MDM September Newsletter - Q3 Digital Video Update

September 23, 2015

Manatt Digital Media – September Newsletter: Q3 Digital Video Update

In this month's newsletter we highlight some of the latest activities in the digital video space. Social media, mobile and over-the-top (OTT) viewing continue to make waves in the media landscape, creating new opportunities for content production, distribution and monetization. (See highlights below.)

Digital Video News Roundup

In the last three months the online video space has seen new entrants, new offerings and further experimentation. Showtime's OTT service finally went live in July. Other newly launched OTT services include A+E's Lifetime Movie Club app, PGA Tour's mobile offering, and Canada's SVOD service Shomi. Mobile and pay-TV operator Comcast is also joining the fray with its YouTube competitor Watchables. Among the major online video players, competition heated up when Amazon Prime Video announced offline viewing for all its subscribers, something Netflix said they would never allow. Around the same time, Hulu unveiled an ad-free version to its users for $4 more per month. Read more

MDM in the Press

Below is a selection of commentary provided by MDM leaders around significant deals, players and activities in the OTT space.
  • BuzzFeed Motion Picture's Winning Strategy. "It's not making decisions on the value of someone's 'gut' instincts, which was often the way to describe the way studio titles were green-lit," said Eunice Shin, who leads MDM's consulting arm. "With BuzzFeed and other savvy digital-first companies, it's making decisions based on data and science and applying that to an intimate understanding of its audience." (LA TimesRead more

It's OK to Stay Bullish on MCNs 

Multichannel networks have been getting a bad rap this past week as a result of a Recode report that Maker Studios' earn-out from its M&A megadeal with Disney might be less than half the maximum $450 million, which would still give Maker execs and investors a nice little $700 million-plus win. Not bad. Read more

Apple's TV Vision—"The Future of TV Is Apps" (Tim Cook)—Highlights From Apple's Press Event

Here are the highlights from this month's Apple press event:
I. AppleTV
  • Headline story: "The Future of TV Is Apps" (Tim Cook).
  • Apple TV is heavily voice-reliant with powerful (and highly specific) voice navigation via a Siri button. Navigation is enabled across apps (such as Netflix, Hulu, Showtime and iTunes) and displays all matches on one screen. This enhances content discovery and will become even more valuable as Apple opens up the platform to other OTT content providers. Voice navigation also enables easy and extremely powerful viewing control (e.g., "skip ahead 7 minutes into the show"). If this works as advertised, this indeed will be evolutionary and revolutionary in our TV viewing experiences.
  • New remote has a touch screen surface. Read more

5 Questions with Zya CEO Matt Serletic - Exclusive Q&A

     

At long last, it's the return of my "5 Questions with ..." executive Q&A series with entrepreneurs from companies innovating in new ways (and which I believe are worth knowing).  I took a several month hiatus on these -- but they are now back with a vengeance!  Expect several more to follow in the days ahead.  Always good to hear from the entrepreneurs themselves, rather than hear their words interpreted by others.  And, that's what you have here -- my 5 questions, the guest's direct and unvarnished answers.  Today's featured entrepreneur is Matt Serletic, co-founder & CEO of music startup Zya -- a company with pedigree-d investors that include Liberty Global and Intel Capital.  That's how I first learned about them.  On his LinkedIn profile, Matt says that he "co-founded Zya to democratize music creation and expression through imaginative games and apps [and the company] has built the world's first streaming engine that empowers anyone to make and share music."  Sounds intriguing -- and love the music angle -- but, Matt, tell us more ...

     (1) What is the reason your company exists (and what problem(s) are you looking to solve)?

Zya exists to change the way the world interacts with music. Since the digital revolution, arts and artistic expression have played a central role in digital experiences. Just look at the rise of platforms such as YouTube and Instagram to see how crucial video and photography are to modern consumer-oriented expression. Yet, due to technical challenges, licensing issues, and lack of imaginative solutions, music has lagged behind. There is an enormous opportunity to change music interaction models and move music forward across the globe. Zya is doing that.

(2) How are you different from your competitors?

We are focused on the social and communication potentials of music and are working to connect the world through music. Our app Ditty is an example. Ditty sings anything you type, making every text musical. Its a never-before-experienced form of communication.

(3) Why will you succeed (and what is your single most important ingredient for success)?

Our technology sets us apart. We have spent years inventing several new modalities for musical expression and have learned through trial and error what users respond to. At Zya, we feel that our technology stack combined with exceptional user-centric product design will help us continue to succeed and grow.

