By Benjamin Mullin 

Apple Inc. previewed its long-awaited TV app on Monday, rolling out a star-studded presentation featuring A-listers like Reese Witherspoon, Steve Carell and Oprah Winfrey.

Missing from the glamorous production was a key piece of information: How much the new TV service will cost.

As companies redouble their efforts to launch streaming services and the cost of marquee offerings like Netflix Inc. climb steadily, consumers are grappling with a difficult question: how to spend their money and their time in an increasingly saturated media landscape.

Already, consumers can choose between services like Netflix, Amazon Prime Video, Hulu and ESPN+. Soon, they will have their pick of new services from AT&T Inc.'s WarnerMedia, Walt Disney Co. and Comcast Corp.'s NBCUniversal. And that is in addition to so-called skinny bundles already offered by AT&T, Dish Network Corp. and Alphabet Inc.'s YouTube.

Consumers who abandon pay-TV can afford to pay for several streaming services before they eclipse the amount they paid for traditional cable. According to data from Kagan, S&P Global Market Intelligence, the average customer pays more than $90 for their video subscription and an additional $57 for their high-speed internet connection.

With $90 freed up from cutting the cord, the average video consumer could pay for monthly subscriptions to services such as Amazon Prime Video ($8.99 a month), Netflix ($13 a month), and Hulu + Live TV ($44.99 a month) and still have cash left over for additional services.

Apple is betting that its new TV app, a central hub that will allow users to view its original programming and purchase popular services like AT&T's HBO, will augment the iPhone business. Scheduled to launch in the fall, the Apple TV+ service will include shows from Steven Spielberg and J.J. Abrams.

According to a survey of 2,000 people conducted by Magid Research in 2018, streaming-video consumers are willing to pay for a handful of services that cost a total of about $38. Those consumers said they would be willing to subscribe to about six streaming services, on average, the survey said.

Netflix, which counted 58.5 million U.S. subscribers in the fourth quarter of 2018, is the most popular subscription streaming service. Second-place during the same period was Hulu, the Walt Disney-controlled video-streaming service, which had 25.2 million subscribers.

"If you look at the market currently, the average consumer may have room to add a service or two but the ceiling of what a consumer will pay is soon reached," said Andrew Hare, senior vice president of digital research and strategy at Magid.

Some streaming video subscribers just can't fit more TV into their viewing schedule. Tres Dean, a freelance pop-culture writer and author who already has subscriptions to five streaming services, was left feeling exhausted by the presentation for Apple TV+.

"I just can't fathom having the time to watch all those shows," said Mr. Dean, who watched a highlight reel featuring the boldfaced names on Monday. "I just got physically tired looking at it."

Rich Greenfield, an analyst for BTIG research who has been critical of the traditional cable bundle, said streaming services are easy to cancel, which makes them particularly susceptible to consumers who binge their favorite show and then churn out.

Despite the churn, both Amazon Prime Video and Apple TV+ will be sustained by distinct advantages, said Matthew Ball, a media and tech analyst. Apple's TV app will be installed on millions of phones, which gives it immediate scale, and Amazon Prime Video is part of its popular Prime offering.

"I would argue that Apple and Amazon are almost inevitably going to be successful as long as they put the capital in and stay committed to the space," Mr. Ball said.

Write to Benjamin Mullin at Benjamin.Mullin@wsj.com

 

(END) Dow Jones Newswires

March 27, 2019 10:33 ET (14:33 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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