Apple Cites Coronavirus for Revised Fiscal Outlook

Apple has become one of the first tech/media companies to attribute revised fiscal projections due to the ongoing health crisis in China.

Cupertino, Calif.-based Apple Feb. 17 issued a regulatory filing citing the Coronavirus (COVID-19) for slowdown in production of iPhones, Mac computers, iPad and Apple Watch, among other products.

In a statement, Apple said its quarterly guidance issued on Jan. 28 reflected the “best information” available at the time as well as its best estimates about the pace of return to work following the end of the extended Chinese New Year holiday on Feb. 10 — the latter due to government concern about the spread of the respiratory virus that has killed more than 1,000 people.

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“Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” the company wrote. “As a result, we do not expect to meet the revenue guidance we provided for the March quarter.”

Specifically, Apple said its worldwide iPhone supply would be temporarily constrained due to the shutdown of manufacturing partner sites located outside the Hubei province.

“While all of these facilities have reopened — they are ramping up more slowly than we had anticipated,” the company wrote. “The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues.”

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In addition, Apple said demand for its products in China has been negatively affected as consumers there worry more about the spread and containment of the virus than buying the latest consumer electronics device.

“All of our stores in China and many of our partner stores have been closed,” Apple said. “Additionally, stores that are open have been operating at reduced hours and with very low customer traffic.”

The company said retail operations are “gradually reopening” and would continue to do so as “steadily and safely as we can.”

Apple said its corporate offices and contact centers in China are open, and that online stores have remained open throughout the health epidemic.

 

NAB Show to Bow ‘Streaming Experience’ Content Showcase

The NAB Show is introducing The Streaming Experience, a new content showcase curated by streaming and online video expert Dan Rayburn that will feature more than 50 OTT platforms and streaming devices.

The showcase, which will give NAB Show attendees a first-hand look at the latest streaming video services, according to organizers, will be located in the Central Lobby of the Las Vegas Convention Center and is open to all registered attendees during exhibit hours starting April 19.

The NAB Show takes place in Las Vegas April 18-22.

A living-room setting will allow attendees the opportunity to test OTT services side-by-side to compare content, video quality, ad formats, playback features and delivery methods. The Streaming Experience will feature hardware from Amazon, Apple, Roku, Xbox, PlayStation, LG, TCL and Samsung. Streaming services on display will include Apple TV+, Amazon Prime Video, CBS All Access, Disney+, Hulu, NBC Sports, Netflix and YouTube TV, among others. New services from HBO Max, Peacock and Quibi may also be showcased, dependent on their launch dates, according to organizers.

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“Streaming is a major focus of the 2020 NAB Show, and the new Streaming Experience is the largest showcase of its kind in the industry,” said NAB EVP of conventions and business operations Chris Brown in a statement. “We are excited for attendees to join their industry peers in this living room environment and experience nearly every live and on-demand streaming service on the market today.”

Additional details of the Streaming Experience, including renderings of the new space, can be found here.

 

SVOD Helps Apple Post Record Q1 Services Revenue of $12.7 Billion

Despite myriad naysayers, the Apple TV+ subscription streaming video service is quietly exceeding expectations and producing on the bottom line, according to CEO Tim Cook.

Speaking Jan. 28 on the Q1 fiscal call, Cook said Apple TV+, which launched on Nov. 1, 2019, has had a “rousing start” with strong consumer response worldwide. Unlike Disney+, which launched on Nov. 12 in six markets, Apple TV+ is available in 100 markets that sell iPhone, iPad, Apple Watches and Mac computers.

The SVOD platform helped Apple’s “services” business segment generate record revenue of $12.7 billion for the first quarter, ended Dec. 28, 2019. That was up 17% compared to services revenue of $10.8 billion in the previous-year period.

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The services category, which also includes iTunes, the App Store, the Mac App Store, Apple Music, Apple Pay, AppleCare and Apple Arcade, has become a significant revenue driver for the Menlo Park, Calif.-based tech giant.

Apple also had a great quarter overall, posting record revenue of $91.8 billion, up 9% from the year-ago quarter. International sales accounted for 61% of the quarter’s revenue.

“We are thrilled to report Apple’s highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for Services and Wearables,” Cook said.

He said Apple’s install base across all branded devices grew in each of the company’s geographic segments topping 1.5 billion.

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“We see this as a powerful testament to the satisfaction, engagement and loyalty of our customers — and a great driver of our growth across the board,” Cook said.

 

Netflix, Apple in Preliminary Talks About Possible MGM Acquisition

Both Netflix and Apple reportedly have had preliminary discussions with MGM, whose hedge fund owners have put out feelers for the studio’s storied catalog of movies, the “James Bond” movie franchise and a strong TV production business.