(4) What makes your company unique (and what do you enjoy most outside of building your business)?

We dont give up. Combining music and technology is difficult and Im glad to say our team is relentless and up for the challenge. There is an incredibly unique set of cross-disciplinary skills at Zya. It pretty phenomenal to share your love of interacting with and making music both in and outside of work.

(5) What digital media trend is most interesting to you (and what is the least)?


We study emerging trends constantly. The digital rise of the rest of the world is too powerful to ignore. Ditty is a # 1 Music App in seven countries, and Top Ten in sixty-six. We are continually evolving our products to address opportunities both abroad and here at home.

KAABOO - Year 1, Day 1 - A Review

My family and I are music festival junkies.  It's just what we do.  It's our thing.  And, it's why our 16 year old daughter and 13 year old son still want to hang with us!

This weekend is a very special one.  For the first time in many years (since "Street Scene" called it quits), our home-town San Diego hosts a major 3-day music festival -- KAABOO in Del Mar.  First time KAABOO live event producers (always an extremely risky proposition) defined their mission as being to build a "truly different adult escape."

So what's the verdict after Day 1?

THEY DELIVERED.  Surprisingly delivered at a venue -- the Del Mar Fair Grounds (the horse track) -- which is challenging in all of its asphalt (as opposed to the grassy comforts of Coachella or the green pastures of Outside Lands).  The venue (7 stages) had the "feel" of a far more experienced festival -- not one of being a rookie.  Especially impressive is the main stage -- Sunset Cliffs -- which sits so close to the ocean that you can smell the salt and feel the breezes (and also see the Coaster train roll by).  Sunset Cliffs replaced asphalt with beach sand (really!) and faux (but quality) grass.  Stage was massive.  Screens matched that.  And the weather matched the promoters' ambitions -- it delivered.  KAABOO does it right.  It showcases San Diego and the magical beach life we are fortunate to live down here (as well as the craft beers and healthy, quality foods that are part of that).

I am an indie/alt music guy who also appreciates EDM and the immersive experiences of the Sahara tent at Coachella.  KAABOO is not that kind of festival (although there are a few exceptions here and there).  Instead, KAABOO features a healthy dose of ska and straight-forward and frequently folksy rock and roll with some classic baby boomer names and many with Southern California roots.  So, for me, the 3-day lineup didn't immediately impress (but, don't think that kind of indie/EDM-driven Coachella-like festival could "work" in San Diego anyhow).  I went for the overall festival escape experience.  

But, I left day 1 having experienced some great sets.  Brett Dennen started the day -- Dirty Heads drove it home (great SoCal band) -- and Sheryl Crow (one of our old-time favorites) led us to the headlining promised land ... No Doubt.  Listen -- I am not a huge follower of No Doubt (or Gwen), but I appreciate them (and Gwen).  Love their energy.  And, it was, in retrospect, a stroke of genius by the KAABOO team to slot them as being the first headliner in KAABOO history.  They represent everything that KAABOO represents.  SoCal (No Doubt is from the O.C.).  Sun.  Fun.  Ska.  Beach life.  And Gwen Stefani herself -- who literally risked her life for all of us (am not kidding).  As the set approached its close, Gwen climbed the massive stage's left metal column  almost to the top -- with no net beneath her -- and clutching (and singing into) her microphone as she did it (just check out the picture above).  I looked around the crowd as she did this, and we held our collective breath until she completed her descent. 

No Doubt -- and Gwen, in particular -- gave it their all.  Left it all out there.  One of the most surprisingly remarkable and fun music sets I have ever experienced -- and that is saying a lot.  I have new respect.

As do I for the KAABOO team.  KAABOO is highly ambitious.  Frequently audacious.  And, a nice dose of quality.  Are there any "misses"?  Of course.  It's a first-time festival after all.  My VIP wrist-bands never came (literally got lost in the mail).  There could (should) be a better major kick-back lounge for those who are willing to pay much more for that comfort as we get a bit older (Outside Lands, in particular, does a great job there).  Many of the vendors accepted only cash (because their credit card processing "didn't work").  And, the festival needs its own instantly-recognizable major defining icon (like Coachella's ferris wheel and Outside Lands' windmill).

But, amidst all the things that KAABOO does right, those are relatively small issues.

At the end of the day, music festivals are about great escape -- great energy -- and great music that come together to create unique, unforgettable EXPERIENCES.  KAABOO does that.  KAABOO is a great new addition to the San Diego lifestyle that already is quite, well, great.  Let's hope its creators sell enough ... and are patient enough ... to make it a San Diego institution.  Think they are -- and they will.

