Apple Inc. a tech giant is a late comer to the market to being transformed by Netflix and Amazon. But if it commits enough money, it could yet be a serious player in the market.
Apple has Amazon, Netflix and the Hollywood studios in its highlights. That is clear after a chaotic summer hiring big TV chiefs, exploring out liberty in a famous Hollywood studio and allowing for spending up to $5BN (£3.8BN) on the rights to deal out James Bond films.
Apple has mainly sat on the sidelines in the TV and film arms race being led by Netflix and Amazon. Until lately, it has been focused on condition that the devices to get access to such content, led by the Apple iPhone. But Apple has been slowly growing its portfolio in last few years. First come with music deal of $3BN acquisition of Dr Beats by Dre’s, followed by its own music service in 2015. Now the Silicon Valley giant has set its eyeballs on playing catch-up in TV and film.
“It is never been too late to bring a billion dollars to any party, given Apple’s entertainment-business domination,” says Paul Dergarabedian, Senior Media Analyst at ComScore. “It would be very wise to take their venture into the filmed content business extremely seriously. They are the next force to be reckoned with..to toss their hat in a very crowded ring.”
Apple stunned Hollywood by recruiting Jamie Erlicht and Zack Van Amburg from Sony as its new TV chiefs in June. At Sony, the duo had been responsible for striking a £100M Co-Production contract with Netflix to make The Crown, and had overseen production of hit shows including Breaking Bad and The Blacklist.
Apple was laying down a indication in Hollywood by taking liberty in California’s Culver Studios, known for films such as Gone with the Wind and The Matrix. In the press, Apple has earmarked $1BN over in 2018 to make at least 10 high-end TV shows.
Apple has so far only curved in its toe into original programming, seizing a deal to spin the popular Carpool Karaoke section from James Corden’s late night US TV show into a 16-episode series featuring stars such as Will Smith. There was also Planet of the Apps – a sort of Dragons’ Den featuring Gwyneth Paltrow, will.i.am, Jessica Alba and entrepreneur Gary Vaynerchuk on a panel that sees developers fight for funding – that Apple Music app made available in June.
Also in development are documentaries about music production svengalis Sean “P Diddy” Combs and Clive Davis, as well as a six-part series on Beats by Dr Dre.
“While Apple is getting stern, there are a lot more companies already spending immensely more on content,” says Richard Broughton, analyst at Media Consultancy Ampere. “Apple’s investment looks reasonably slim next to the incumbents. If they really want to make a spot it is a great step in the right direction, but they’ll required bit more billions on top to really compete.”
Netflix is also set to use up to $6.6BN on TV and filmed content, Amazon $4.5BN, HBO (maker of Game of Thrones and The Sopranos) $2BN, and Sky more than $5BN.
Given Apple’s huge resources, it could hypothetically buy its way to the top of Hollywood. Apple has a stock worth of around $830BN, almost twice of Jeff Bezos’s Amazon ($474BN), 5X Disney ($168BN), more than 10X Netflix ($77BN) and 15X Rupert Murdoch’s 21st Century Fox.
“It also depends on what Apple’s ambitions are, but as Netflix has shown, you don’t really need to own studios to mount up a library of intellectual property,” says Tim Westcott, analyst at IHS Markit. “You just need to make the right innovative decisions and be prepared to take risks by fully funding fresh projects.”
Apple’s growth into entertainment follows a stated ambition that it wants to double the amount of revenues it receives from services such as Apple Music, iCloud and App Store by 2021. As businesses combat to make their products and services “sticky” for consumers – from Amazon launching online TV service to BT taking a segment of Premier League football rights – Apple’s main goal is keeping customers loyalty.
“We can possibly assume that filmed content investments will be in support of the company’s device sales, given how Apple has treated content and services in the past – effectively subsidizing them to encourage device usage, sales and loyalty,” says Broughton.
“Having an edge with exclusive video content is one of potential method of ensuring Apple brand loyalty and boosting new device sales.”
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