Apple TV Plus Freeloader issue: 62% of customers get free trials

Apple has said it wants to increase revenue from services, including Apple TV Plus, which is just over a year old. But new research suggests that the tech giant’s entry into the so-called “streaming wars” is at a distinct disadvantage compared to its rivals.

In the fourth quarter, the majority of Apple TV Plus subscribers – a whopping 62% – said they received the free promotional offer that Apple extended to buyers of its hardware devices, according to the research firm’s SVOD Tracker Q4 2020 report. MoffettNathan. What is worrying for Apple: 29% of them said they did not plan to re-subscribe after the promotional period expired; only 30% said they plan to renew at the regular price of $ 4.99 / month (and the rest weren’t sure).

By comparison, 16% of Disney Plus users said they accessed the service through Mouse House’s promotional partnership with Verizon. About 23% of HBO Max subscribers reported accessing the service through AT&T promotions that provide free access to customers on the carrier’s best wireless, video, and Internet plans (and for the most popular plans). dear, HBO Max is a permanent advantage).

Almost half of Disney Plus subscribers to the Verizon promotion (48%) said they plan to resubscribe after the free access period ends; only 19% say they do not intend to renew. Data suggests that about 18% of Apple TV Plus subscribers plan to turn off the service after their promotional offer ends, compared to 3% of Disney Plus customers with free plans, according to the MoffettNathanson report.

Apple has not disclosed the number of users of Apple TV Plus. But he clearly doesn’t want to lose them: The company has extended the free access period for Apple TV Plus customers who signed up through its one-year free subscription offer until July 2021. The 12 months free Apple TV Plus remains available to customers who purchase a new iPhone, iPad, iPod Touch, Apple TV, or Mac.

“We remain concerned about the future unsubscribe rate of subscribers if there is a slow device cycle and users choose not to renew themselves,” wrote the analyst-led MoffettNathanson team. Principal Michael Nathanson, in the report. While Disney and WarnerMedia have been “clear on stepping up their respective content offerings, it seems Apple still isn’t quite on board with making the Apple TV Plus originals a focal point.”

A big problem for Apple TV Plus is its very limited range of content, compared to the thousands of titles available on other SVOD services. Currently, Apple TV Plus offers a total of 55 originals (11 drama series, six comedy series, 13 non-fiction series, 11 movies, and 14 family and specials series). These include breakouts like “The Morning Show” and “Ted Lasso,” but in terms of tonnage, Apple TV Plus is way below the rest of the SVOD realm.

Apple has a list of originals in the works, but it’s still not in the same league as Netflix, Disney Plus, or HBO Max. Upcoming releases on Apple TV Plus include Season 2 of “For All Mankind” by Ronald D. Moore (February 19); and the Anthony and Joe Russo film “Cherry” with Tom Holland as a drug addict who resorts to bank robberies to pay off his debts (February 26).

Meanwhile, the percentage of U.S. consumers who reported using Apple TV Plus fell from 10% in November 2020 to 8% in December, according to the MoffettNathanson report. In December, 72% of respondents said they used Netflix, followed by Amazon Prime Video (52%), Hulu (39%), Disney Plus (31%) and HBO Max (13%).

That said, for Apple, there is another underlying strategy behind the SVOD game: boosting hardware sales, by getting consumers to buy its smartphones, tablets, computers or Apple TV set-top boxes. If the free Apple TV Plus benefit made a little more difference in moving the needle there, it’s possible the company could rationalize the cost of investing in Apple TV Plus. Apple, in true Apple form, doesn’t offer a native Android smartphone app (but claims you can use Chrome or Firefox on Android devices to stream Apple TV Plus); Google says the Apple TV app will arrive on the new Chromecast with Google TV in early 2021.

For the SVOD tracking study, MoffettNathanson enlisted market research and consulting firm HarrisX to conduct surveys of 19,435 respondents between October and December 2020.

Other results from the MoffettNathanson / HarrisX study:

  • US household streaming service penetration was 77% at the end of 2020, up five percentage points year-over-year, attributable to the country’s return to a self-quarantine phase this winter due to the COVID pandemic.
  • The average American pay-TV household now subscribes to 3.33 SVOD services, while non-pay households subscribe to an average of two. This “may be a testament to the impact of revenue on cutting the cord as pay TV households are more willing / able to invest in more video products,” analysts at MoffettNathanson said.
  • When asked to name the content they were watching recently, 43% of Disney Plus customers cited original series, and 38% of Netflix and 34% of Amazon Prime Video customers said the same. . Only 13% of Hulu subscribers said their recent viewing was original TV shows and for HBO Max it was 12%. Meanwhile, 84% of Hulu and HBO Max customers said the programming acquired was what they watched most recently, compared to 56% for Netflix, 51% for Prime Video and 49% for Disney Plus.
  • When asked why they use streaming services as a replacement for pay TV, at least half of subscribers with Hulu (50%), Amazon Prime Video (54%), Netflix (53%), and Disney Plus ( 52%) responded that it was due to the cost of traditional cable and satellite television. The second most cited reason for cutting the cord in favor of streaming services was convenience (12% -17%), followed by content availability (13% -14%), the ability to binge-watch content ( 10% -12%), and ad avoidance (4% -8%).

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