Almost every company has suffered stomach-churning choppiness over the past few months. However, blue-chip icons like Apple (NASDAQ:AAPL) garner significant attention due to their bellwether status. So I’m sure management felt some relief when Apple stock did something it hasn’t done in some time: AAPL moved decisively higher.
Fortunately for stakeholders, the swing north has fundamental justification. With the content-streaming success of companies like Netflix (NASDAQ:NFLX) and Amazon (NASDAQ:AMZN), rumors circulated that AAPL will enter the fray. During the last several weeks, anticipation grew to a fever-pitch until finally, the company relented.
On Monday, the consumer-tech firm announced a press event for the morning of Mar. 25. AAPL insiders expect that management will unveil the long-rumored Apple streaming service. As part of its initial marketing campaign, the company might offer iPhone and iPad owners free access to original shows.
Those who want to jump on board the Apple streaming service will likely have access to premium cable channels. But according to a CNBC report, the service — which may launch in April or May — won’t include Netflix or Hulu.
Adding to the mystique surrounding the event, management may also announce a reworked Apple News service. According to The Wall Street Journal, the tech firm is keen on leveraging its Texture acquisition. The idea here is for AAPL to bundle various news subscriptions under a single umbrella, effectively a “Netflix for magazines.”
Finally, the leadership team could introduce some new products, including a revitalized iPad. As I mentioned in prior articles, Apple stock remains a pressured investment if the underlying company can’t diversify away from their iPhone. This mystery event represents a chance to right the ship.
Still, what can we really expect from the upcoming product and service launch?
Apple Streaming Service Enjoys Several Positives
Initially, I admit that I felt the Apple streaming service was more of a desperation move to boost Apple stock. To no one’s surprise, the company generated roughly two-thirds of its revenue from iPhone sales. But without Steve Jobs’ brilliance, both their smartphone and non-smartphone products have encountered conspicuous disappointments.
Recently, its iPhone XR fell flat on its designated role as a fighter model. Notoriously, Apple stock tanked when the U.S.-China trade war gutted the Chinese revenue stream. In addition, the company’s HomePod smart speakers couldn’t dent Amazon’s and Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) dominant market share.
Given these ugly stories, many investors rightfully feel skeptical. However, AAPL is pulling in some big names to make this venture work. Management hired veteran Sony (NYSE:SNE) executives Jamie Ehrlicht and Zack Van Amburg to jumpstart their content-streaming ambitions. They’ve also aggressively courted television executives.
Next, Apple has finally spent money on acting talent to erase its prior painful memories in the original content arena. One flagship program will star Hollywood A-listers Jennifer Aniston, Reese Witherspoon and Steve Carell.
Revolving around an inside look into the down-and-dirty business of morning TV shows, the concept is surprisingly compelling; perhaps compelling enough to get an old-school, non-cord cutter like me to cut the darn cord!
That’s not all: AAPL will work with the queen of daytime TV, Oprah Winfrey, to create original programming. Moreover, the company has secured the services of renowned directors Steven Spielberg and J.J. Abrams.
The message is clear. Unlike prior ventures, management is pulling out all the stops, and they’re not taking no for an answer. This should encourage those holding Apple stock for the longer term.
Streaming Ultimately Not a Game-Changer for Apple Stock
I genuinely believe that this upcoming streaming service can positively redirect AAPL’s narrative. But as a game-changer for Apple stock? I’m sorry but I just don’t see it.
The obvious headwind is that Apple is extremely late to the party. True, with Disney (NYSE:DIS) offering its own streaming option, the entire industry will be frisky. In this open-air environment, an upstart could make a viable channel.
But that doesn’t change the fact that AAPL must climb multiple barriers to challenge Netflix or Amazon. Both companies are deeply ingrained in the streaming culture, having acquired valuable connections and experience. Apple just can’t throw money at their new venture and expect smooth sailing.
Moreover, the company is already shooting itself in the foot. Apple wants to avoid mature content, which immediately limits its appeal. For example, everyone knows that “corded” entertainment is on its last legs. Yet one of the most popular shows on TV, Game of Thrones, is from premium cable channel HBO.
Game of Thrones is hardly what you would call programming safe for a general audience. But ratings and awards intractably demonstrate that mature content is what people want to see.
As a morality play, perhaps AAPL’s streaming service wins kudos. But we’re talking about Apple stock. If you’re not winning consumers, you’re not winning at all.
As of this writing, Josh Enomoto is long SNE stock.