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Apple has joined the front lines of the war against streaming, and a former Netflix executive and Hulu told CNBC on Wednesday that he thought the tech giant would immediately be able to compete with his existing rivals.
While the Apple TV + monthly cost of $ 4.99 was praised, some wondered whether its initially thin content offerings would be enough to generate subscriptions from people who already pay for a competing service such as HBO, Showtime, Netflix and Hulu.
"You've seen with Showtime and HBO that it only takes a few shows each season to encourage people to maintain their subscription, and I think that Apple will absolutely be able to do that with the current lineup up," Simon Gallagher said on "Squawk Alley."
The Apple stock is up 2.82% on Wednesday and is on the pace of its best day since August 13, when it had risen 4.23%. It has also reached a market capitalization of $ 1 trillion.
Apple's service will feature nine original shows when it launches on November 1, and will bring together a variety of stars: Jason Momoa, Jennifer Aniston, Steve Carell and Oprah Winfrey.
"I think they're very deliberate in the initial selections and genres they've chosen.They have popular genres with absolute talent, the best talents," said Gallagher, who was previously director of strategy and business development at Hulu. joins Netflix as director of content acquisitions.
Users can get a free one year subscription if they buy a new iPhone, iPad, Mac or Apple TV, the company said.
"If they consume great content, [users] will not be unsubscribed from the service, and unsubscribing is a key measure for these services, "said Gallagher.
Gallagher's remarks come one day after Apple unveiled its new products and services at its Cupertino, California headquarters.
This includes a trio of new smartphones – the iPhone 1199 at $ 699, the iPhone 11 Pro at $ 999 and the iPhone 11 Pro Max at $ 1,099 – which have improved cameras and a longer battery life, as well as the $ 399 Watch Series 5, which is now available all the time while maintaining its 18-hour battery life.
But most of the attention has focused on Apple's service offerings, which, in addition to Apple TV +, include its game subscription, Apple Arcade. Launched on September 19 in 150 countries, it offers subscribers access to more than 100 new exclusive titles to download from their iPhone, iPad, Mac or Apple TV. It will cost you $ 4.99 a month.
Apple's foray into video streaming and its subscription to the games represent the company's latest attempt to reduce its reliance on the sale of hardware to generate revenue. IPhone sales have recently fallen, recording a 12% year-on-year decline in iPhone sales in the third quarter in July.
Many analysts expected the cost of Apple's streaming service to be around $ 9.99, but its aggressive low point was favorably received by Wall Street analysts.
At the same time, the video streaming video space is becoming increasingly crowded, with Disney, WarnerMedia of AT & T and NBCUniversal, Comcast, soon launching their own services. The Disney service, at $ 6.99 per month, will be launched two weeks after Apple's.
In addition to the lowest monthly cost, Apple has many advantages to compete with established heavyweights and newcomers, Gallagher said. For starters, he said that the 1.4 billion Apple devices used worldwide gave it an integrated constituency far superior to that, for example, of Amazon, which has more than 100 million in the world. Premium subscribers.
In addition, Apple's ability to market its original programming will likely be an exciting proposition for content creators who will decide which streaming partner to work with, Gallagher said. Take the physical stores of Apple.
"The traffic they encounter in the stores, if you think about your ability to promote a new movie or a new TV show in this type of room, is pretty impressive," he said.
Disclosure: Comcast is the owner of NBCUniversal, the parent company of CNBC and CNBC.com.
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