For Apple TV+ To Succeed, Apple Needs to Leave Its Walled Garden Behind

Over the past few months, Apple has been dramatically breaking with the long-standing tradition of keepings its own services inside its own walled garden — a trend that began almost 20 years ago with the iPod and the iTunes Store and has continued with almost all of its products and services for years, including the App Store, FaceTime, iMessage, iCloud, and more.

In fact, in the very few cases where Apple has opened up to other platforms over the years, it’s been either as a result of necessity (i.e. iCloud for Windows), or the occasional odd partnerships (i.e. the ill-advised Motorola iTunes Phones of the pre-iPhone days). It wasn’t until the debut of Apple Music four years ago, with its accompanying Android app, that Apple finally began to see the light, realizing that it could no longer expect its most ambitious services to succeed if it insisted on excluding massive numbers of potential customers.

Recent reports estimate that the Apple Music app for Android has now been downloaded 40 million times, indicating how important Apple’s new strategy of embracing other platforms has become, especially as it moves into a more services-focused business model. As of last fall, Apple Music was estimated to have 56 million subscribers, and while there’s likely some overlap among users with both Android and iOS devices, the number of downloads make it a safe bet that a sizeable portion of Apple’s subscriber base is coming from a platform that competes directly with its flagship hardware product.

So it’s no surprise that Apple has come to realize that it can no longer afford to expect the quality of its services to drive users into its hardware ecosystem the way it once did. While people may have bought an iPod twenty years ago because of the simplicity and quality of the iTunes Music Store, when it comes to modern media streaming services, there are too many options out there for Apple’s offerings to entice users to buy into the larger Apple phenomenon, and this is even more obviously the case considering how late Apple is to the game.

Hence we see Apple’s unprecedented embrace of competing hardware platforms. It turns out that offering Apple Music on Android was just the start, with the music streaming service coming to Amazon Alexa last year, ending its HomePod exclusivity, and then the surprise announcement at CES that several major TV brands would be gaining AirPlay and iTunes support. If that wasn’t enough, even the Apple TV’s biggest competitor, Roku, is getting support for AirPlay 2 and Apple’s new TV app.

Steve Jobs famously once referred to the Apple TV as a “hobby” and while the term hasn’t been used in recent years, it’s fair to say that the set-top box never evolved much beyond that stage. According to Fortune, the Apple TV has never risen above a 19 percent market share, and has more recently dropped to remain steady at 15 percent over the past two years. Meanwhile Roku has been steadily climbing to a market-leading position with 37 percent of the share of internet video streaming devices. While the iPhone surged in popularity, Apple’s home media solutions — the Apple TV and HomePod — remained ancillary devices at best.

In an interview with CNBC, Roku CEO Anthony Wood discussed Apple’s decision to partner with Roku and other third parties as the only way for the company to have any hope of succeeding in the streaming market.

Obviously, they’re counting on jump-starting [the streaming service] with all of their iPhone and iPad and Mac customers. But actually, smart TVs are the way that most streaming services, long-form streaming services are viewed by customers. That’s where they spend most of their hours. And so for any kind of service like that to be successful you want to be on the leading streaming TV platforms.

Anthony Wood, CEO, Roku

Unlike the smartphone industry, television and internet streaming is a much more complicated landscape, and one that Apple has obviously had difficulty figuring out how to navigate by itself. Rumours that the company was going to introduce its own television set years ago never panned out, and Apple’s set-top box languished for years with little focus until the fourth-generation model modernized the platform with is own App Store. By that time, however, Apple was following other industry leaders like Roku rather carving out any real strategy of its own for the hardware.

While loyal customers within Apple’s own ecosystem will likely be the most enthusiastic adopters of Apple’s new TV+ service when it lands later this year, that fact is that of the over one billion iOS users, the vast majority are using non-Apple products in their living rooms. There’s nothing we’ve seen so far that would suggest that Apple TV+ will be compelling enough to convince people to replace their smart TV or set-top box, and it’s obvious that Apple knows this too. As Apple continues its reinvention into a services-oriented company, it’s going to be interesting to see how widely the “Apple experience” expands beyond the company’s own hardware.