In the burgeoning subscription streaming video ecosystem, content is king. Netflix and Apple are on the opposite ends of the SVOD sphere with the former setting the bar when it comes to market penetration and content spending.

Yet both companies want expansive access to original and catalog content, especially Apple, which has entered the SVOD market relatively late — and with scant programming. Netflix, which has seen third-party catalog content migrate back to original holders’ branded streaming services, is looking for a big push back.

How better to do that than acquiring MGM Studios.

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CNBC, citing sources familiar with the situation, says MGM has shrewdly come back from bankruptcy in 2010, and is now worth a reported $10 billion, with its owners willing to sell.

Both Apple and Netflix have been largely absent from the merger & acquisition playing field. Apple most-recently spent $3 billion acquiring the Beats earphone brand.

In 2017, Netflix made its first M&A deal, acquiring Millarworld, the publishing company of comic book writer Mark Millar. In 2019, co-founder/CEO Reed Hastings said Netflix had “no big appetite” for major acquisitions.

“I don’t think investors have too much to worry about there,” Hastings said on the investor webcast last April. Indeed, neither Netflix or Apple are commenting on the MGM media reports.

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Regardless, MGM had revenue of more than $1 billion for the first nine months of the fiscal year (ended Sept. 30, 2019) consisting primarily of about $600 million in TV and film licensing revenue and $300 million from Epix subscriptions. The studio recorded pre-tax earnings of $123 million.

 

Apple TV+ Inks Deal with Julia Louis-Dreyfus

Apple has signed an overall deal with actress and producer Julia Louis-Dreyfus.

Under the multiyear agreement, Louis-Dreyfus will develop new projects exclusively for Apple TV+ as both an executive producer and star. The deal marks her first-ever overall deal with a streaming service.

“I am thrilled about this new partnership with my friends at Apple,” said Louis-Dreyfus in a statement. “Also, many thanks and kudos to my representatives for structuring the deal in such a way that I am paid in AirPods.”

Louis-Dreyfus is best known for her iconic roles in “Saturday Night Live,” “Seinfeld,” “The New Adventures of Old Christine” and “Veep.” She has won multiple Emmys, Golden Globes, SAG and Critics Choice Awards for her work as an actress and producer and is a recipient of the prestigious Mark Twain Prize for American Humor.

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Apple Drops Subscription Gaming Platform Price, Eyeing Content Bundles

Apple, like much of the tech world, has gone to a subscription-based business model to offset slowing iPhone sales.

In addition to launching Apple TV+, Apple bowed gaming-themed Apple Arcade and news-based Apple News+. Now, the company is cutting $10 from Arcade when paying the full $49 annual price compared to the $4.99 monthly fee.

Arcade aims to offer myriad online games (playable on iPhone, iPad, etc.) akin to what Netflix, Hulu and Amazon Prime Video do with movies and TV shows. Notable titles include Where Cards Fall, Grindstone, What the Golf? and Sayonara Wild Herts, among others.

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Apple is also reportedly considering bundling platforms similarly to what Disney is doing with Disney+, Hulu and ESPN+ and what Amazon does with Amazon Channels. The idea, as reported by Bloomberg, would bundle Apple Music, Apple News+ and Apple TV+ for a discounted price beginning in 2020.

The idea has apparently been met with pushback from traditional news publishers leery of giving away more of their shrinking margins. Apple currently pockets 50% of all subscription revenue, while the remainder is split among publishers depending on the number of eyeballs to their content.

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CNBC reports that consumer interest in Apple News+ — unlike Apple Music — has been limited due in large part to increasing numbers of people getting their news from social media and alternative online sources for free.

Apple Makes Golden Globe History with ‘The Morning Show’ Nominations

Upstart Apple TV+ made history of sorts becoming the first SVOD service to receive Golden Globe nominations (“The Morning Show”) in its first year of service.

The service received a Best Television Series — Drama nomination in addition to dual nominations for Best Performance by an Actress in a Television Series — Drama for stars and executive producers Jennifer Aniston and Reese Witherspoon. The series also stars Steve Carell.

The awards will be presented at the 77th Annual Golden Globe Awards on Jan. 5, 2020.

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Apple TV+ ($4.99) launched Nov. 1, representing the tech giant’s foray into OTT distribution.

“The Morning Show” explores the cutthroat world of morning news and the lives of the people who help America wake up in the morning. Told through the lens of two complicated women working to navigate the minefield of high-octane jobs, while facing crises in both their personal and professional lives.

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The nominations are also the first drama TV actress nominations for both Aniston and Witherspoon. Aniston is now only the fourth person in history to receive Golden Globe nominations for both TV Comedy and Drama, Lead Actress.