I was glad to be there.  Glad to be there with my family and friends.  Glad to hear the great music.  And look forward to Day 2 ....

Apple's TV Vision - "The Future of TV is Apps" (Tim Cook) - Highlights from Today

Just finished following live reports from the big Apple press juggernaut event.  Here are the highlights, category by category so far (starting of course with the new Apple TV which we have all anticipated for days ... and since that just wrapped up; the final act will be the iPhone, which I will not cover here):

I.  APPLE TV
(i) HEADLINE STORY - "The Future of TV is Apps" (Tim Cook)
(ii) Siri -- Apple TV is heavily voice reliant - powerful (and highly specific) voice navigation via a Siri button, which enables navigation across apps (like Netflix, Hulu, Showtime ... even iTunes!) and displays all matches on one screen (intriguing that iTunes doesn't seemingly get any preferential treatment here -- but we need to see that to believe that); also enables easy and extremely powerful viewing control (e.g., "skip ahead 7 minutes into the show") -- if this works as advertised, this indeed will be evolutionary and revolutionary in our TV viewing experiences
(iii) New Remote -- pretty, as expected -- top half of which is touchable glass
(iv) Animated Screen Savers -- that's kind of cool, so that your TV becomes a living, breathing work of art (rather than dead screen) -- I have always wanted that (and it seemed so simple and obvious to do)
(v) Apple Music -- available (and likely featured), of course -- content matters!  (Including Apple's own version of content services -- it doesn't just cede anything to anybody ... take note of that for the future on the streaming video side ...)
(vi) New OS -- called tvOS -- and, note, Eddy Cue calls out Hulu specifically as being an initial tvOS consumer "tinkering" with it (intriguing, eh, given my recent speculation about why it could make sense for Apple to buy Hulu to fast-track its own streaming video ambitions?  NOTE -- Eddy did not point out any of the other major streaming video players when announcing this)
(vii) Games -- yes, games, as expected, are a headline, including multi-player gaming with the new remote plus another using their iPhone
(viii) Shopping -- features the Gilt app -- why ever leave your couch anymore?  "Apple TV is the new shopping mall" (so says TechCrunch in its live coverage)
(ix) Pricing -- $149-$199 (32GB v. 64GB)
(x) Available October
(xi) NO Netflix "Killer" yet (as expected) ... but, stay tuned for the months ahead ... and don't forget the tantalizing Hulu possibility ...

II.  IPAD
(i) iPad PRO -- the big news - an entirely new version (and all of the features below are related to the new PRO, which was the entire focus of the iPad show)
(ii) Microsoft? -- yes, 'tis true -- MSFT took the stage to demo the new Office for the Pro
(iii) Screen/Performance -- the biggest iPad screen by far -- 12.9"; and performance is fast fast fast (22X faster than the original iPad's CPU performance)
(iv) 4-speaker audio
(v) Stylus -- called the "Apple Pencil"
(vi) Health -- a demo about simulating surgeries
(vii) iPad PRO Price -- ranging from $799 (32GB) to $1,079 (128GB) -- "Apple Pencil" not included ($100 extra); the high end version is both wifi + cellular

III. APPLE WATCH -- Tim Cook started with this, because perhaps the least impressive:
(i) New Apps -- two of the most intriguing are: (a) GoPro app -- uses the watch as a view finder; and (b) Airstrip - new healthcare app -- enables reading of patient vital signs (including baby monitoring)
(ii) New styles/bands -- apparently Apple is especially proud of its new Hermes line -- so, a focus on fashion
(iii) New Watch OS2 -- available next week, 9/16

Verizon's Go90 OTT Whistles In "Originals" To Win

OTT wars indeed! Trying to steal at least some of today's Apple thunder, mobile giant Verizon yesterday announced its own long-anticipated millennial-focused streaming service, "Go90."  Notice no "V" is to be found at all in that name, because Go90 will be available to all of us, no matter what carrier we use.  After all, that's the power of OTT -- anyone can access the service (or any service) anytime, anywhere, and on anyone's network.

The only rub, of course, is the growing number of such "services."  So, how can Verizon -- or the burgeoning field of others (including inevitably Apple) -- compete in this all-out OTT war?

One critical "go to" strategy is via original web series.  And, in the mobile-driven millennial-focused media world, that means short form content from creators who have built their brands on leading multi-channel/multi-platform networks (MCNs/MPNs).  And, that's exactly what Verizon is doing.

