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Stifel Discusses Apple's Potential OTT Video Subscription Bundle Ahead of WWDC


In a report published Sunday, Stifel analyst Benjamin Mogil discussed Apple Inc. (NASDAQ: AAPL)'s potential Over The Top (OTT) video product which may introduced as soon as the company's June 8 through 12 WWDC conference.

According to Mogil, a potential Apple product will offer users a lower channel load than a full MVPD (multi-channel video programming distribution) offering, given the fact that Apple can have a stronger ad monetization capacity than the current services. He also noted that such an offering would be most attractive for millennials who have "grown up" with Apple's eco-system while "cord-nevers" will not likely be attracted to the product given their price sensitive nature.

"We view the product as having a deeper ad supported VOD (video on demand) platform, more out-of-home rights and a stronger interface with mobile devices," Mogil wrote. "For broadcast/cable networks, such a system may aid in stabilizing cord-cutting and offer new advertising outlets."

Mogil said that Apple's potential new offering could serve as a "net positive" for the networks. While some networks may not be included in Apple's service, an enhanced ad supportive VOD platform can improve ratings and economics for networks on key shows where they do not own downstream rights and possibly stabilize the number of households receiving video service.

Bottom line, the extension of Apple TV to further tie-in its iOS and OS X ecosystem is "important" and it is not yet fully clear how Apple will leverage its iAd platform, as well as an App Store integration, HomeKit, gaming and iCloud.

Shares of Apple are Buy rated with a $150 price target.

Latest Ratings for AAPL

Mar 2020UBSMaintainsBuy
Mar 2020Deutsche BankUpgradesHoldBuy
Mar 2020Nomura InstinetMaintainsNeutral

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