Is Apple TV the new HBO?

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to cut. Pachinko. silo. Ted Lasso. Over the past couple of years, a number of Apple TV shows have been hits with audiences and critics alike. However, compared to the size of other subscription services, Apple TV is still barely any success.

In Nielsen Latest benchmark reportApple’s service once again failed to make the top 10 list of most used streaming services, suggesting that its audience is smaller than not only Netflix and Disney Plus, but also Tubi, HBO Max, and The Roku Channel.

New data released by subscription insights startup Antenna last week suggests that may not be a contradiction at all: Engagement with Apple’s video services relies heavily on a few core offerings, according to a new Antenna report. Subscription status reportwhile Netflix viewing is more spread across a wider range of titles.

The report estimates that 32 percent of those the company classifies as heavy viewers watched an Apple TV show Shrink In March of this year, 31 percent watched action series Monarch: Legacy of Monsters. On Netflix only War machine It was watched heavily by 25 percent of viewers, while all other titles remained below the 20 percent mark.

“Big text hits drive more viewership on Apple TV,” the report notes. “Heavy Netflix viewers are spread across the list, suggesting breadth of engagement rather than concentration.”

Some of the headlines that grab people and become cultural moments: This is a model that premium cable networks like FX, HBO and Showtime have relied on for decades. It’s also something a number of video subscription services briefly tried to replicate in the streaming era as they aimed to compete with Netflix.

When HBO Max first launched in 2020, it was all about extending HBO’s brand and curation approach to streaming. Then, WarnerMedia merged with Discovery, bringing a bunch of reality TV shows to the service, blurring the value proposition. The service was briefly renamed Max to appeal to a wider audience, but Warner Bros. Discovery I reversed this change last year.

Likewise, Disney tried to give its broadcasts a network TV feel when it launched FX on Hulu brand with much fanfare in early 2020. To capitalize on the cable network’s success, FX on Hulu was supposed to host not only shows that previously aired on cable, but also FX-branded Hulu originals. However, creating a premium brand within a service that had a little bit of everything turned out to be easier said than done. Since then, the company has phased out the “FX on Hulu” branding and simply uses FX as a content category alongside others, such as ABC, Hotstar, and Freeform.

Which raises the question: If being an HBO streaming provider doesn’t work with HBO, can it work with Apple TV?

“Providing superior service to a niche audience that you understand well is a business model,” says Paul Pastor, chief business officer at Quickplay, which builds streaming applications and infrastructure for media companies such as MSG and Gray Media. “They do it very well in their shows,” he adds.

Some of the differences in engagement between Apple TV and Netflix can be explained by catalog size. Apple TV currently offers subscribers access to about 220 shows, According to JustWatchWhile Netflix’s catalog contains about 3,300 shows.

However, Pastor also believes Netflix is ​​more active in showing lesser-known gems to its audience. “They’ve really figured out the formula for how to manage this through their recommendations and personalization engines,” he says. “They are primarily focused on their technology platform.” (Pastor provides AI-powered personalization solutions to streaming service operators.)

Pastor acknowledges that Apple has some key advantages that allow the company to stick to an HBO-like model for its streaming service.

For one thing, Apple has a different business model than many of its competitors. Apple TV is the only major streaming service that doesn’t have an ad-supported tier yet, and Apple as a company has a huge hardware business that allows it to pursue different priorities. This includes using Apple TV as an entry point for reselling other services.

Case in point: If you turn on Apple TV or browse the Apple TV app on your iPhone, you may find supporting Apple TV programming, but also third-party content from services like Hulu, HBO Max, or Prime Video. When you subscribe to these services through Apple devices, the company grows Already a huge service business.

“At the end of the day, Apple is also an assembler,” Pastor says. “This may be the best business model for them.”

The best business model at the moment is. If the company were to adopt Apple TV advertising, as has already happened Rumored for some timemay adopt a more Netflix-like model with a broader catalog, more customization, and less focus on tentpole titles. Not only are advertisers demanding scale, but an ad-supported tier would also fundamentally change Apple’s incentive structure. Right now, the company makes money through monthly fees, regardless of how much each subscriber watches. With the ad-supported tier, each additional ad break viewed generates additional revenue.

Until that happens, Apple TV may be the best thing we have after HBO. Sorry, HBO Max.