Business Report: Apple TV+ Set To Launch In November
Q: So let's start with Apple. It just had its big reveal event, and while new iPhones are usually the headline of those events, that wasn't the case this year. What direction is the company heading in here?
A: The big news is actually Apple TV+. They launched their new streaming service with big fanfare. They're going to launch it on Nov. 1, which is before the Disney service which was announced to launch around Thanksgiving. (Apple is) charging only for $4.99 a month versus $6.99 for Disney or $12.99 for their premium version with Hulu, or $12.99 for Netflix.
(Apple is) making a huge commitment in content. They're going to spend over $6 billion in content. In fact, they're trying to create a whole category of what they call "Prestige TV." What they're doing is also making it really easy for consumers. Families can be on the plan, up to six people with their own I.D. and password. If you buy an Apple device — they're encouraging (consumers) to be involved in the Apple ecosystem — you get the service for free. So it gives you a great trial opportunity because they're a little bit behind everybody else.
They don't have the content, but they're going to start with nine series. They're going to add at least a series every month, and they're going to scale up really fast. Apple has a lot of loyal consumers and customers. There's going to be a lot of people who are going to look at Apple as a streaming alternative.
Q: Let's talk about Zillow. I understand that the real estate website is offering to buy homes directly from sellers. How does that work?
A: They have a new service called "Zillow Offer." It's in 16 markets already. San Diego is the newest market. It's pretty simple that you can go online, answer some questions, submit a form, within two days you'll get a no-obligation offer to buy your home and you can close it as quickly as five days to 90 days. So potentially very attractive, but they charge a service fee. So unlike a broker commission, which is around 5% to 6%, they're going to charge 7.5%. If you can do the upgrades, it's better to go with a real estate agent if you're in a desirable neighborhood because you could probably get more money than you would from Zillow.
There are a lot of companies who are doing this already. There's a couple of companies, one is called Offerpad, one is called Opendoor. Opendoor has already bought 10,000 houses around the country. They're just not in San Diego yet. With Zillow, they've already purchased about 3,000 homes. So it's a big deal.
Q: Assembly Bill 5 has been big news here in California. Tell us a little bit more about this bill and how it might change things for gig economy workers and companies like Uber and Lyf.
A: This is a really complex bill that may have unintended consequences, but the gist of it is that for a long time there's been this fraying relationship between employers and employees. Employers are looking for contract workers. They're offloading the benefit costs, the employer costs of Social Security and Medicare to employees. So the net take-home package in many cases is a lot less, and so employees have said, look, we should be employees.
The Supreme Court ruled narrowly, the state of California, in favor of classifying these employees, these gig contract workers, as employees. So the legislature has followed suit. All these workers [who] are working for 40 hours or more should become employees. They get a minimum wage, they get some benefits and it's a really positive thing. It might reduce some flexibility for workers. So now if I'm committed, I'm an employee for one company, if I'm an Uber driver and I drive for Lyft or other ride-sharing services, I really can't do that. Additionally, the major issue is that it really can impact the way companies do business. All of a sudden if Uber and Lyft have to take on 20% additional costs on increased benefits, or paying Social Security and Medicare taxes, that's going to substantially impact the way they do business.
Other companies will be affected are companies like Google and Facebook. They hire thousands of contractors who work full time on their businesses, developers, programmers and whatnot. They will also be affected. So the industry has been really wary of this bill, but there is a big disconnect because the cost of living in California is so relatively high. If an individual who then is seen as a self-employed individual has to pay out all these costs living in California becomes much more challenging.