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The Details on Apple's New Streaming TV Service

Daniel Sparks, The Motley Fool

As expected, Apple (NASDAQ: AAPL) launched its new streaming TV service during its big event on Monday. Of course, there were other announcements, too. The tech giant showed off a new gaming service, a news subscription service, and an Apple-branded credit card as well. But Apple's new TV service, Apple TV+ -- along with its redesigned Apple TV app -- was arguably the company's most ambitious new endeavor.

Here's a look at Apple's new TV service and what it means for the company.

A group of young people watching TV

Image source: Getty Images.

What we know

Coming this fall, Apple's new streaming TV service is the company's first Apple-branded video subscription service featuring original programming.

The service's initial slate of original content has been created by a host of prominent names, including Oprah Winfrey, J.J. Abrams, Jennifer Aniston, Steven Spielberg, Steve Carell, and more.

Backed with Apple's robust balance sheet and tens of billions in annual free cash flow, the company is willing to spend big to ensure its content is high quality.

"Apple TV+ will be home to some of the highest-quality original storytelling that TV and movie lovers have seen yet," said Apple's senior vice president of internet software and services in the press release about the new service. 

Helping the service's value proposition, Apple TV+ will be ad-free.

The service was announced alongside a redesigned Apple TV app that will make its debut in May. Unlike the previous TV app, which was primarily focused on content discovery but launched third-party content in third-party apps, the new app gives users access to content from within the all-new personalized Apple TV app. In addition, the app curates third-party channels such as HBO, Starz, SHOWTIME, CBS All Access, and more, allowing users to subscribe to channels they want without needing new login credentials.

What we don't know

The big question left unanswered about Apple TV+ was the most important one: How much will it cost?

Going up against a number of established and successful streaming TV services, Apple may need to be aggressive when it comes to pricing. Even media powerhouse Walt Disney (NYSE: DIS) is taking a cautious approach with the launch of its new Disney+ streaming service, which is slated to launch in the second half of 2019. Disney plans to price its upcoming streaming TV service "substantially below where Netflix (NASDAQ: NFLX) is," said Disney CEO Bob Iger in the company's fourth-quarter fiscal 2017 earnings call. "[T]hat will give us an opportunity to grow in volume and to have the pricing over time reflect the added volume as this product ages."

Netflix itself has taken a similar approach to pricing, only increasing its subscription fees when the quality and quantity of its content grows enough to easily justify price increases.

While Apple has done a good job rounding up an impressive list of talented creatives and celebrity actors and actresses for its new service, the company will need a robust lineup of both original and licensed content to get customers to pay for yet another streaming-TV subscription service. In addition, Apple may initially have to sell the service at a lower price than more established peers such as Netflix.

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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple, Netflix, and Walt Disney. The Motley Fool has the following options: short January 2020 $155 calls on Apple and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.