Netflix (NASDAQ:NFLX) may have a myriad of problems to tackle, but advent of Apple (NASDAQ:AAPL) as a competitor in the fast-growing video-on-demand market is the one current and prospective owners of Netflix stock need to worry about the least.
That’s not the prevailing rhetoric this week, in the shadow of Monday’s event that unveiled Apple’s overhauled video product. The tech giant now offers subscription-based access to a variety of third-party video content.
It also has committed $1 billion to the creation of some original programming, to be made available via its streaming platform.
It still doesn’t hold a candle to what Netflix offers its customers though.
Apple’s Plan and Netflix Stock
The streaming video on demand (SVOD) market is an interesting arena. Unlike most industries, it didn’t start out fragmented and then whittle itself down to only two or three key players. It started with Netflix was the only serious player. Only been within the past couple of years have newcomers stepped into the arena.
But they’re stepping into the arena in spades now, however.
These providers aren’t carbon copies of one another though. Hulu, arguably Netflix’s biggest threat, is a cooperation of Walt Disney (NYSE:DIS) and Comcast Corporation (NASDAQ:CMCSA), featuring some original programming, but lots of older NBC, Universal, Disney and Time Warner content.
Amazon.com (NASDAQ:AMZN) is in the business as well, though its video effort is largely intended to drive online purchases of goods. Most cable providers also now offer on-demand options.
No two are quite alike though, and Apple’s latest entry into the race is no exception.
Apple TV+ is by and large a repackaging of other producers’ content. To its credit, Apple offers more options through Apple TV+. To its fault though, it offers little that’s unique.
And that’s the good news for any Netflix stock owners worried that Apple could dethrone Netflix as the current king of streaming.
Apple TV+ and Netflix Stock
It’s not likely that the service unveiled on Monday is the final, etched in stone version of Apple TV+, but it’s a respectable step forward.
The new service deliver ad-free video entertainment to subscribers. There was no published price tag at the time of this writing, but the on-demand service will launch in more than 100 countries later this year. Apple+ TV will be accessible through several third-party devices like Amazon’s Fire TV and the Roku.
Viewers will be able to access their already-existing subscriptions to services like HBO, Showtime, CBS All Access and others, but will also be able to enjoy Apple’s home-grown content.
Apple also will sell subscriptions to various third-parties, collecting a commission of sorts for being the middleman.
Netflix is the one SVOD service missing from the mix.
Only time will tell to what extent that matters, though it’s likely to mean little. While the app undeniably brings convenience to the people who subscribe to multiple video services, standalone apps aren’t overwhelmingly cumbersome.
Apple also will have to dethrone Netflix as the undisputed king of streaming. As of its most recent tally, the company boasted 139 million paying accounts, leaving its most direct competitors in the dust.
Though 1.4 billion Apple devices are currently in use, each of which translates into a potential video customers, tablets, smartphones and even bigger-screened computers aren’t the preferred way most Netflix subscribers watch. More than two-thirds of its customers watch Netflix on an actual television where Apple hasn’t made much of a dent.
Bottom Line for Netflix Stock
Never say never. While Apple TV+ is a solution to a problem that doesn’t quite exist and it offers very little in the way of original content that will be a draw. For instance, Apple has only budgeted $1 billion in its own content this year, while Netflix has earmarked $15 billion.
On the other hand, though, Apple’s got deep pockets and Netflix doesn’t. If and when Apple wants to wade all the way into movie-making waters, it can.
Until that actually happens though, Netflix remains a fan favorite in on-demand video, and its customers have remained surprisingly loyal through multiple price increases.
“Apple is very late to this game,” said eMarketer analyst Paul Verna. “Netflix has become the gold standard in how to create and distribute content, using all the data they have about their viewers.”
Never even mind that the bulk of Apple TV+ blatantly highlights the fact that others are providing most of the content available using the platform.
The Apple headlines may be head-turning, but they’re not a reason for owners of Netflix stock to sweat.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley.