Case in point leading sports-focused MCN/MPN Whistle Sports.  Whistle Sports EVP Brian Selander tells me that Verizon signed with Whistle to develop a slate of seven original series with an initial commitment of over 80 episodes in a "multi-million dollar deal."  Selander tells me,"We launched our network to serve those with a mobile-first mindset in sports and entertainment.  Go90 gives our community unique new shows, new content, and a new way to engage."

Verizon's faith in Whistle is well-placed, as is its faith in mobile-driven short-form content from other leading MCNs/MPNs Tastemade and Machinima.  These companies have the short-form millennial-focused DNA that Verizon needs to play and win.  And, Verizon gives Whistle, the others -- and the millennial creators behind them -- a powerful new distribution platform and captive audience (so long as the content is compelling).  Verizon also gives Whistle a new multi-million dollar revenue deal -- underscoring the potential and promise of original programming in the MCN/MPN monetization game.

HBO taught all OTTs the "Originals" game a couple decades ago when the media revolution was televised.  Well, that same "you can watch it here only" exclusive original programming strategy still holds true today in the OTT revolution that is fast becoming mobilized.  Everyone is doing it.  Netflix, Amazon, Hulu, YouTube, Vessel all play that "exclusivity" card ("Go 100," so to speak).  And now, so will Go90 -- although Verizon's original programming strategy is truly mobile-first (unlike Netflix, Amazon and Hulu).  And, mobile still means primarily short-form video content.

Go90 kicks it all off just in time for the NFL season with exclusive mobile streaming rights for NFL games as well.  Not a bad start.  Snack some game-time at the airport, on the subway, as you cross the street and choose to ignore the cabs coming straight at you.

Apple Buys Hulu ... Tomorrow's Big Announcement? 5 Reasons It Could Happen

Apple's mega-press event is tomorrow -- and the rumor mill and pundit speculation are at a fever pitch.  I certainly have entered the fray in separate interviews in the New York Times and Los Angeles Times, etc.

One central theme in all of this pre-event hype is Apple's inevitable launch of its own Netflix-like subscription streaming video service -- will (or won't) it happen on Wednesday?  I just published my own Apple v. Netflix 5-factor analysis in a head-to-head showdown when it does -- and, my headline was, "Maybe Apple Should Just Buy Netflix."

But, here's the thing -- Apple won't buy Netflix.  But, Apple may buy Hulu (and it wouldn't be beyond the pale that Apple announces that on Wednesday).

Here are 5 reasons why an Apple/Hulu mega-deal would make sense -- and why Apple's not-too-distant acquisition of Beats on the music side is both consistent and highly instructive on this tantalizing possibility:

(1) Hulu gives Apple the immediate mass of content (and related rights) it needs.  It is no secret that Apple has been challenged in its content negotiations with studios and broadcasters for the streaming rights it need (just like it was on the music side).  That has delayed Apple's "Netflix Killer" over and over again.  Hulu (like Beats Music) would solve that problem immediately at mass scale.

(2) Hulu gives Apple the immediate marquee differentiating content it needs.  Hulu has been on bender lately buying up exclusive premium marquee video content and television rights at significant price-tags.  Cases in point include South Park ($192 million for 5 years)Seinfeld ($160 million for 5 years), and last week's coup of stealing away Epix cable movie rights from Netflix.  A new boldness at Hulu is in the air -- highly differentiated from its appetite in the past.  Was this all simply part of plan to better position itself to Apple (and potential other mega-buyers)?  Certainly, Hulu has actively flirted with the idea of being acquired for several years now (that has been big news in Hollywood for years).  This may be the time.  Previously, those who woo-d Hulu (including Yahoo! and several media behemoths) didn't step up to the plate to meet the bold demands of Hulu's media owners (Disney, Fox and NBCUniversal).  Apple, with its mega-$200 million cash hoard certainly is in a position to be significantly more aggressive.  It certainly was with Beats -- spending a cool $3 billion (which is significantly more than any purported Hulu offers previously).

