Apple has long been known for the premium prices it charged for premium products that all “just worked,” an approach that helped it crest a $1 trillion valuation.
It tested the robustness of that approach the past couple of years, busting well beyond through the $1,000 price barrier for its top iPhone models, even as demand flagged for new phones of all kinds amid a stumbling Chinese economy.
There’s still plenty of premium pricing in products Apple announced Tuesday. Indeed, one Washington Post take was headlined “iPhone 11 First Look: That’s An Awful Lot of Cash for A Camera.” (A clever headline, though even mid-range mirrorless cameras like the fine Sony A7 RIII or competitors from Nikon and Canon cost at least $1,800 for just the body, and don’t make phone calls.)
But there are deals too, perhaps a recognition of the limits of people’s wallets even for an Apple experience. And the bargains may quickly impact the soon-to-be-very-crowded sectors of streaming video and games.
Let’s start with that $4.99 monthly price for TV+, the service that will showcase some $6 billion worth of premium scripted programming such as The Morning Show.
That high-profile series, about an embattled morning news program, reportedly has cost hundreds of millions to make, more than even HBO’s final season of Game of Thrones. Unlike GoT, it doesn’t even feature dragons (though the first trailer suggests that Jennifer Aniston’s character may have a bit of Westeros coursing through her).
Apple has ordered a bunch of other shows, but many have been slow to arrive, which already forced a delay from the original spring launch. They won’t all be there on Nov. 1 either.
But that $4.99 undercuts Disney+, now set to debut 10 days after the Nov. 1 launch of TV+ and for $2 a month more. That’s going to cause problems, less for a near-bulletproof Disney+, I think, than for other services stumbling into the competition in subsequent months.
For instance, HBO Max has already seen its price droop from $17 a month to $15, and it’s not set to launch until April. What does this price do for the pricing and business model, still to be announced, for Comcast’s unnamed service, or that Vudu redo from Walmart?
It’s also $1 a month less than even the ad-supported version of Quibi, the big-swing mobile service from Jeffrey Katzenberg. Having a cheaper competitor, from the giant company making the mobile devices on which your competing service will be viewed, can’t be good.
Apple’s service will debut with a thin initial selection of shows, far less than Netflix, and even what Disney+ showcased last month at D23.
But as beloved colleague Alan Wolk suggests, when it’s that cheap, people are probably more likely to forget the fee than burn and churn to the next service. They’ll probably stay signed up even after they’ve watched The Morning News or whatever the sainted Ronald Moore (Battlestar Galactica) comes up with.
Apple is also, unlike some competitors (ahem, Quibi), launching across much of the planet. Even Disney+ is rolling out slowly overseas, starting with the Netherlands and a good chunk of the former British Empire.
To boost its overseas prospects, Apple is offering a bargain mobile deal for TV+ in India, the equivalent of $1.40 a month.
That’s about half the price of the India mobile deal that Netflix announced this summer. The Subcontinent, about to become the world’s most populous country, is a top priority for Netflix, Amazon, and others.
If Apple can grab up some of the mobile audience that otherwise might opt for Netflix, it could crimp growth prospects for the Big Red N.
In similar fashion, Apple’s bargain price for game service Arcade could crimp the business models of services from Google, Verizon and others. It also will cost $4.99 for access to around 100 games from big-name creators, though not much in terms of big-name franchises.
What’s more interesting with Arcade is determining its target audience. The price and playability across Apple devices suggests a different target community than the self-identified traditional “gamers” who play on tricked-out PCs or consoles.
It’s seems like a smart approach. More than half the $134 billion in global revenue from videogames last year came from mobile, according to a NewZoo analysis.
Arcade’s subscription approach looks to solve some of the distortions of the mobile market, now dominated by free-to-play titles with in-app purchases that wring every nickel from compulsive “whales.”
Many casual gamers may welcome the option of spending $60 a year for all-you-can-eat access to a bunch of good to great titles, without perpetual dunning for additional expenditures just to compete.
In turn, that could have significant impacts on the mobile revenues of Activision, EA, Disney, Ubisoft, Jam City, and many other established mobile game publishers.
Bargain hunting can take many forms, especially if the economy sours in any substantive way. Once again, Apple may have quietly set off a trend.
And it’s already working out for Apple, whose market capitalization again crested $1 trillion after Tuesday’s announcements before settling back down. No bargains to be had there.