Ex-Netflix chief Marc Randolph has slammed Apple's video strategy, saying Apple TV+ is lagging behind the competition due to the company's free offerings and lack of compelling content.
Apple Not in Streaming "With Both Feet"
If you ask former Netflix CEO and co-founder Marc Randolph, Apple TV has been plagued with a freeloader problem that has contributed to the service's anemic growth compared to Netflix, Disney+, and other successful streaming services.
Speaking to Yahoo Finance, he said Apple TV+ is wasting energy on promotions and free offerings whereas it should be focusing on adding more quality content to boost value.
If Apple spent one quarter as much time on content as they do on giveaways they really could play. They have no excuse [and] they're still not in it with both feet. They really have to do the entrepreneurial thing and walk up to the edge of the cliff and jump.
Jumping off the edge of the cliff may be easier said than done because Apple TV+ lacks Disney's market power and Netflix's brand recognition. Right now, it's all about Disney+ vs. Netflix and which streaming service offers the best value for money to potential customers.
Apple TV+ Has the Highest Churn Rate
Randolph is taking a stand against giveaways and promotions in the streaming market, suggesting that Apple TV+ has the "highest churn rate" among the major services.
You can't keep replacing people. You've got to give them a reason to stay.
MoffettNathanson-HarrisX found that 29 percent of those who signed up via a free don't plan to resubscribe once their free trial expires, as reported by Variety.
Free Apple TV+ Deals
Apple has been offering 12 months of free Apple TV+ service to everyone who purchases an eligible new device from the company, like a new iPhone. In the meantime, Apple has extended the free year-long subscriptions twice for those who signed up in 2019.
It's a clear signal Apple itself doesn't believe the service provides enough content to justify the asking price of $5/month. Look at it another way: Had Apple TV+ exceeded internal projections, Apple would've already bragged about subscriber numbers.
Disney+ and Netflix Provide Serious Competition
It was only 15 months ago that Apple TV+ made its debut in November 2019. Disney+ followed soon after. Apple isn't revealing how many paying subscribers Apple TV+ has but Disney just passed 94 million subscribers, far surpassing even its own expectations.
By comparison, Netflix counted 204 million paying customers at the end of 2020. Disney hopes it could match Netflix in terms of subscribers in just 12 months.
Randolph says Disney+ has "fought its way up to a really strong position" thanks to content. "It's really a war of who's prepared to make the content," he added.
We’re seeing the new rules of the game developing. This is not just announcing, this is not just having a promotion---what you have to demonstrate is that you have the content, content, content.
Indeed, the game is about the content. For example, as outlined in its plans for 2021, Netflix will launch a new original film every week throughout the year. By contrast, Apple TV+ features a handful of films like the Tom Hanks-starred WWII drama Greyhound (based on true events), the original drama Palmer starring Justin Timberlake, and Sofia Coppola's On The Rocks, to name but a few.
Apple’s Slow-Burn Approach
What Randolph doesn't acknowledge is that Netflix and Disney+ had massive amounts of content from day one whereas Apple TV+ is building out its content library from scratch.
Apple has obviously opted for a slow-burning approach, as evidenced by the scarcity of shows relative to Disney+ and Netflix. No matter how you look at it, its strategy with Apple TV+ seems to require luring people with free offerings in the hope the service amasses enough quality content to convert free customers into paying subscribers.