As iPhone sales pull back, Apple eyes streaming

AFP

Apple looks to begin a fresh reinvention today as it rolls out Hollywood stars for its new streaming television service, part of a broad shift in direction for the California technology giant.

Having seen a pullback in the once-sizzling smartphone market, Apple will seek to diversify by getting deeper into the television business, with the likely launch of a subscription news service.

The iPhone maker, which has officially been mum on its plans, was expected to bring in Jennifer Aniston, Reese Witherspoon and “Star Wars” director J.J. Abrams to a launch event today at its Silicon Valley headquarters.

“It seems fairly obvious they are launching a new video service,” said Techsponential technology market analyst Avi Greengart.

Big questions to be answered include how compelling content will be; how much the service will cost, and what makes it unique in an increasingly crowded streaming television market, according to the analyst.

“If the content is compelling enough, people will subscribe,” Greengart said.

“This is not new, but it is hard to do well.”

The event comes with Apple under pressure to diversify its revenues amid sluggish growth in smartphones, which have delivered the bulk of Apple’s profits for the past decade.

While iPhone sales remain enviable, growth has stalled. Meanwhile, money Apple takes in from selling services or digital content has climbed.

The Cupertino-based company recently stopped disclosing iPhone sales numbers with quarterly earnings releases and has taken to stressing the money-making potential of selling services, apps, music, movies and more to the millions of people using its devices.

The new service will be “a pivotal step for Cupertino in further driving its services flywheel and entering the ‘streaming content arms race’ which is clearly starting to take form,” said Daniel Ives of Wedbush Securities in a research note.

Ives said he believes Apple’s services business will be “worth roughly US$400 billion on a standalone basis.”

In streaming, Apple is taking on not just Netflix and Amazon but some of the biggest names in the media-entertainment world.

Walt Disney Co has announced its new streaming service Disney+ will launch this year, as will another from WarnerMedia, the newly acquired media-entertainment division of AT&T.

The new entrants, with more expected, could launch a formidable challenge to Netflix, which has some 140 million paid subscribers in 190 markets, and to other services such as Amazon and Hulu.

These rivals are coming into the segment which has been transformed by the spectacular growth of Netflix and a growing movement by consumers to on-demand television delivered over Internet platforms.

Subscriptions to online video services globally climbed 27 percent last year to 613 million, eclipsing cable television subscriptions for the first time, according to the Motion Picture Association of America.

Apple is also widely believed to be set to launch a subscription news service described as a “Netflix for news” with partners in the media world.