Why Disney’s video bundle will force Apple to bundle Apple TV+

It’s amazing how one company can change how you view pricing in an entire market.

More than a year ago, I made some guesses about how Apple would roll out its still-forthcoming TV streaming service. I was a symbol away from getting the name right, and guessed that “Apple TV”—we now know it’s called Apple TV+—would cost $7.99 a month, with an affordable bundle with Apple Music.

But back then, Disney’s streaming plans were still on the drawing board. Today, with the launch of Apple’s service coming very soon, the landscape is more complicated and competitive than ever. Not only are NBCUniversal and Warner Media preparing their own streaming-service launches, but Disney’s moves keep getting more aggressive.

The media world was taken aback when Disney announced that its new Disney+ service would be initially priced at $7.99, dramatically less than competitors like Netflix and HBO Now. But this week Disney let the other shoe drop, saying that when its service launches on November 12, it will also be available in a bundle with Hulu and ESPN+ for $12.99. Not only will Disney+ undercut Netflix by $5 a month, but a subscription to all three of Disney’s streaming services will cost the same as Netflix.

Disney is willing to give up short-term customer revenue to rapidly gain subscribers and make itself look like a value when compared to the competition. It might not be enough to derail the streaming giant that is Netflix, but it certainly makes you reconsider the possibilities for the new launches from Warner Media (HBO Max) and NBCUniversal.

And… then there’s Apple. Remember Apple TV+? Coming this fall. Price unnamed. How will Apple approach this new streaming landscape?

Backing the bundle

It’s awfully hard to imagine that Apple TV+, a service with a small number of original shows and no back catalog of older content (so far as anyone can tell), can possibly be priced anywhere near Netflix’s $12.99. The bigger question is, can Apple dare to compete with the $7.99 price of Disney+?

Having predicted a $7.99 price for Apple TV+ a year ago, I think I’m going to stick with that prediction. Apple is not a company that is in the habit of making its products cheap, and I don’t think it will start now. That said, Apple’s pricing strategy with Apple Music—a generous trial period and a price that matches up well with its competition—seems like a good model. (Apple also offered a bundle of a sort, pricing the Apple Music Family Plan at a rate that forced Spotify to move to match it.)

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