As we reported yesterday, Apple executive Eddy Cue and members of his team have been meeting with Hollywood executives in an effort to gauge their interest in producing original content. While the seriousness of such discussions remains unclear at the moment, one source told Variety that Apple’s ultimate goal is “to create development and production divisions that would churn out long-form content to stream in a bid to compete with Netflix.”
While the notion of Apple producing its own original content sounds completely outside of the company’s wheelhouse, the increasingly competitive world of streaming TV arguably demands it. Netflix, of course, has expertly executed this strategy to great success in recent years, prompting the likes of Yahoo, Amazon, and Hulu to follow suit with original programming of their own. Even Google has spent over $100 million to create original content for YouTube.
So while Apple taking on Netflix admittedly sounds bizarre at first glance, it’s not really that outlandish. You might even say it’s a strategy Apple needs to implement if it wants to become a real player in video streaming.
Make no mistake about it, original content is where it’s at. Case in point: Netflix recently opted not to renew its longstanding movie licensing deal with Epix and will instead focus on creating more Netflix originals.
“Our focus has shifted to provide great movies and TV series for our members that are exclusive to Netflix,” chief content officer Ted Sarandos explained in a blogpost.
The streaming marketplace is crowded enough as is and there are only so many hours in the day to compete for viewer attention. Apple coming to the table with a TV subscription service and its own selection of original content is a surefire way for the company to stand out and, perhaps one day, actually steal viewers away from competitors.
Importantly, Apple has the requisite resources to make a huge splash when it comes to churning out original programming. With over $200 billion in the bank, Apple finds itself in a better position than most to throw money at established talent in an effort to bring compelling and exclusive content to the masses. As Netflix demonstrated with House of Cards, all you need is one ace-in-the hole to generate buzz and attract new viewers. That being the case, Apple would only need one such hit for people to start taking the company seriously as a purveyor of quality TV.
Can Apple topple Netflix? Not at the moment, of course. But look at how quickly Netflix was able to transition from a company known for sending DVDs through the mail into a media powerhouse with an impressive stable of award-winning and addictive programming. The list is seemingly endless — Arrested Development, House of Cards, Orange Is the New Black, Narcos, Unbreakable Kimmy Schmidt, Daredevil — and Netflix managed to bring all of these to the screen in just three years.
Who’s to say Apple can’t do the same?
One also wonders if Apple might try and secure licensing deals for TV shows and movies, in effect offering a complete Netflix style service in parallel to a TV subscription service. In such a scenario, imagine Apple offering discounts to users who sign up for both. In one fell swoop, Apple might be able to make a huge dent in a market that, for most other companies, would be impenetrable.
Consider this: Two years ago, Netflix was spending $2 billion a year on licensing movies and TV shows. Apple in its last quarter alone generated over $7 billion in profit. In other words, Apple can certainly has deep enough pockets to pay to play.
Even if Apple solely focuses on producing original content, with no plan to secure licensing deals for TV shows, it’s still a great way for the company to attract an army of new users to the Apple TV and perhaps increase the overall value proposition of its TV service.