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Can Apple Solve These Consumer Frustrations With Video Streaming?

By Adam Levy – Updated Apr 14, 2019 at 7:28PM

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The tech titan could offer simple solutions to these big problems.

Apple (AAPL -0.92%) is set to unveil a video-streaming service next week. The service is expected to include content from a variety of over-the-top services, as well as Apple's own original productions. In that manner, the service may look similar to Amazon's Prime Channels or Roku's (ROKU) Roku Channel, which both put the company's respective own licensed content alongside content from other media companies.

Despite the growing adoption of streaming -- more households subscribe to video-streaming services than pay TV in the U.S. -- consumers still have several big frustrations. Apple's service may be able to address those frustrations. And if it can provide simple solutions to those problems, it could be a big hit.

The TV app on Apple TV.

Image source: Apple.

Where'd my favorite show go?

Anyone that's subscribed to Netflix (NFLX 1.72%) for longer than a few months has probably experienced a film or TV show they were planning to watch suddenly disappear from the service. The problem has increased over the last couple years as media companies have started retaining more of their shows and films for their own direct-to-consumer projects. Fifty-seven percent of respondents in Deloitte's Digital Media Survey expressed frustration over "disappearing" shows.

As an aggregation service, Apple may have the opportunity to help users follow shows from one streaming service to another. At the very least, it can offer users the opportunity to download a show that was taken off a streaming service from iTunes.

There are a couple problems Apple might run into. First of all, it won't be able to partner with every streaming service in existence. Big names like Netflix have already said they won't participate, and Hulu is unlikely to be part of the service, either.

Second, even if Apple is able to help users find their favorite show on another service, it still has to convince those users it's worth paying for another subscription or the price to own it. Forty-seven percent of respondents in Deloitte's survey said they don't like having to piece together multiple services to watch everything they want.

Check out the latest earnings call transcript for Apple.

Thousands of hours of content and nothing to watch

It's increasingly rare that households use just one streaming service. Forty-three percent of all households subscribe to more than one paid streaming-video service, according to a Leichtman Research Group survey from last August. Many households also watch free ad-supported content.

Discovering content across various streaming services can be difficult without the right tools. Roku offers a built-in search menu in its devices that searches for content across many of its available channels. But that search feature may be overlooked by many users, and management hasn't done a great job highlighting it.

If Apple can develop a solution for finding content users want and discovering new content they might be interested in, that's just step one. Apple also needs to make it a big part of the platform, so people know it exists and how to get the most out of it in order to quell consumers' frustrations.

That's my data!

There's a growing concern with data privacy in the U.S. Consumers are increasingly wary of not only who they give their financial information to, but what data companies are collecting on their behaviors.

Netflix, for example, collects tons of data on its users in order to inform its content suggestions and its studio production decisions. In fact, it's likely (at least in part) that the level of detailed data Netflix is able to collect on its users is what prevented it from partnering with Apple for its new video service.

Apple has a relatively strong track record with regard to data privacy, especially compared to other big tech companies. Whether Apple can actually offer a more secure and private service while still maximizing revenue remains to be seen. But its reputation may give it some cachet with users.

Fixing the problems with streaming

Apple has a good chance at resolving these consumer frustrations. It'll be interesting to see if Tim Cook and the presenters highlight these pain points during the March 25 unveiling, or if it'll be just another content aggregator like Amazon Prime Channels and the Roku Channel. If it's the latter, it's hard to see a few original productions getting consumers to shift their entire video-streaming behavior to Apple's platform instead of sticking with what they're currently doing.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Levy owns shares of AMZN. The Motley Fool owns shares of and recommends AMZN, Apple, and Netflix. 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 recommends Roku. The Motley Fool has a disclosure policy.

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