Why The Apple Video Streaming Service Makes Perfect Sense

These days it seems like it's almost every other day when a new company gets into the melee that is the video streaming industry. The giants who once disrupted the existing hierarchy are in danger of now being disrupted themselves. With the addition of 'ads' to Netflix, Netflix has become the thing it sought to destroy like some macabre tale of old. Don't get me wrong Netflix is hugely successful in what they do. They pull in billions of dollars each year. Now Apple wants a slice of that pie.

Why Services?

If you've been paying attention to Apple's earnings call over the past few years. You'd be surprised to see that Apple's services sector has been it's services sector. Now services includes everything from the App Store to Apple Music and it has been bringing in serious cash. At a time when Spotify and Deezer are both losing money Apple's services sector looks to be going strong.
Now it's no secret that Apple is highly dependent on the money that the iPhone brings in year after year. But with most markets becoming saturated in the next few years. Apple's bottom line is expected to drop. Apple is expecting it's revitalised services sector to pick up some of the slack. Besides a company that diversifies is more secure. Lets compare both Google and Apple in their attempts at diversification.
Google mainly makes software and then sells you ads, Sells you to ads *Cough Cough*. But anyway knowing that relying solely on ad revenue is putting you eggs all in one basket, Google has branched out into video rental music streaming and hardware. With no to moderate success. In my opinion Google's music services were one of the only few diversification attempts that saw some semblance of success. Which is highly surprising considering that that Google is one of the internet's advertising empires. Meanwhile Apple on the other hand has invested in a few services like Apple Music and it has been wildly successful. Dethroning established players in the scene. Through Apple's effective marketing and having a wide and extensive user base, Apple's services just took off.

Rinse And Repeat

Its safe to say that now Apple has a winning formula that is not easily replicable by other other companies. Apple is now looking to repeat the success it has had with music service with it's purported video service. With the arrival of "Apple Video" so to say, Apple will have a foot in multiple doors. From app royalties to cloud storage to music and video streaming. This is when Apple truly starts to become more of a services company and less of a hardware  company. Just think of the possibilities, Music, Video, Cloud Storage all for a fixed price. An aggressive marketing campaign could very well convince people to switch from Netflix or Spotify to Apple's equivalent service. Moreover it's clear that Apple is on the right track. In the streaming world it's all about original content.With Netflix expected to spend almost $13 billion on original content alone. It may come as a surprise but Apple has already invested in original content and no I'm not talking about planet of the apps. Apple has signed for lots of shows including for a comedy from Rob McElhenny and Charlie Day (YAAAS!). The list is quite extensive and the Apple catalogue looks to be off to a great start. Keep in mind with a few negotiations all the titles or at least most of the titles on the iTunes Store could be ported over to the streaming service. Further bolstering the Apple video catalog.