Rumors abound about Apple’s likely foray into TV streaming. In confirming the date for its next event, Apple tagged the March 25 invitation with a sentence that hinted at an upcoming video service, reigniting speculation on the company’s streaming plans.
Aija Leiponen, professor of applied economics at the Cornell SC Johnson College of Business and an expert on digital markets, studies the way data is commercialized on the internet. She says that Apple will need big hit shows to convince consumers to subscribe to yet another streaming service.
“Apple is entering a fairly crowded field, with Netflix, Amazon, Hulu, and many other smaller providers of streaming services. Apple, of course, has a massive budget for creation and acquisition of content, distinguishing it from some of the lesser (or even major) rivals. Nevertheless, it will be a tight battle to get people to switch, and they will need to produce big hit shows to achieve even some of that, which is highly uncertain. Netflix currently has over 60 million U.S. subscribers, whereas Amazon Prime has over 100 million subscribers, although the latter are not just for video streaming.
“Nevertheless, although many households 'multihome' i.e. subscribe to multiple services, convincing consumers about the need for yet another subscription streaming service will require that they make a big splash with innovative content. Apple might do that but Netflix and Amazon are way ahead of them in the game.
“On the other side, this will likely significantly accelerate the decline of traditional cable TV. With everything that is now becoming available ‘over-the-top’ on the internet, it is becoming increasingly difficult to justify paying $100-$200 monthly for a cable subscription when consumers can get more streaming content for the same price annually. Streaming of course requires fast home internet but that is still a much less costly and more desirable package. Cable TV is having a hard time innovating and has become bloated and entrenched. They will be forced to start offering lower cable prices, and they will need to significantly trim their corporate structures.”