Apple Gets Aggressive With Apple TV+ Pricing

The Mac maker’s forthcoming video streaming service is far cheaper than expected.

| More on:

It was becoming increasingly clear that $10 per month wasn’t going to cut it for Apple TV+, and Apple (NASDAQ: AAPL) has apparently come to that same realization. The Cupertino tech giant is entering a crowded market for over-the-top (OTT) video streaming services, and investors are already excited for Disney (NYSE: DIS) to launch Disney+. At $7 per month, that service’s value proposition looks incredibly strong, and a promotional offer that brought that price down to under $4 per month crashed Disney’s site last month.

Apple has decided to undercut Disney+’s base pricing, launching Apple TV+ in November at just $5 per month.

Giving TV+ away

It takes many years and many billions of dollars to build up an original content portfolio. Apple has already been at it for about four years, and its budget has reportedly swelled to $6 billion. Services chief Eddy Cue has already stated that Apple is going for quality over quantity, and the initial slate of shows that will be available at launch is fairly limited. Pricing the service at $10 per month would have been a hard sell, especially when compared side by side to Disney+, which is also set to launch in November. Disney+ will include decades worth of content.

Furthermore, Apple announced another surprise: Anyone who buys a new iPhone, iPad, Apple TV, iPod Touch, or Mac gets a free year of Apple TV+. That’s a lot of TV+ subscriptions that the company will be handing out — Apple sells tens of millions of devices per quarter — although only one promotional offer can be claimed and shared per household. It’s unclear for how long the promotion will run.

The pricing and launch promotion are incredibly aggressive. Apple really wants people to try out the new service and is effectively giving itself another year to prove that its content is good enough for subscribers to renew; the company will be continuously adding new shows and movies each month.

Marching toward 500 million

Apple TV+ was always going to be a core part of Apple’s growing portfolio of services, and the service represents one of its most significant cross-platform plays, since Apple TV+ will also be available on competing tech platforms such as Amazon Fire TV and Roku, as well as through third-party smart TVs made by prominent manufacturers like Samsung.

The Mac maker set a target earlier this year of hitting 500 million paid subscriptions at some point in 2020. At the end of the second quarter, it had already reached 420 million paid subscriptions and has consistently added 30 million per quarter over the past seven quarters. With Apple TV+ and Apple Arcade launching, both at an affordable $5 per month, the company should have no problem hitting that goal early next year.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of AMZN, Apple, and Walt Disney. The Motley Fool owns shares of and recommends AMZN, Apple, ROKU, and Walt Disney. The Motley Fool has the following options: long January 2021 $60 calls on Walt Disney, short October 2019 $125 calls on Walt Disney, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.

More on Tech Stocks

hot air balloon in a blue sky
Dividend Stocks

3 Canadian Stocks That Could Benefit From a Softer Economy

These three TSX names try to defend a portfolio in a softer economy with essential demand, monthly income, or a…

Read more »

truck transport on highway
Tech Stocks

Have $3,000 to Invest? 2 High-Potential Growth Stocks Worth Buying Without Overthinking It

Uncover the potential growth of emerging companies. Understand the risks and rewards of investing in high-potential growth stocks.

Read more »

Piggy bank on a flying rocket
Tech Stocks

This Aggressive Savings Strategy Can Help Make Up for Lost Time

Trying to catch up on your investments? This TSX growth stock could help speed things up.

Read more »

Rocket lift off through the clouds
Tech Stocks

The Best Places to Put Your TFSA Contribution if You’re Focused on Growth

Three TSX stocks from different sectors are standout choices for growth-focused TFSA investors.

Read more »

ETF is short for exchange traded fund, a popular investment choice for Canadians
Tech Stocks

The 1 Strategic Canadian ETF I’d Make Sure Every TFSA Includes

Discover how to build a successful TFSA portfolio using strategic asset allocation in Canadian ETFs to mitigate risk.

Read more »

rising arrow with flames
Tech Stocks

1 Canadian Stock Supercharged to Surge in 2026

VitalHub crossed $100 million in revenue in 2025 and is building AI tools customers are already paying for. Here is…

Read more »

A person's hand cupped open with a hologram of an AI chatbot above saying Hi, can I help you
Tech Stocks

What the TFSA Fine Print Says About Holding U.S. Stocks

The TFSA protects Canadian gains from tax, but U.S. dividend stocks come with a 15% dividend withholding tax twist most…

Read more »

3 colorful arrows racing straight up on a black background.
Dividend Stocks

3 Canadian Stocks That Could Thrive Even if the Economy Slows

If the TSX hits a softer patch, these three stocks stand out for durable demand, long-cycle work, or exposure to…

Read more »