Apple Faces Moment Of Truth With Video Streaming Service As Elongated Free Trials End

Apple Inc (NASDAQ: AAPL) is set to face the stickiness factor for its streaming service as it weans off subscribers off the free plan beginning July, according to a CNBC report.

What Happened: The Cupertino, California-based tech giant will cut down the duration of its free promotional streaming service that comes along with purchases to three months beginning July, from 12 months now, the report noted.

In November 2019, Apple bundled the sales of its products such as iPhone, iPad, and others, with a year of free subscription for the newly-launched Apple TV+ streaming service. That offer was extended twice during the pandemic for users whose trial periods were about to expire.

See Also: Netflix Staring At A Big Customer Churn, Deloitte Report Finds: What You Should Know

Why It Matters: Apple TV+ has far fewer hours of movies and other content compared to rivals and its subscription is much cheaper at $4.99 a month, compared with $8 per month for  Walt Disney Co's (NYSE: DIS) Disney+ or $8.99 for a standard plan of Netflix Inc's (NASDAQ: NFLX) service.  

About 62% of current subscribers still access the company’s digital streaming service through a promotional package, as per the report. 

As per analytics firm Antenna, Apple TV+ had a 15.6% monthly cancellation rate (excluding free trials ending and credit card expirations) as of the fourth quarter of 2020, the highest among peers, according to a report by the Hollywood Reporter.

Apple has since late 2019 sold millions of iPhones and other products but doesn't gibe a break out of how many subscribers ended up sticking to the SVOD service that rivals Netflix, Disney and Amazon.com Inc’s (NASDAQ: AMZN) Prime Video.

In contrast, Netflix has 208 million subscribers globally and Disney+ has 100 million subscribers.

Netflix co-founder has in the past criticized Apple for the high churn rate and said the company needs to give customers “a reason to stay.”

See Also: Apple Has 'No Excuse' To Be Trailing In SVOD Space, Netflix Co-Founder Says While Praising Disney

Price Action: Apple shares closed 0.22% lower at $133.11 on Friday.