Apple has a streaming service called Apple TV+. Is Netflix winning against Apple TV+?
First Order Thinking: Yes. Measure both against streaming metrics like minutes watched, revenue from streaming subscriptions etc. and Netflix is a clear winner.
Second Order Thinking: Netflix has one product – streaming. Apple TV+ is part of a larger Apple ecosystem. Netflix and Apple TV+ are not in the same race at all.
Apple’s goal is not to win this streaming race. It is not to maximize the wealth created from Apple TV+. It is to maximize the wealth created for Apple.
Apple TV+ works even on non-Apple devices. By getting even a few people using non-Apple devices to subscribe to Apple TV+, Apple creates the potential to get them to buy an Apple device next time.
Third Order Thinking: Some people use both Apple and non-Apple devices e.g. I use an iPad but an Android phone.
I don’t watch TV or streaming shows. But I am a voracious reader.
What happens when my iPad runs out of memory? I buy space on iCloud+ because I don’t want to delete my ebooks.
Price of iCloud+ storage: 50GB for 0.99€/month
Apple tries to upsell me a package called Apple One. It includes:
Apple Music, Apple TV+ Arcade iCloud+ with 50GB of storage (the only one I really need)
Price of Apple One: 16.95€/month.
I did not choose Apple One. But by bundling Apple TV+ with iCloud+ storage, Apple could sway someone who spends more time watching streaming shows.
If they get a few such customers to switch from Netflix, it
a) Hits Netflix’s revenue
b) Gets the customer deeper into the Apple ecosystem
c) Upsells to16.95 Euros/month while starting from a customer need of extra storage which would be only 0.99 Euros/month
Most people who use any Apple device need extra storage. Apple prices the devices such that the extra in-device memory is much more expensive. So customers are nudged towards iCloud+ instead of devices with higher memory. And once they consider iCloud+, they are nudged towards Apple One!
That is the power of critical thinking!
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