Apple is going to announce its new video streaming service plans at an event in Cupertino, Calif., on Monday, March 25.
Over the past few months, CNBC has reported many details on Apple’s plans. But the big open question is the pricing, and whether there will be any discounted bundles that encompass multiple services. A steep discount on available streaming video services could give consumers an immediate reason to sign up for Apple’s new service.
Here’s what people familiar with the company’s plans have told us:
- Apple is housing a new video streaming service in its TV app. Within that app, Apple is going to allow device users to subscribe to currently available streaming services, similar to Amazon Channels. This will likely include over-the-top (OTT) services such as Starz, Showtime, CBS All Access, Viacom’s Noggin, HBO, and other existing channels, many of which can already be found on Amazon Channels. It will not include Hulu or Netflix. Users will be able to watch video in one dedicated application without having to flip between a variety of other company’s streaming apps.
- Apple is investing in original content, at least some of which will be available for free to Apple device users within the TV application. Macworld put together a list of Apple’s shows here.
- Apple has pushed for a 30 percent cut on every customer that subscribes to an over-the-top video service through its streaming service, people have told CNBC. Currently, Apple takes a 15 percent cut on revenue from customers that sign up to HBO Now, Netflix, and other streaming apps through the App Store.
While Apple may bundle some of these services together at a discounted price, we don’t yet have details of how the bundles and pricing will work.
And here’s the kicker — its partners don’t seem to know either.
Apple has been so secretive about its bundling plans that many of the main participants in its “channels” product don’t know how it plans to package the services and what it plans to charge, according to people familiar. This sentiment was echoed by JPMorgan media analyst Alexia Quadrani:
“While we met with several companies participating in Apple’s upcoming video service, none seemed to have a clear sense of what will exactly be announced on Monday,” Quadrani wrote in a note to clients. “There is some consensus however that the product will include free original content plus a number of channels that consumers can purchase or view in one app using a single sign-on.”
Bundling at a discount could differentiate Apple from Amazon Channels, which has thus far only sold its OTT services a la carte.
Apple has already negotiated bundling rights with its media partners. Apple is taking a lower licensing fee on packages that are bundled at a discount, said one person familiar with the contract structures.
Apple is also spending about $1 billion on its own original content. While several people have told CNBC that at least some of the content will be free to Apple device users, it’s still uncertain how the video will be available (if at all) to non-Apple device users.