Consumer Electronics

Does $4.99 Price for Apple TV+ Give It an Edge?

Apple TV+ has among the lowest monthly subscription prices across all the major streaming services. Apple Inc. (NASDAQ: AAPL) was late to the streaming video wars, but, the price point may be the advantage that moves it into the top tier of services based on subscriber count.

The monthly subscription price for Apple TV+ is $4.99. That is after a free seven-day trial. Many people who buy an Apple device (a new iPhone, iPad, iPod touch, Apple TV or Mac) get a year free. With the purchase of a Watch Series 3 or later, the free period is three months. Each of these offers gives Apple a head start over many streaming operators due to the huge and rising Apple hardware base. It leaves open the question of how many people will pay for Apple TV+ at the end of the trial.

Apple continues to have among the smaller video libraries across large companies with streaming services. This leaves it at a distinct disadvantage.

Apple’s two primary competitors have massive libraries. Amazon.com Inc.’s (NASDAQ: AMZN) Prime service has, over the years, set up licensing deals for libraries of films and TV series that date back years. It also has agreements with services that include HBO. Amazon leverages the other benefits of its Prime services, which include free shipping of items ordered at Amazon.com. A Prime membership is $12.99 a month. For the streaming service alone, the price is $8.99. An estimate put Prime membership at about 150 million in the United States.

Netflix Inc. (NASDAQ: NFLX), the other leader in the field, has about 80 million U.S. subscribers. It has a “first mover” advantage, as the oldest major streaming service in America. It has been able to amass a large library of older movies and TV shows. It invests well into the hundreds of millions of dollars to create new, exclusive content each year. This has left it debt-heavy. Netflix standard plan costs $13.99 a month.

The most successful newcomer to the field is Walt Disney Co.’s (NYSE: DIS) Disney+. It has garnered over 60 million U.S. subscribers in just over a year. It has done so on the strength of the Disney, Pixar, Marvel and Star Wars franchise. Parent Disney has priced the service low at $6.99. Analysts believe the price is a major enticement. However, it means Disney’s margins could be substandard.

Another recent and probably the least successful of the major studio companies with an offering is AT&T Inc.’s (NYSE: T) HBO Max. It carries a hefty price of $14.99 a month. It does have the entire Warner Bros. library. The Warner Bros. 2021 new film releases will also appear on the service.

Apple may have made the only move “late movers” can in an effort at success in a crowded market. It has priced itself at the low end. In its case, Apple has two advantages. Customer loyalty to the Apple brand and huge hardware installed base.