Why Apple Wants a More Affordable Over-the-Top Service

Apple will look to compete in online streaming market

In the previous part of this series, we discussed the point of contention between Apple (AAPL) and TV content providers, which resulted in Apple holding temporary negotiations with these providers. Apple’s main issue is that it wants a skinny bundle of channels that can be priced at ~$30 per month to users. However, TV networks do not agree with such an offer from Apple.

Apple wants a cheaper over-the-top service so that it can compete effectively with other streaming players in the market. As the chart below shows, Netflix’s (NFLX) service is priced at an average of $10 per month. Hulu’s ad-supported service and Amazon’s (AMZN) Prime Instant Video service are priced the same, at ~$8 per month. But there is a difference in the kind of content they offer.

Why Apple Wants a More Affordable Over-the-Top Service

Netflix, Hulu, and Amazon provides cheaper streaming services

Netflix provides online video streaming services under various plans that average about $10 per month. Currently, Netflix offers TV shows and movies, including original content. Hulu offers TV shows and movies in its streaming service. It also offers an add-on online media network—CBS’s (CBS) Showtime—at an additional cost of $8.99 per month, which is in addition to Hulu’s ad-supported service at $7.99 per month.

Amazon Prime Instant Video offers TV shows, movies, and music priced at $99 per year as part of the Amazon Prime membership. This works out to $8.25 per month. Amazon is planning to expand this service by possibly adding other online media networks. To find out more, please read Will Amazon Prime Instant Video Expand Its Services?

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