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Apple takes on Netflix with a $5-a-month streaming service
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Apple takes on Netflix with a $5-a-month streaming service

Apple takes on Netflix with a $5-a-month streaming service
Photo Credit: AP Photo/Tony Avelar
Apple CEO Tim Cook announces new products at an event Tuesday, Sept. 10, 2019, in Cupertino, Calif. (AP Photo/Tony Avelar)

Apple takes on Netflix with a $5-a-month streaming service

Apple is finally taking on Netflix with its own streaming television service and, uncharacteristically for the company, offering it at a bargain price — $5 a month beginning on Nov. 1.

Walt Disney Co. is launching its own assault on Netflix the same month, for just $7.

It may be sheer coincidence that the cost of paying for both Apple and Disney subscriptions will still be a dollar less than Netflix's main plan, priced at $13 a month. But the intent to disrupt Netflix's huge lead in the streaming business couldn't be clearer.

Apple delivered the news Tuesday while also unveiling three new iPhones that won't look much different than last year's models other than boasting an additional camera for taking pictures from extra-wide angles.

The aggressive pricing is unusual for Apple, which typically charges a premium for products and services to burnish its brand. Most analysts expected Apple to charge $8 to $10 per month for the service, which will be called Apple TV Plus.

But Apple is entering a market that Netflix practically created in 2007 — around the same time as the first iPhone came out. And Netflix has amassed more than 150 million subscribers, meaning that Apple needed to make a splash.

"You have to expect they're going to do something, considering how hyper competitive the streaming video space is," said Tim Hanlon, CEO of Vertere Group.

Apple CEO Tim Cook did not have much new to say about the TV service beyond its pricing and debut date, although he did show a trailer for a new Jason Momoa-led series called "See."

Netflix declined to comment. In the past, Netflix CEO Reed Hastings has depicted the increased competition as a positive for everyone, allowing consumers to create their own entertainment bundles instead of accepting bundles put together at higher prices by cable and satellite TV services.

Like Netflix and similar services from Amazon and Hulu, Apple has been spending billions of dollars for original programs. The most anticipated so far seems to be "The Morning Show," a comedy starring Jennifer Aniston, Reese Witherspoon and Steve Carell. The service will launch with nine original shows and films, with more expected each month. It will only carry Apple's original programming and will be available in 100 countries at launch.

Since it began focusing on exclusive shows and movies six years ago, Netflix has built a huge library of original programming and now spends upward of $10 billion annually on its lineup.

Apple also announced a new videogame subscription service that will cost $5 a month when it rolls out Sept. 19. Called Apple Arcade, the service will allow subscribers to play more than 100 games selected by Apple that are exclusive to the service.

Disney, one of the most hallowed brands in entertainment, is also muscling its way into the market with a streaming service featuring its treasured vault of films and original programming.

That means both Apple and Disney will be undercutting the industry leaders. Besides Netflix, there is Amazon at $9 per month and Hulu at $6 per month.

The price war is unfolding as Netflix tries to bounce back from a rough spring in which it suffered its first quarterly drop in U.S. subscribers since 2011. Apple's pricing tactics caught investors' attention. Netflix's stock fell 2% on Tuesday.

Each new entry into the crowded video subscription market stretches the limits of just how many monthly plans viewers are willing to pay for.

The Apple streaming service will, at least for now, offer fewer viewing options than Netflix or Disney but also at a significantly lower price.

Apple's pricing shows it is serious, and the company will probably take a loss "as it plays catch-up," said Colin Gillis, director of research at Chatham Road Partners.

Hoping to propel its streaming service to a fast start while also boosting iPhone sales, Apple will give a year of free TV access to anyone who buys an iPhone, iPad, iPod Touch or Mac.

The new iPhones were accompanied by an unexpected price cut for the cheapest model, which underscored the company's efforts to counteract the deepest slump in sales for its flagship product since the phone was unveiled 12 years ago.

IPhone shipments are down 25% so far this year, according to the research firm IDC, putting pressure on Apple to generate revenue from services such as music, video streaming, games and its App Store. Revenue from services rose 14% to nearly $23 billion during the first half of this year.

Apple is cutting the price of the iPhone 11 to $700 from $750, the price of last year's XR. The lower prices reverse a trend in which premium phones get more expensive as people upgrade them less often.

The new phone models resemble last year's iPhone XR, XS and XS Max. And they have the same design — with more display space, less bezel and no home button — that Apple switched to with the iPhone X in 2017.

