The New Apple TV Streaming Service Could Be A Netflix Killer

Apple TV+ will offer ad-free, exclusive content from award-winning directors like Steven Spielberg and Damien Chazelle. Apple will also offer a “channels” service in May, which will allow customers to purchase subscriptions from HBO and other well-known providers. Notably missing was Netflix (NFLX), after CEO Reed Hastings said last week that it would not be part of Apple’s service.

Apple Arcade, which is slated to launch this fall, will have more than 100 new and exclusive games for iPhones, Macs and iPads.

What’s new. While one analyst said the event “had sizzle but little steak,” another analyst at Needham wrote in a note to clients on Tuesday that Apple’s new offerings could earn the title of “Netflix Killer.”

Needham analyst Laura Martin said Netflix, “has an inferior competitive position to [Apple] over time.” She noted that Apple’s devices give the company 900 million “captive” global unique users, “which are the wealthiest consumers in the world.”

“This will be aided by premium original content with the biggest stars in Hollywood,” Martin said.

Martin also liked the Apple Arcade announcement for bringing television, games, and music closer together on its platforms. “We think it will be able to cross-sell and integrate best practices of all three into a new innovative service never done before,” she wrote.

Apple stock was up about 1.3% near midday on Tuesday, to $197 per share, while the S&P 500 had gained about 0.7%. Netflix stock was down about 1%, to $362 per share.

Moving forward: Martin reiterated a Strong Buy rating for Apple stock, with a price target of $225.

“We anticipate lifetime value per user upside from new subscription products,” she said, “as well as valuation upside created by falling churn and strong barriers to entry tied to [Apple’s] Network Effects.”

Still without price details, it’s tough to forecast the impact of Apple TV+ on a fragmented and complicated streaming landscape.―Market Watch