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Apple needs Netflix and HBO more than they need – Motley Fool



Apple (NASDAQ: AAPL) is about to launch several new services next month, according to reports. It is expected that the company will implement the news aggregation service on the basis of its purchase subscription last year. In addition, the company plans to launch a streaming video service, secured by its $ 1 billion investment in original content. Apple wants to save 50% of its revenue from its news subscription service, according to Wall Street Journal . Meanwhile, Apple is reportedly taking 30% of revenue from video subscription for its service.

It is not surprising that companies abandon those fees that exceed the standard Apple fees. Netflix (NASDAQ: NFLX) noticeably deleted the ability to subscribe to its service in the application through payment of Apple fees. I think that he pays a higher fee to give Apple even more access to their viewing data does not make sense.

  Apple, an application for TB on the iPhone and iPad.

Apple TV app for iPhone and iPad. Image source: Apple

Apple should consider leader's loss strategy

If Apple wants to render its content aggregation services successful, it should consider providing free advertising for services such as Netflix or AT & T (NYSE : T) HBO is now. Both services are pretty popular, with less subscription revenue, but their ability to attract customers to the new Apple service may be huge. services. If Apple provides subscribers with a convenient way to see all their paid content in one application, they should attract many viewers to their platform. It opens the door for Apple to sell additional subscriptions to less well-known services based on what they see on more popular channels, such as HBO or Netflix. Of course, he does invest heavily in his own content to attract viewers, but it does not necessarily make him a hub for video entertainment. If the formula weighs content from Entertainment Weekly with the same value as in-depth reports The Wall Street Journal or The New York Times It's easy to see how the last two can upset The Wall Street Journal charges $ 39 a month for subscription, EW costs less than $ 2 a month.

Apple really has no top

What Apple offers to media companies like Netflix, HBO The Wall Street Journal and The New York Times is an access to its mass media of the 1.4 billion active devices – 900 million of them – iPhone users. But these big companies do not need direct access to the Apple audience.

Last year, Netflix spent more than $ 2 billion on marketing; Everyone knows about Netflix and its hundreds of originals. HBO has led the world in Emmy nominations for 17 years before Netflix has headed it this year. It will be difficult for you to find a news reader that has never been considered The New York Times or The Wall Street Journal .

The point is, if consumers want to find quality content they will find the above companies with or without the help of Apple. Apple is only benefiting small media companies that can focus on smaller niches or may not have marketing budgets to reach their potential audience. That's where it can get value.

Apple must stop worrying about the margin of its services and discuss the special conditions with the leaders in subscribing videos and news to get them on board with its services. This will be an issue for attracting customers without these deals, even if all 900 million iPhone users instantly access $ 1 billion worth of content. The smaller margin of a larger business is much more valuable than a large margin of small business.

Adam Levy owns Apple shares. Motley Fool owns stocks and recommends Apple and Netflix. Motley Fool has the following options: long January 2020 $ 150 calls to Apple and short January 2020 $ 155 calls to Apple.


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