“Thank you to the Hollywood Foreign Press Association for today’s historic nominations,” Zack Van Amburg, Apple’s head of worldwide video, said in a statement. “[T]oday’s nominations are a true testament to the powerful storytelling that went into ‘The Morning Show,’ as well as all of our Apple Originals.”

Despite reported struggles gaining consumer traction (in comparison with Disney+), Apple said “The Morning Show” is resonating with audiences globally.

“We cannot wait to continue exploring the world of ‘The Morning Show’ into season two,” said Jamie Erlicht, Apple’s head of worldwide video.

“The Morning Show” streams exclusively on Apple TV+ on the Apple TV app, with new episodes premiering worldwide every Friday. The season finale premieres on Dec. 20.

Apple TV App Now Available on Amazon Fire TV

Amazon Oct. 24 announced that Fire TV users in more than 60 countries can download the Apple TV app — affording first-time access to iTunes movies, TV shows and channels purchased.

The app will enable Fire TV users on Nov. 1 to subscribe to Apple TV +, Apple’s new SVOD service featuring original and catalog programming, including “The Morning Show,” “Dickinson,” “See,” “For All Mankind” and “The Elephant Queen.”

The announcement is significant as it underscores Apple’s willingness to expand beyond its branded iOS ecosystem.

Viewers can also use the Alexa Voice Remote or a paired Echo device for far-field voice control.

The Apple TV app is available for Fire TV Stick (2nd Gen) and Fire TV Stick 4K, in the United States, Canada, the United Kingdom, Germany, France, Italy, Spain and India. Fire TV Basic Edition can also start using the app in more than 50 countries, including Australia, Austria, New Zealand, Brazil, Ireland and Mexico.

The app will be coming soon to the Fire TV Cube (1st- and 2nd-gen), Fire TV (3rd-gen pendant design), Fire TV Edition smart TVs and Nebula sound bar.

IHS: Apple TV+ Growth Hindered by iOS Mandate

When Apple bows its branded $4.99 monthly Apple TV+ subscription streaming video service on Nov. 1, it will be the cheapest SVOD platform on the market.

But being priced 50% below Netflix apparently isn’t good enough for IHS Markit, which suggests the service’s growth will be hampered by its exclusivity to Apple’s iOS platform.

Apple TV+ will be limited to the new iPhone, Mac, iPad and Apple TV streaming media device. The company is offering a free year of Apple TV+ with the purchase of any of the aforementioned devices.

Indeed, Apple is projected to sell about 70 million new iPhones through the winter holidays, in addition to Macs, iPads and Apple TVs.

Yet the data underscores the reality that Apple TV+ will have the potential to reach just 57% of the addressable market ion the United States, according to IHS Markit.

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By comparison, Netflix reaches 95% of the U.S. market — a percentage the pending Disney+ platform is expected to emulate.

“With its limited device distribution, Apple TV+ will be accessible to just over half the online population in the US, thus hindering subscriber growth,” analyst Fateha Begum said in a note. “Although Apple is the largest smartphone brand in the U.S. market and plans to offer free access with hardware purchases, the company would need to widen its device distribution to compete with OTT players that are now available nearly universally.”

Begum argues Apple should move beyond its iOS borders and make Apple TV+ available to Android devices. Indeed, the SVOD service is expected to be made available on Roku and Fire TV, in addition to Sony, LG and Vizio smart TVs.

“By opening up to other platforms, Apple TV+ will see its addressable base increase by 24% to 87 million U.S. households,” Begum said. “This will improve Apple’s position, but the company will still be at a disadvantage compared to competitors who can address the entire U.S. market of 124 million online households.”

 

Reports: Amazon Prime App Unavailable on Apple TV and iOS App Store

The Amazon Prime Video app disappeared Friday, Oct. 4, from Apple’s app store and Apple TV, according to news and social media reports.

“The developer has removed this app from the App Store,” is the notice that many mobile users received, according to reports. “Item not available” was another message when trying to download the app.

The app was also missing from Apple TV, according to reports.

It was a temporary glitch, according to Amazon.

“Earlier today, there was a technical glitch that impacted the Prime Video app on iOS and tvOS devices. The issue has been resolved, and the Prime Video app is now once again available in the App Store,” read an Amazon statement.

The glitch comes as Apple plans to launch its own streaming service, Apple TV+, Nov. 1 at $4.99.

Disney, too, is entering the market with Disney+ Nov. 12, and its CEO Bob Iger resigned from Apple’s board Sept. 10, the day the tech giant announced details about the pricing and release of its streaming service.

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In another streaming dustup, Disney is reportedly banning Netflix ads from all of its entertainment TV networks, including ABC, according to The Wall Street Journal.