Apple and the Trends in the Media Industries

Trends in the Media Industry
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Trends in the Media Industry
The media industry is changing its landscape considering the current trends that it is adopting. As more organizations emerge and new competitive avenues spring, organizations counter their moves with newer strategies to survive. Lately, the major media outlets have indulged in streaming services that are viewed as the industry’s future. To achieve relevance, each media house attempts a strategy that they feel to be vital in their move to become supreme in streaming services. Among the players that have indicated their need to eclipse the industry’s market share is Apple. Apple has the resources to penetrate the market through streaming services. However, the industry is highly competitive, especially with countermeasures from players such as Amazon, AT&T, Disney, Comcast, and Netflix, which have shown interest in aggressively enhancing their streaming packages. That leads to the question of what Apple plans to employ to stay competitive. In this analysis, emphasis is put on Apple’s strategic options in the upcoming trends in the media industry, as implied in an article from The Economist titled “The Future of Media: Streamlined.” The analysis shows that an insightful understanding of the strategic trends such as vertical integration, disintermediation, network effects, and economies of scale should steer the organization to untamed success relative to possible counter-strategies from competitors.
Part 1
Question 1: Apple and the Trends in the Media Industry
“The Future of Media: Streamlined” article defines some of the strategic trends that should inform the decisions that a key industry player such as Apple should make. The article emphasizes the acquisitions and strategic alliances the big six media companies are conducting to prepare for the future. Among the cited investments include the $215 billion combined acquisition package by AT&T, Disney, and Comcast (The Economist, 2019). The companies subject to the acquisitions included Sky, Time Warner, and Century Fox. There are suggestions that Netflix could bow to the increasing competition to be acquired by one of the competitors. Because Netflix still commands 50.2% of the global market for all digital originals, its acquisition will trigger a notable shift in the market share. In the article, media houses are attempting to capture the biggest market shares while emphasizing low operational costs for the future. Almost all the big six players are integrating their value chain to create individual ecosystems of supporting services. Should the current trends continue, the industry will be indulged in a new operational platform.
One question that Apple must address if it attempts to follow the suits of its competitors is the financial viability of the strategy. Streaming services have been profitable, especially to a key player such as Netflix. Partly, Netflix’s prominence stems from the fact that it penetrated most markets before some of the key players indulged (Liberal-Ormaechea & Cabezuelo-Lorenzo, 2018). If Apple is to pursue streaming services competitively, it must understand its current position and its chances of upward mobility should the strategy thrive. The current data indicates that Apple has less than 20 million subscribers in the US and Canada (Katz, 2021). Further, statistics indicate that Apple’s global subscription is 40 million, with 20 million paying subscribers. Netflix boasts of approximately 209 million paying subscribers, while Amazon has a global subscription of 116 million. Going by the industry market share analysis, it is wrong for Apple to spend more in a dominant product segment, and the leading competitors are also resourced enough to warrant efficient expansion.
The failures in the market share front should not be the only reason why it is not viable financially for Apple to invest aggressively in streaming services. From a raw economic standpoint, no other organization in the industry can outspend Apple considering their budget cap that stands at $2.37 trillion (Katz, 2021). However, even with such a market value for the parent company, Apple TV+ still must curve its niche to warrant the investments. Presently, Apple fronts an annual content budget of $6.5 billion. That is much less compared to Netflix’s $17 billion (Katz, 2021). Relative to their expenditure, Apple has also seen the least subscription rates in the US compared to other service providers. In Q2 of 2021, Apple’s subscription index improved only by 3%. In comparison, Netflix’s subscription increased by 29% in the same period (Katz, 2021). It is, however, worth remarking that Netflix’s numbers have been reducing, considering a 48% subscription growth in Q2 of 2019. The current market share and the growth rate that Apple has showcased indicate the need to stall aggressive investments in streaming services.
The other factor to consider in capping the expenditure for streaming services at Apple are the strategic options that the organization boasts relatively to its competitors. Apple has created an ecosystem for its products and services, which gives it the uniqueness that its normal target consumer segment demands. With an ecosystem such as Apple’s, consumers of other products such as the Apple Watch, iPhone, iPads, and MacBooks can easily be integrated into the services (Katz, 2021). Unlike organizations such as Netflix that must spend more to integrate vertically, Apple already has an ecosystem where its streaming services can be appreciated. However, in an industry where diversity in tools and platforms is a necessity, Apple stands at a disadvantage, lest they adopt flexibility and other organizations such as Google with Android indulge, thereby hampering their disintermediation strategy for which the Apple ecosystem stands (Nover, 2018). Still, Apple has the resource advantage that could ease its adoption of more long-term strategies. Currently, Ap...