Apple is going to spend (literally) billions to produce original movie and TV content of its own. While most associate Apple with computers, iPhones, iPods and iPads, the company has also changed how content is distributed, through the iTunes Store, Apple TV and other products that have changed the way people stream and download content. It’s long been in the company’s DNA - cofounder Steve Jobs also cofounded Pixar, and was the largest individual shareholder in Disney at the time of his death in 2011.
In recent years, Apple has begun to make noises about dipping its toe into actual production of content. After all, following all those years of hugely-profitable quarters, Apple is sitting on a cash pile in the hundreds of billions of dollars. It’s always seemed a logical move for Apple to find one more place to compete with Amazon, as well as Netflix and even traditional Hollywood studios. Now, there’s word about exactly how much Apple is willing to invest in that effort.
Apple plans to spend $1 billion in order to “procure and produce original content” over the course of the next year, according to the Wall Street Journal. That amount, according to the piece, is roughly equal to what Amazon spent in 2013, its first year in the original content business, although Netflix is likely to spend $6 billion on its original content slate this year.
Apple’s first forays into its own content, Late Late Show spinoff Carpool Karaoke and the reality show Planet of the Apps, haven’t quite broken through in any meaningful way, although Apple’s original content effort is still very young. It was reported earlier this year that Apple's original series won't directly compete with Netflix, at least not yet.
This is a huge development, for a simple reason: Apple has a LOT of money - about $250 billion in cash on hand, as of its latest earnings report. While they’re only spending $1 billion in the first year, the company has the ability to up that investment significantly in the future, should they scale up this effort. That means if they want to pursue a Game of Thrones-like original series that’s super-ambitious and expensive, or get into business with big-name directors, showrunners or actors, or even pursue theatrical releases, they can afford to. They’re now in position to follow the Amazon and Netflix formulas of a few years ago, only with a lot more money at their disposal. There’s been a lot of talk lately about Netflix’s long-term debt; Apple doesn’t have that problem.
The key with this effort, as with most, is that Apple makes the right decisions about which shows and movies to pursue. Of course, Apple is coming into this effort years behind its competition, and there’s no telling what the company’s many Hollywood partners will think about Apple encroaching on their turf. But as we saw with Netflix and Amazon, all it will take for Apple to become a player in this space is one or two big hits.
Source: Wall Street Journal