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Is Apple TV+ Trying to Become the Costco For Streaming?

Jason Gurwin

Earlier this week, Apple TV+ launched a premium video bundle for Apple TV+ subscribers.

The deal allows Apple TV+ subscribers ($4.99 a month) to receive CBS All Access Ad-Free ($9.99) and Showtime ($10.99) for just $9.99.

Just like Roku’s Showtime and STARZ bundle, Apple could have made the bundle available to anyone with an Apple TV or an iPhone (at a higher price), but they chose not to.

It feels like Apple is trying to be the Costco of streaming.

Let me explain.

Costco makes no more than 10% on any item you buy in their store. All of their profits are more or less from their $50 a year membership.

Could Apple TV+ be that membership for streaming? You could try to get hundreds of millions to pay $5 a month for Apple TV+ content, but as of right now, there just isn’t enough there to justify that.

But maybe, the real value in the Apple TV+ “membership” is that it’s a paid loyalty program that gives you insane value from the various bundles they might offer.

For Apple, to get this first bundle was easy. It was two services from the same conglomerate (ViacomCBS). The challenge will be when they want to start to offer bundles made up of content from different companies.

But, this is where they can be different too.

Unlike a cable company, they can pass on nearly all of wholesale savings to the customer for being an Apple TV+ member. And, because what they really care about is selling iPhones, they don’t need to make money on Apple TV+ itself. You probably will get it as part of your Apple One bundle anyway.

Cable companies already do this with premium channels, where you can get a massive discount when you subscribe to multiple ones. But the entry point to access that is a $100 cable bundle, not a $5 streaming subscription.

Imagine next year when NFL Sunday Ticket is available. Could Apple offer it for $149 for Apple TV+ subscribers and $249 for everyone else? Every NFL fan would instantly subscribe to Apple TV+.

Apple TV+ in its current incarnation is not working. There just isn’t enough content to justify the monthly subscription if it isn’t free — and not enough of a reason to open the TV App.

When you have incentive to subscribe to these services through Apple via discounted bundles, then the TV App will become your “cable box”, which makes it the gateway and aggregator of your entertainment.

Netflix can make any mediocre show successful because they have hundreds of millions of subscribers open their app when they turn on their TV. Only when Apple gets you to choose to open the TV App before anything else, will they become a major player in the streaming ecosystem.

And if your Apple TV+ membership can be your “discount card” to streaming, then you will have no choice but to aggregate your streaming there.

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