Unlike some of the other devices coming out this year, the new iPhones won't support upcoming ultrafast cellular networks known as 5G. Apple paid billions of dollars to settle a royalty dispute with chipmaker Qualcomm in April to gain the technology it needs for 5G iPhones, but those models will not be ready until next year.

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AP technology writers Mae Anderson in New York and Barbara Ortutay in San Francisco contributed to this story.

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This story has been corrected to fix spelling of the actor's last name. It's Steve Carell, not Carrell.

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Update 3:35 p.m. EDT Sept. 13: U.S. District Judge Indira Talwani sentenced Huffman to serve 14 days in jail and 250 hours of community service after she pleaded guilty earlier this year to charges leveled at her as part of a probe into a nationwide college admissions bribery scheme. In a statement read Friday in court, Huffman apologized to college officials and other students who were affected by her decision to participate in the bribery scheme. She said she felt ashamed of her choice. Prosecutors said prison time would deter others from committing similar crimes and noted that Huffman's reputation would likely recover. Prosecutors said she signed a movie deal with Netflix while awaiting sentencing, according to WFXT. Attorneys for Huffman argued against jail time for the 'Desperate Housewives' actress, pointing to her remorse and her lack of a previous criminal record, among other factors. Update 2:30 p.m. EDT Sept. 13: Huffman appeared in a courtroom on the third floor of the federal courthouse in Boston on Friday for a sentencing hearing. Her husband, actor William H. Macy, was also in the courthouse, according to WFXT. He has not been charged as part of the case. Update 2 p.m. EDT Sept. 13: Huffman arrived at the federal courthouse in Boston on Friday afternoon ahead of her scheduled sentencing hearing. Original report: Prosecutors have asked U.S. District Judge Indira Talwani to sentence the 'Desperate Housewives' actress to one month in prison and supervised release, citing her deliberate and repeated deception of her daughter's high school, the college entrance exam system and college administrators. They have also asked she be fined $20,000. 'Her efforts weren't driven by need or desperation, but by a sense of entitlement, or at least moral cluelessness, facilitated by wealth and insularity,' prosecutors said last week in a sentencing memo filed in court. Authorities said Huffman coordinated with Singer to convince test administrators to give her daughter extended time to take the SAT in 2017, citing a 'learning difference.' She arranged to have her daughter take the test at a center affiliated with Singer, where her answers were altered to boost her score by about 400 points, prosecutors said. 'She could buy her daughter every conceivable legitimate advantage, introduce her to any number of useful personal connections, and give her a profound leg up on the competition simply because she would be applying to college as the daughter of a movie star,' prosecutors said in the sentencing memo. 'But Huffman opted instead to use her daughter's legitimate learning differences in service of a fraud on the system, one that Huffman knew, by definition, would harm some other student who would be denied admission because Huffman's daughter was admitted in his or her place, under false pretenses.' Attorneys for Huffman have asked Talwani to sentence her to one year of probation, 250 hours of community service and a $20,000 fine, calling the incident out of character and noting her remorse for her part in the admissions scheme. 'In my desperation to be a good mother I talked myself into believing that all I was doing was giving my daughter a fair shot,' Huffman wrote in a letter to the court filed last week. 'I honestly didn't and don't care about my daughter going to a prestigious college. I just wanted to give her a shot at being considered for a program where her acting talent would be the deciding factor. That sounds hollow now, but, in my mind, I knew that her success or failure in theater or film wouldn't depend on her math skills. I didn't want my daughter to be prevented from getting a shot at auditioning doing what she loves because she can't do math.' Huffman is scheduled to appear Friday afternoon in the federal courthouse in Boston. Huffman was one of more than 50 people, including 34 parents, to be charged earlier this year with participating in the large-scale admissions scheme. Prosecutors said the parents involved paid Singer to bribe college coaches and rig test scores to get their children into elite universities. The scandal also led to the arrests of “Full House” actress Lori Loughlin and her husband, fashion designer Mossimo Giannulli, both of whom are fighting the charges. The amount Huffman paid is relatively low compared to other bribes alleged in the scheme. Some parents are accused of paying up to $500,000 to get their children into elite schools by having them labeled as recruited athletes for sports they didn't even play. Authorities say it's the biggest college admissions case ever prosecuted by the Justice Department, with a total of 51 people charged. The Associated Press contributed to this report.

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