Alex Sherman, CNBC:

Apple is preparing a new digital video service that will marry original content and subscription services from legacy media companies, according to people familiar with the matter. Owners of Apple devices, such as the iPhone, iPad and Apple TV will find the still-in-the-works service in the pre-installed “TV” application, said the people, who asked not to be named because the details of the project are private.

The product will include Apple-owned content, which will be free to Apple device owners, and subscription “channels,” which will allow customers to sign up for online-only services, such as those from HBO and Starz.

Paralleling Amazon Prime Video, if you buy into the Apple ecosystem, you get Apple’s original content for free. This seems a reasonable strategy, as it reduces the pressure for Apple to have to produce content worth paying for, à la Netflix.

Seems to me, this is Apple easing their way into a market they have no experience with, reducing their chance of failure to almost zero. Over time, if they find the path to creating truly compelling content, they can ease into another business model.