(3) Hulu gives Apple the immediate core creative and production expertise it needs for its inevitable "Originals" strategy.  The buzz about Hollywood this past week centered around Apple's reported newly-rejuvinated plans to develop its own premium original movies and series a la HBO, Netflix, Amazon ... and Hulu.  I was interviewed this past week over and over again about this captivating rumor, underscoring how critical and fundamental an effective originals programming strategy is to differentiate any one service from the growing field of mega streaming competitors.  Hulu -- which already features a deep slate of original programming -- has those chops (and the relationships that go with them).  Let's not forget -- Apple still is first and foremost a technology company -- it critically needs that Hollywood expertise and those authentic relationships with the creative community.  Hulu immediately solves that problem (just like Beats did on the music side with Jimmy Iovine and Dr. Dre -- critical creative and relationship elements to that deal).  Apple should (and likely will) augment that expertise further by buying an innovative, connected premium marquee production house (and the talent that goes with it) in an effort to "out-marquee" all others.

(4) Hulu gives Apple an immediate widely-recognized video brand and immediate mass distribution.  Yes, everyone knows (and uses) Netflix.  But, everyone also knows Hulu.  It is a widely-known -- and increasingly widely-respected -- brand (especially now as more and more exclusive compelling premium content is available on its platform).  Hulu also -- importantly -- already is featured on most significant non-Apple distribution platforms.  Yes, I know, Apple dropped the Beats brand when it recast that music streaming service as Apple Music.  But, remember, Beats Music had launched only months before Apple's acquisition (and didn't yet build its own significant user base yet and the "goodwill" associated with it).  And, let's also not forget that Apple DID retain the Beats brand for headphones -- its established business that had built up a significant customer base and goodwill.  So, it certainly is no longer unprecedented for Apple to feature a different brand name.  Hulu's brand is fundamentally different from the Beats Music service brand.  It is an established premium video brand, as well as a respected video service with mass scale, goodwill and a generally applauded customer experience (an Apple hallmark).  Hulu's "Swiss" non-Apple brand is beneficial to further expand the service beyond the Apple platform.  And then, of course -- in the big inevitable shot across the bow to Netflix -- Hulu (in the hands of Apple) would also be the headline primary featured service on Apple TV and in the overall closed Apple eco-system.  Others may still exist on that platform (as they do now), but they would be buried into relative obscurity.  You can be sure of that.  Membership has its privileges -- and Apple controls what we see on its platform (and in its retail stores).  That, of course, significantly impacts what service we use (and the switching costs from Netflix to Apple are minimal in this subscription streaming game).  Compelling.

(5) Hulu gives Apple a significantly more cost-effective way to enter the streaming video market at mass scale.  Yes, Apple could afford to buy Netflix (as I pointed out in my recent blog post).  But, Hulu would be massively more cost-effective (by a significant multiple).  Again, Apple's Beats deal is highly instructive in this regard.  Apple could have easily bought the market mega-leader in the streaming music space -- i.e., Spotify.  But, that move would likely have carried a $10-$15 billion price-tag (since Spotify's last round valued the company at $8+ billion).  Instead, Apple paid $3 billion for Beats (and got the lucrative headphone business to go with it).  Apple likely could buy Hulu for something more in the $4-$6 billion range (previous reported Hulu M&A discussions indicated that a $2 billion-ish price likely would have closed the deal).  Netflix, which trades at around a $42 billion market cap (as of this past Friday), likely would cost $60-$80 billion.  And, although Apple holds $200 billion in cash, that massive differential (between Hulu and Netflix) matters -- especially if Apple gets many of the ingredients it needs via Hulu.  Apple also could sweeten the pot to further entice Hulu's owners (i.e., the studios) to consent to the transfer of Hulu's content licenses to Apple by giving them some equity in the newly-acquired company to give them a piece of the action -- and to make Hollywood a bit more amenable to licensing its content to Hulu as a result in the future.  Again, membership has its privileges.

So, will Tim Cook announce a Hulu deal on Wednesday?  I absolutely believe he will make some kind of major strategic video content announcement as part of his Apple TV "main event."  But, I peg odds of this intriguing Hulu possibility as being small ... for now.

However, that doesn't mean it's not a logical move.  Nor does that mean that it won't eventually happen.  Apple understands it needs to enter the streaming video service game now in a big, big way.  There is no time to wait any longer.  Netflix has simply gotten too big, too fast.  It ultimately saw the same writing on the wall on the music side.  Spotify had simply gotten too big, too fast.  So, Apple finally made is long overdue move with Beats.

Apple will make a massive move on the video side too.  That is inevitable.  Hulu could be that move.  And, when it does, its vastly different (and significantly more compelling) underlying business model from Netflix's will be a significant advantage (see point 5 in my recent blog post which discusses that oft-overlooked point).

Ladies and gentlemen, buckle your seat belts.  It's going to be a bumpy ride.

