Apple takes on Netflix with $5/month streaming service

CEO Tim Cook speaks at an Apple event at their headquarters in Cupertino, California, US on September 10, 2019. (REUTERS)

Apple is finally taking on Netflix with its own streaming television service and, uncharacteristically for the company, offering it at a bargain price — USD 5 a month beginning on November 1.

Walt Disney Co is launching its own assault on Netflix the same month, for just USD 7.

It may be sheer coincidence that the cost of paying for both Apple and Disney subscriptions will still be a dollar less than Netflix's main plan, priced at USD 13 a month. But the intent to disrupt Netflix's huge lead in the streaming business couldn't be clearer.

Apple delivered the news Tuesday while also unveiling three new iPhones that won't look much different than last year's models other than boasting an additional camera for taking pictures from extra-wide angles.

The aggressive pricing is unusual for Apple, which typically charges a premium for products and services to burnish its brand. Most analysts expected Apple to charge USD 8 to USD 10 per month for the service, which will be called Apple TV Plus.

But Apple is entering a market that Netflix practically created in 2007 — around the same time as the first iPhone came out. And Netflix has amassed more than 150 million subscribers, meaning that Apple needed to make a splash.

"You have to expect they're going to do something, considering how hyper competitive the streaming video space is," said Tim Hanlon, CEO of Vertere Group.

Apple CEO Tim Cook did not have much new to say about the TV service beyond its pricing and debut date, although he did show a trailer for a new Jason Momoa-led series called "See." Netflix declined to comment.

In the past, Netflix CEO Reed Hastings has depicted the increased competition as a positive for everyone, allowing consumers to create their own entertainment bundles instead of accepting bundles put together at higher prices by cable and satellite TV services.

Like Netflix and similar services from Amazon and Hulu, Apple has been spending billions of dollars for original programs.

The most anticipated so far seems to be "The Morning Show," a comedy starring Jennifer Aniston, Reese Witherspoon and Steve Carrell. The service will launch with nine original shows and films, with more expected each month. It will only carry Apple's original programming and will be available in 100 countries at launch.

Since it began focusing on exclusive shows and movies six years ago, Netflix has built a huge library of original programming and now spends upward of USD 10 billion annually on its lineup.

Apple also announced a new videogame subscription service that will cost $5 a month when it rolls out Sept 19. Called Apple Arcade, the service will allow subscribers to play more than 100 games selected by Apple that are exclusive to the service.

Disney, one of the most hallowed brands in entertainment, is also muscling its way into the market with a streaming service featuring its treasured vault of films and original programming.

That means both Apple and Disney will be undercutting the industry leaders. Besides Netflix, there is Amazon at USD 9 per month and Hulu at USD 6 per month.

The price war is unfolding as Netflix tries to bounce back from a rough spring in which it suffered its first quarterly drop in U.S. subscribers since 2011. Apple's pricing tactics caught investors' attention. Netflix's stock fell 2% on Tuesday.

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