UPDATED with closing stock price. There was no ribbon-cutting or fireworks display. No rang the opening bell of the stock exchange.
Instead, Apple did what Apple does in rolling out Apple TV+, the company’s long-awaited, multi-billion-dollar bet on original streaming programming. The service went live quietly and smoothly as October 31 became November 1, with a few log-in glitches reported by early adopters but no widespread issues. As an on-demand service, Apple TV+ has an easier technology hurdle to clear than those attempting concurrent, live streams.
The service is the first of several major new entries into the streaming arena, with Disney+ launching November 12, and NBCUniversal’s Peacock, WarnerMedia’s HBO Max and Quibi arriving next spring.
Investors cheered the debut of Apple TV+ as one more reason to be bullish, sending Apple stock to a new all-time high of $255.82, a gain of nearly 3%. Shares have risen 73% in 2019 to date.
Producing content, while expensive (The Morning Show has reportedly run up a budget of nearly $300 million for its two seasons), is seen as a way to prop up Apple’s flagging hardware sales, particularly for the iPhone. The company has aggressively priced the service at $5 a month and is giving one year free to anyone buying a new Apple device.
Promotion for Apple TV+ has been steady and significant, but it has focused almost entirely on the shows and talent of the slate, which includes For All Mankind, The Morning Show, See and Dickinson. At the company’s flagship retail store on Fifth Avenue, whose distinctive glass cube and underground space got a major makeover before reopening this fall, there wasn’t a single sign for Apple TV+ on launch day. None of its offerings were playing on laptops, tablets or phones spread across the store’s 77,000 square feet, though workers said they could provide a demo of the streaming app upon request.
Both LA and New York have seen lavish premieres of the company’s shows in recent days, and billboards have peppered passers-by with show messages. Jennifer Aniston and Reese Witherspoon, the stars and executive producers of The Morning Show, have been making the press rounds, with morning shows a particular focus, naturally. The Apple TV social media accounts (which have handled Plus promotion) have been silent Friday after putting up a few posts in recent days.
On Apple’s quarterly earnings call on Wednesday, CEO Tim Cook gave Apple TV+ a plug. He emphasized that it is “the first all-original video subscription service,” a subtle dig at rivals like Netflix and Amazon, which mix licensed fare with their originals. “One of the great perks of this job is that I’ve gotten to binge-watch almost all” of the Apple TV+ lineup, he gushed.
In a question-and-answer period with Wall Street analysts, Cook said the one-year-free promotion is “a gift to our users.” The business objective, he added, is clear: “We’re proud of the content and we’d like as many people as possible to view it. And so this allows us to focus on maximizing subscribers, particularly in the early going.” Many observers believe the company will continue to bundle the streaming service with hardware and other services, as Amazon has done.
In response to questions from analysts about how the company will account for its streaming service in its public reporting to shareholders, given its ties to the hardware business, CFO Luca Maestri did not offer much. In particular, analysts have wondered how the $60 per year of deferred/foregone revenue for each customer taking advantage of the free 12 months of streaming will show up in the financials.
“We need to make some assumptions around the take rate of our customers on Apple TV+,” Maestri said. “And we don’t want to get into the details of that because we view those assumptions as confidential and competitively sensitive.”
Distribution is another frontier that will be interesting to watch. At launch, Apple is available beyond the company’s ecosystem only on select Roku and Amazon Fire devices and some Samsung Smart TVs. Apple broke new ground last spring with multiple smart TV and connected-device deals for the redesigned Apple TV app.