With Apple entering the streaming video business, what can they do to compete with all the other streaming services out there? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Answer by Michael Vogel, 12 years experience working for and with Apple, on Quora:

Apple is definitely coming from behind in the streaming market. The giants of streaming, Netflix, Hulu, and Amazon, are well entrenched, Google is leveraging YouTube to enter the field, and every studio from Disney, HBO, Warner Brothers, MGM, CBS, etc. are all launching their own services. There are now going to be so many streaming services that consumers are unlikely to pay attention to them and will probably just tick with a few, sinking the others until they're acquired by one of the bigger ones. So how can Apple break into that pack?

Apple is has one big advantage, before I talk about it though, let me talk about a potential disadvantage that they have.

Apple uses its hardware to leverage sales of software. That usually works well when the service lends itself to working well with the hardware. Sure, Apple has 1.2 billion active devices out there, but pretending that gives them some kind of leg up in the video streaming market would be a mistake. Only 27 million of those people use Apple Music. It's not going to work.

Apple's big advantage though is Apple Music. How so? Well, they already have close to 30 million Apple Music subscribers and counting. That's a nice number of subscribers. If they roll out their video streaming service, at no additional cost, to all Apple Music subscribers, they not only will have an instant platform for their content, but will also have a cross platform audience with their Apple Music Android App. Even if they later raised the price of the combined services by a small amount or offered a cheaper 'video only' service, initially offering it at no extra cost, that would be the best way for them to break into the service. Apple video streaming service will initially be a loss leader using this strategy, but it would be well worth it to stay competitive in both the music and video markets and Apple has cash to spare to do this. Since they have been rumored to earmark $7 billion USD to this venture, it looks like they're taking this seriously.

There is no way the market can sustain dozens of video streaming services and they will eventually coalesce into only a few. If Apple is willing to do what it takes to become one of those that survives, it will have a big advantage when the others start to go under. In particular, Disney and Apple have a great relationship and Disney is starting their own video streaming service. If the studios learn that running their own video service isn't worth the trouble and Apple has a good streaming service already up and running with a solid user base, it would be likely that they will turn to Apple rather than Netflix, Amazon, or Hulu to take over. Apple can then leverage the vast Disney library which includes Pixar, Marvel, and Star Wars. Combined with their original content that they are working on currently, that would be a service that people would be willing to pay for. In a couple years Apple could spin off the video service into its own service while still offering a discount for the combined service. Additionally, this woulc enable them to offer something that Spotify does not have. When people are making the choice between essentially the same services currently, having a robust streaming library as well would be a powerful reason to choose Apple instead.

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Published on: Jan 5, 2018