On March 25^th, Apple unveiled a suite of new services designed to bolster its service revenue, headlined by its much anticipated foray into TV and video with its new Apple TV app and Apple TV+ subscription VOD (SVOD) service.

This announcement underscores the growing importance of service revenue to Apple as a result of weak hardware sales in China, a saturated global smartphone market, and limitations associated with Apple TV. As a result, Apple is increasingly turning to services, which include iTunes (e.g., music, television and movies), the App Store, Apple Pay, Apple Music, AppleCare, the iCloud, and now Apple TV+ and Apple TV Channels, Apple Arcade, Apple News+, and the Apple Card to boost its bottom line.

As part of Apple’s strategy to increase service revenue, Apple is taking aim at the $280B global TV and video market, which includes pay TV, SVOD, and physical and digital rental and sell-thru of movies and TV shows.

The Apple TV App, not to be confused with Apple TV which is a streaming STB, was first introduced in October 2016 on the 4^th generation Apple TV and iOS devices. The new Apple TV App offers three significant upgrades over the old app.

1. Expansion of the Apple ecosystem beyond Apple devices
2. Apple Channels
3. Apple TV+

In addition to unveiling the new Apple TV App, Apple also introduced the world to Apple TV+, its subscription VOD (SVOD) service. While Apple TV+ may be the exclusive home for its originals, there are a number of issues it must overcome if they hope to succeed.

1. Limited investment in original programming
2. Small catalog
3. Glut of original programming
4. Studios and programmers are wary of Apple
5. Brand confusion
6. Subscription fatigue

Clients of Strategy Analytics TV & Media (TMS) service can read our in-depth analysis of the new Apple TV App, Apple Channels and Apple TV+ here or if you are interested in purchasing the report please contact mgoodman@strategyanalytics.com.