Business Corpus: Apple Plan To Offer Free Video Content Smart Move: AnalystApple reportedly plans to offer original video content for free to users of its devices rather than start a paid service to compete with Netflix and others. The post Apple Plan To Offer Free Video Content Smart Move: Analyst appeared first on Investor's Business Daily.

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Apple (AAPL) reportedly plans to offer original video content for free to users of its devices rather than start a paid subscription service to compete with Netflix (NFLX) and others. That's the right strategy for it to take, according to a longtime company analyst and current venture capitalist.

"CNBC reported that Apple plans to give away some of its forthcoming original video content to Apple device owners as a part of a new digital TV strategy (likely starting in mid-2019)," Gene Munster, managing partner with Loup Ventures, said in a blog post Friday. "We cannot confirm if this is, in fact, part of Apple's strategy but we believe it's the right approach for the company, because it advances their mission as a services company."

Munster and associate Will Thompson cited four reasons why giving away content makes sense for the tech giant. First, it's a way to quickly build awareness of Apple's video content with its roughly 1 billion device users. Second, it would increase hardware retention.

Third, it would drive usage of the company's preinstalled TV app. That allows users to sign up for third-party subscriptions from which it takes a cut of revenue. And fourth, it would build a loyal viewer base to which it could upsell a range of paid options.

Apple has two dozen original shows in production and development, according to media reports. CNBC reported Wednesday that Apple will initially offer its shows for free while it looks to launch a paid service somewhere down the road.

In the meantime, Apple will promote third-party video services such as HBO, Netflix and Starz. Apple charges a 30% commission on all app sales and in-app purchases, including subscription services. It takes a 15% commission on subscriptions maintained for over a year.

Video Subscriptions Through Apple Up 100%

Apple Chief Executive Tim Cook boasted about the company's subscription offerings on a July 31 conference call with analysts.

"Paid subscriptions from Apple and third parties have now surpassed 300 million, an increase of more than 60% in the past year alone," Cook said. "Revenue from subscriptions accounts for a significant and increasing percentage of our overall services business. What's more, the number of apps offering subscriptions also continues to grow. There are almost 30,000 available in the App Store today."

Growth in third-party video subscriptions through the company's App Store is about 100% year over year, Cook said.

The iPhone maker could be taking a page from Amazon.com's (AMZN) playbook by offering free video, Munster said. Amazon Prime Video is a free extra to subscribers of Amazon's Prime membership program, which offers free two-day shipping on millions of items.

Apple stock rose 3.2%, near 221.20, in morning trading on the stock market today.

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