But, an incredibly dramatic and exciting one as well ....

Apple v. Netflix (Or, Maybe Apple Should Just Buy Netflix)

Well, the grand-daddy of all digital media rumors is back again.  Yesterday, Variety reported that Apple's quest to build its long-anticipated "Netflix Killer" is hot again in Cupertino.  More specifically, that Apple too -- like Netflix, Hulu, Amazon Prime, and virtually all OTTs and MCNs these days -- plans to "do an HBO" to accomplish its mission (i.e., have a significant focus on creating its own exclusive original programming to woo customers away from the other established streaming video services).

Variety's article is new, but certainly the inevitability of Apple entering the premium streaming video game -- as well as the article's focus on Apple's quest to create compelling and differentiating original content -- is not (I have written about it several times).  And, much like Apple finally choosing to focus on buying/building its own "Spotify Killer" on the subscription streaming side for music (and finally recognizing that the times had moved away from a "pay per download" model), Apple at long last will go the same route for video (initially focusing on longer-form premium video content like movies and series).

With this most recent story now breaking before Apple's upcoming announcements, it is worth revisiting my earlier analysis where I pit Apple v. Netflix.  In that direct battle royale -- which absolutely will happen -- who wins?  Let's analyze 5 individual battles that define that war.

(1) Content/Programming -- Let's take Apple first.  Apple will offer (i) both VOD and live/linear TV (Netflix only offers VOD), and (ii) both ESPN and HBO, the two premium channels that matter most (Netflix doesn't).  How does Netflix counter this attack?  In two ways (i) exclusive original "must have" programming like House of Cards and Orange Is the New Black (although -- as I wrote months ago -- you can bet Apple absolutely will get into that "originals" game as well (and smartly fast-track those efforts by buying a high-end and highly-respected production house with deep relationships -- or perhaps even buy a major Hollywood studio), and (ii) a significant depth of content that Apple will not have ... at least for a long time.  Advantage Apple.

(2) Distribution -- Apple's ecosystem is closed.  Netflix's is open.  That means that Apple's OTT video service will be bundled only into Apple products, whereas Netflix comes with virtually everyone else (including Apple TV -- although you can bet that Apple's Netflix-Killer will be front and center and free (at least for a while) on Apple TV's when it launches).  So, Netflix's sheer reach significantly outdistances Apple.  Oh yes, and Netflix already has built a massive customer base -- and is growing fast internationally.  Advantage Netflix.

(3) User Experience -- Virtually everyone on the planet has Netflix.  It's part of our Zeitgeist and its UI is practically burned into our brains.  So, it is easy to use.  But, Apple's hallmark is user experience -- a UI/UX that is both "pretty" (yes, that matters) and intuitive/easy.  And -- and this is a critical "and" -- Apple can do (and does) what Netflix and others can't.  It seamlessly integrates software/services with its hardware (including Apple TV).  That means that Apple's new OTT video service will be front and center and easier to use.  Advantage Apple.

(4) Price -- Netflix charges $8.99 monthly for new users, whereas Apple's "killer" service likely will cost significantly more.  ESPN alone costs cable/satellite operators about $6 monthly per sub.  Advantage Netflix.

So, we have a draw here, right?

(5) Business Model -- Well, here's the ultimate rub.  The companies' fundamentally divergent business models.

Neflix is a pure-play video service.  The company monetizes its service only.  That is its business model -- and that means that it must be profitable based on subscription revenues alone (unless and until it finds a way to effectively mine its treasure trove of customer data).

Apple's business model is fundamentally different.  For Apple, its "coming soon" OTT video service can be (and likely will be) a loss leader -- a losing proposition that ultimately wins.  You see, Apple's core DNA is unlike Netflix's.  It is hardware pure and simple.  Apple makes money (boatloads of it) by selling "cool" metal -- iPhones, iPads, Apple Watches, Apple TVs (and ultimately the iTV?).  That means that Apple's new video service is essentially a "marketing" expense that drives incremental hardware sales.  That also means that Apple can (and will) subsidize its content licensing costs -- and original programming efforts -- in order to keep its subscription pricing down.  Apple's massive cash hoard offers a lot of highly coveted freedom that others simply don't have.

How does Netflix match that?  Maybe, Apple simply buys Netflix with all that cash -- after all, as massive as Netflix is, its market cap is a downright paltry $49 billion compared to Apple's $643 billion, which includes about $200 billion in cash).  Now THAT would change the media landscape ....