.
If Apple licensed music downloads to Microsoft or Sony 20 years ago, it would be forced to follow the latter two and develop any format and DRM solution hardware that would support these vendors' choices. By reaching its own content delivery agreement with the record company, Apple can sell iTunes music on the AAC format and eventually reach a DRM-free sales agreement, which clearly distinguishes its products from Microsoft and Sony's efforts to lock music formats.
Apple's position on iTunes enables it to distribute movie downloads and rentals in MP4 H.264 format and optimize the playback of this format on its mobile hardware. If there is no iTunes store that brings a lot of media sales, Apple will be forced to use Microsoft's WMP or Adobe Flash video distribution system, which is not only built into its software, but also built into its custom chip.
Imagine if there is no iTunes, if Microsoft refuses to provide music and movies for the iPhone, the iPhone will not be so popular. Instead, Apple can refuse to support WMP and Flash, and therefore launch a better product.
As the music and movie business moves from personal downloads to ongoing streaming subscriptions, Apple has to follow the trend because another option will return control of streaming technology to third parties. If streaming media moves mainstream media consumption to Spotify and Netflix, Apple will eventually face the issue of everyone watching Netflix and listening to Spotify services and merchandise on any device. In addition, Spotify and Netflix may even begin to play music on non-Apple devices.
Netflix has launched the interactive game "Bandersnatch", which is a game of "choose your own adventure", which Apple TV does not support. Todd Yellin, vice president of Netflix products, dismissed the lack of support for Apple TV. He said, "Netflix has almost every device that can run this game."
Netflix also withdrew from Apple's app store subscription service, discontinued support for AirPlay streaming, and opt-out of integration with Apple TV apps (it can only be played on tvOS and iOS via its own Netflix app). This is certainly not the first time a content producer has deliberately prevented Apple device users from seeing their content.
In 2010, Facebook initially refused to let its app support the iPad platform, and quit the social network with Apple iTunes Ping. The social networking company also adopted a cross-platform mobile application strategy. Before realizing that this was a serious mistake, Facebook felt "dismissive" on the Apple iOS platform.
Google's Android system supports iOS on maps, Google Assistant and other aspects; Amazon's Fire smartphones, the federal government's penalties for Apple's competition in e-books, and Apple TV's temporary refusal to sell. And the most famous Microsoft lost to the Mac no longer supports the iPod, iPhone and iPad, there is no "real sense" media device operating system. Until these companies have arrived, they have to "be humble" to Apple, admit that they are really urgent Apple's business is needed, mainly because iOS users are very important.
Apple is currently forcing third-party companies, including Amazon, Facebook, Google, Microsoft, Netflix, and Spotify, to support their platforms through their large and important scale. But Apple still can't relax, because once Apple loses any relevance, these partners will "stand on their own feet" as quickly as they think they can.
After Netflix created a variety of compelling and unique original content, and chose to use proprietary formats to exclude the possibility of playing on future Apple platforms, more importantly, Apple will pass its own proprietary content and make users interested. Hardware to pressure Netflix to support its content.
The role of this character was originally undertaken by iTunes and later maintained by the popularity and exclusivity of applications developed in the iOS App Store. Apple doesn't need to drive Spotify and Netflix out of their app market, just grab the attention of users, and its user base won't be attracted to a new platform.
That's why Apple doesn't need to worry about what Google Maps doesn't have. Users who like Google services, such as Google Assistant or Google Maps, can use them on iOS, but all the default options are still Apple Maps and Siri, and most people do this. Similarly, Apple even launched Microsoft Office and its own office software on the iPad and Mac platforms. Apple likes to participate in the success of Spotify and Netflix.
However, if any of these alternative services are not constrained by Apple's own products, they will quickly become an important issue that threatens the importance of the Apple platform. Apple plans to use billions of dollars in investments to add original scenarios to its new Apple TV+ service in the next few years into a cost-effective way, and to strengthen the value of its platform to make its own TV application center regardless of content Users don't look like it, even if it includes original content from Netflix, Hulu, Disney, HBO and other streaming services.
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