We’re expecting a new Apple media event to take place next month, and while it’s not 100% guaranteed that we will see any sign of the company’s new video streaming service, it’s likely that it will be announced. While it may not actually be ready to go live next month, we should at least learn some of the intricacies of what Apple has been working on for what seems like forever, and according to an investor note by Jefferies analyst Tim O’Shea, there could be some hurdles to overcome.

The research note, seen by Business Insider, suggests that O’Shea believes Apple has some problems they will need to solve.

Apple’s spending a fraction of what Netflix is spending on original shows and movies, meaning that at least at first it will likely be far more dependent than the streaming video giant on third-party content. But the company’s plans to take a 30% cut on revenue may not sit well with many Hollywood studios and networks, he said.

“It’s hard see how those economics fly,” O’Shea said.

[…]

Apple could find it hard to sign up customers to its own video service if too many production companies balk at offering shows and movies through it. Already Netflix has balked at being a part of Apple’s service and HBO has yet to commit to it, CNBC reported.

“There are only a handful of players that make content that matter,” O’Shea said. “If you lose one or two of them, it makes your service much less attractive.”

Despite Apple already having a huge Apple Music subscriber-base and millions of users with credit cards on file, the belief is that even should Apple be able to grow its streaming service to be larger than Netflix, it won’t have a home run.

O’Shea estimated that if Apple’s video service had 250 million subscribers in 2023, it still would account for only about 5% of the company’s revenue that year — and wouldn’t make up for its declining smartphone sales. By point of reference, after offering streaming video for 12 years, Netflix has 139 million subscribers.

“It’s going take a long time for this type of service to really move the needle,” O’Shea told Business Insider.

It’s going to be a few weeks before we learn just what is going into this streaming service, and with O’Shea believing that it will cost around $15 per month, we’ll also have to wait and see how the market will react to having yet another streaming service to pay for.

(Source: Business Insider)

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