A Report on Recent Apple Reports

Bloomberg had a report yesterday that got widespread attention around AppleTV+ and Apple looking to build a broader catalog of content. The report also consisted of a user number that is likely low and more representative of a paying base of customers vs. active users.

As luck would have it, we at Creative Strategies did a recent product experience study on AppleTV+, and we gained some fresh insights on the service. I’ll address the point of the article about Apple looking to secure a back catalog first.

AppleTV+ had a tough comparison to nearly every other video service out there in that all of them had a back catalog of content. Even Disney+ launched with a huge back catalog, and experts in this subject were right to label this as a flaw in AppleTV+’s launch strategy. It seems consensus in those who know and study the space, knew a rich catalog was an essential bar that had to be met to gain consumer attention. Here we have two data points.

The first is this chart, where we asked consumers in our survey to rate specific features of AppleTV+. As you can see from the chart below, sentiment around content selection skewed to average at best.

Our study also revealed the lack of interesting content as the major reason most have not signed up or tried AppleTV+. 34% of those not active users of AppleTV+ checked “not enough content I care about” as the main reason they have not been interested in trying or subscribing to AppleTV+. The second main reason checked for not trying/subscribing to AppleTV+ was due to already having/paying for too many subscriptions.

This was insightful to us since we asked what other subscriptions were subscribed to as it gives us a glimpse into what pay content services AppleTV is competing with for share of wallet. Among those not trying/subscribing to AppleTV+, Netflix, Hulu, Dinsey+, and HBONow sat among the top as the main video services consumers were paying for. The list of top services currently subscribed to was nearly identical among those actively trying/paying for AppleTV+.

We also asked people to freely write in feedback on AppleTV+. I share below a few highlight quotes from our respondents.

“I was onboard with Apple’s apparent rationale on the service. “You don’t just come to the party to become another Netflix. Their offering was unique – we don’t have unlimited shows, but you don’t have unlimited time. So we’re just giving you enough of the BEST content to fill the hours you DO watch”. It’s never lived up to its promise. The Peanuts show is good. Don’t really care about any of the others.”

“They are making a lot of shows, but I don’t think there’s any real vision underlying the network. The productions values are very high, but I haven’t found a show yet that I really felt I had to watch or would strongly recommend to anyone. That being said, Apple has a lot of money, and they’re pretty patient, so I’m guessing they will learn, and it will get better.”

“Apple just needs more content.”

“Just too limited on content.”

“Needs more content in general.”

“Content, content, content. For me, none of the content rises to the level that I’d pay for a service.”

Those are just a few that follow the normal pattern of the hundreds of comments I’ve read through.

It will be interesting to see how Apple evolves TV+. A rich catalog of content is what will keep consumers actively engaged in the service. However, should Apple’s game here be extremely long, in a few years, they will have a decent catalog on their own of original content. That being said, I do think it wise Apple license, or even buy, content to help boost their catalog as it will no doubt benefit AppleTV+.

Now to the total user number. One thing that was quite surprising to me in our study was how few were actively paying for AppleTV+ and how many were using it as a part of their free year promotion for buying new hardware. Here is the chart on this point.

As you can see, the number of paying subscribers is surprisingly low. However, of the base of users in our study, 60% said the $4.99 price tag is extremely (36%) to moderately (24%) priced.

Along that thread, we found intent to convert to a paid subscription once the trial or promotion is over relatively high as well. 22% of respondents said they are likely to continue to subscribe to AppleTV+ after their trial or promotion is up.

All of this, in my mind, still raised the macro question of what AppleTV+ is to and for Apple holistically. Our data reveal the potential of the service that much is clear. Should it be bundled with other services and or hardware going forward? Is Apple thinking about this more like Amazon does with Prime, where the value of the content/service is a part of a broader service or product strategy? I think, while fairly priced at $4.99, Apple still has steep competition not just for a share of wallet but also for a share of time. If consumers are likely to subscribe to 3-4 media services, maybe more, and all those services have a depth of content, then there is simply not enough time in the day/week/month for all the media services out there. To me, not necessarily wallet but time is the biggest competitive factor Apple needs to overcome, and for that, the old adage remains true; content is king.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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