- Apple’s product events have become increasingly important as the company has been forced to navigate slowing iPhone sales.
- This year’s September keynote featured a trio of new iPhones, a new iPad, an updated Apple Watch, and a shockingly low price tag for Apple TV Plus.
- The pricing announcement for Apple TV Plus sent shares of rivals Netflix, Disney, and Roku lower.
- Here’s what Wall Street analysts are saying about Apple’s streaming service, and what it could mean for the company’s future.
- Visit the Markets Insider homepage for more stories.
Apple’s September keynote shed more light on the company’s plan to jump into the streaming wars.
While the event revealed a trio a new iPhones and a new iPad, perhaps the most significant announcement was the pricing of its upcoming streaming service.
Apple TV Plus will cost $4.99 per month, undercutting competitors such as Netflix, Hulu, and the upcoming offerings from Disney, AT&T, and Comcast. Apple also said customers who purchase a new Mac, iPhone, or Apple TV will receive a free year of the service.
The news sent shares of Netflix, Disney, and Roku sliding, with Apple’s pricing seen as a clear challenge to the future of other streaming competitors.
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Wall Street analysts have spent months speculating how Apple TV will fit into the tech juggernaut’s larger hardware-driven business. With the highly-anticipated announcement of its pricing and the reveal of that new customers will get one year free with a device purchase, analysts are forming a more definitive picture for Apple’s content strategy.
Here’s what Wall Street’s top analysts are saying about Apple’s streaming ambitions, and what it could mean for the future of the company:
Rosenblatt: “Apple is positioning AppleTV+ as a tool in subscriber acquisition to its ecosystem”
“The key highlight from the Apple Event on 9/10 is more aggressive (lower) pricing on AppleTV+ than we previously expected,” Bernie McTernan, an analysts at Rosenblatt Securities said in a note to clients on Wednesday.
He continued: “We believe Apple is positioning AppleTV+ as a tool in subscriber acquisition to its ecosystem as opposed to another source of high margin service revenue.”
Wedbush: “The pricing of Apple’s streaming TV service at $4.99 per month is a ‘show stopper'”
Price target: $245
“The pricing of Apple’s streaming TV service at $4.99 per month is a ‘show stopper’ and a major shot across the bow at the likes of Netflix and Disney among others,” Wedbush analyst Daniel Ives said in a research note to clients on Wednesday.
Ives add: “In our opinion with an installed base of 900 million active iPhones worldwide we believe Cook & Co. have an opportunity to gain 100 million consumers on the streaming front in the next 3-4 years.”
Needham: “AAPL has started a price war with NFLX and Disney+”
Price target: Raised to $250, from $225
Rating: Strong Buy
“By pricing AppleTV+ at $5/month, AAPL has started a price war with NFLX ($13/month) and Disney+ ($7/month),” Laura Martin, an analyst at Needham & Company wrote in a note to clients on Wednesday.
Martin added: “AAPL’s balance sheet won’t lose this war, but NFLX might.”
UBS: “The story of this launch is, for the first time, the bundling of services and hardware”
Price target: $235
“The story of this launch is, for the first time, the bundling of services and hardware,” Timothy Arcuri, an analyst at UBS said in a note to clients on Wednesday.
He continued: “Additionally, monthly sub pricing of the Arcade gaming and TV+ at $4.99 for a family is lower than most expectations, undercuts all other rivals, and should spur adoption.”
Bank of America: “Apple can build content by deploying capital”
Price Target: $250, up from $240
“Perhaps the biggest surprise at the event was monthly price for Apple TV+ service which was set at $4.99/month which is lower than we expected, Bank of American analyst Wamsi Mohan said in a note to clients on Wednesday.
Mohan added:”We recognize the limited content at launch but Netflix launched 13 original shows in 2013 (not dissimilar to Apple’s launch) and Apple can build content by deploying capital. Apple spends $60bn in buybacks in one year which exceeds the total amount spent by Netflix on original content cumulatively since launch.”