About a week ago, a report from Bloomberg relayed that Apple has plans to scale back its Hollywood ambitions. With Apple spending boatloads of cash on Apple TV+ originals in recent years, the company is now looking to be more cost-conscious.
Though Apple TV+ has a range of compelling content, Apple hasn’t seen a return on investment to the degree it was hoping. The figures cited by Bloomberg certainly aren’t encouraging. Over the past few years, Apple has invested upwards of $20 billion on original content, only to see that level of spend equate to 0.2% of TV viewers. One particularly interesting data point is that Apple TV+ “generates less viewing in one month than Netflix does in one day.”
Of course, Apple doesn’t need Apple TV+ to be a profit-making machine. The company has billions in the bank and so much excess cash that its stock buyback program is the largest in history. Still, 0.2% of TV viewers has to be disappointing relative to the amount of resources Apple has poured into its TV efforts. And sure, various Apple titles like Ted Lasso have garnered prominent awards, but the sheer volume of eyeballs on the platform remains relatively low.
Apple needs third-party content to compete with the big boys
A big problem that prevents Apple from becoming a must-have streaming service is that it lacks a back catalog of familiar and engaging content. If you want to attract eyeballs, Apple can’t just rely on original content. It needs familiar shows and movies as well, from classic sitcoms and compelling documentaries to an extensive selection of movies across all genres. Netflix provided the blueprint, and Apple refused to pay attention.
To this point, the success Netflix experienced with The Office, and more recently with Suits, demonstrates that there’s a big appetite for older TV shows with dozens and dozens of episodes. Put simply, TV fans love reconnecting with or discovering old programming in addition to watching original content.
Apple may know smartphones, but media companies like HBO and Netflix know content. And again, a look at these companies should provide Apple with something of a roadmap. Consider that Netflix in 2019 paid $500 million for the licensing rights to Seinfeld. A few years earlier, Netflix paid $100 million for the rights to Friends, which quickly became one of the platform’s most-viewed programs.
And why isn’t Friends available on Netflix anymore? Because HBO swooped in with $425 million in 2020, after which it became the platform’s top-performing show. There’s value in old but beloved content.
As others have observed, having a library of familiar content is perfect for keeping subscribers engaged during the downtime between seasons of original programming. Not only does this prevent lulls in viewing, but it also helps combat subscriber churn.
Apple needs to be smarter about where it spends its money
Apple, meanwhile, spent a reported $215 million for Killers of the Flower Moon. It also spent $200 million for the rights to Argylle. Perhaps Apple would be better served by using some of its cash hoard to strike licensing deals for older content instead.
Every other streaming platform, whether it be Netflix, Max, Hulu, or Prime Video, has a deep library of third-party content to supplement its original offerings. The idea that Apple can compete with the aforementioned services while strictly relying on original content is misguided.
There’s nothing wrong with Apple’s focus on prestige programming and high-quality original content. But it shouldn’t be all Apple focuses on. Sure, viewers enjoy shows like Severance, but Apple TV+ ignores the fact that many viewers enjoy content across multiple genres. Viewers in search of a comprehensive viewing experience may simply not be drawn in by a limited catalog of programming.
Prestige TV shouldn’t be Apple’s only focus
At the time of this writing, some of the top 10 shows on Netflix include a true-crime-themed documentary about boy bands, the Karate Kid reboot Cobra Kai, and a reality show called Too Hot to Handle. While I don’t expect Apple to get into trashy reality TV, there is a middle ground to be had as well.
Apple, at times, appears to be more focused on critical acclaim attracting viewers. But it doesn’t have to be an either-or situation.
Licensing is expensive, and it’s understandable that Apple wants to shy away from insanely expensive deals. But if the company is spending upwards of $20 million per episode of Severance and hundreds of millions of dollars on films that don’t move the needle, perhaps it needs to rethink its investment strategy.
Amassing a huge library of content takes time, and if Apple doesn’t make changes in the near future, it’s hard to imagine Apple TV+ gaining any ground on rivals who appear to have a firmer grasp on what viewers enjoy watching.
