Cash-rich Apple now appears set to take its foray into original content to the next level. According to The Wall Street Journal, the iPhone maker plans to invest $1 billion in acquiring and producing original TV shows in 2018.
Apple original content plans
Apple’s intent to make a mark in original programming is quite evident from its $1 billion budget, which is about half of what dedicated content creators like HBO spent last year and about the same as what Amazon spent in 2013. With such a budget, Apple could procure and produce about 10 television shows, says the WSJ, citing people familiar with the matter.
Hollywood veterans Jamie Erlicht and Zack Van Amburg will reportedly help effectively utilize Apple’s budget for original programming. In June, Apple hired both veterans from Sony to oversee its content acquisition and video strategy. Amburg and Erlicht are already reportedly in talks with Hollywood agents about shows that fit Apple original content plans.
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Recently, former WGN America President Matt Cherniss was also hired by Apple to look after its video unit. Previously, all three Apple recruits worked together to bring Sony shows Underground and Outsiders to WGN, notes MacRumors.
Prior to focusing on original content, Apple was more into renting TV shows and movies. However, the rise of subscription services made the business less attractive, as from 50% in 2012, Apple’s movie rental-and-sales market is estimated to have dropped to 35% currently, notes The Verge.
Will Apple succeed?
The Apple original content plans first came to light this year with shows like Carpool Karaoke and Planet of the Apps. Though both shows have received very poor critical reception, this surely has not discouraged Apple. In fact, if the WSJ report is to be believed, Apple has only increased its efforts to make a mark in original programming.
One big hit would be enough for Apple to push its video service plans further. Apple SVP Eddy Cue reportedly aims to offer content that is on par with HBO’s Game of Thrones. Apple’s budget, combined with its marketing clout and global reach, makes it a formidable player in the already-crowded market, in which traditional and new media players are in a cat fight to pocket original content.
However, it will not be as easy as it sounds for Apple. Netflix and Amazon already enjoy big leads and have a far bigger budget for programming. This year, Netflix is expected to spend more than $6 billion on its shows. Additionally, making shows could prove very costly; for instance, Game of Thrones Season 6 costs $10 million per episode. Comedies, on the hand, are comparatively cheaper, costing around $2 million per episode, while a drama can cost about $5 million per episode, notes The Verge.
Apple’s foray into original content also risks the 15% cut which Apple’s App Store gets from video services like Netflix and HBO Go. Lately, it’s been a growing contributor to Apple’s $24.35 billion in annual services revenue, notes The Australian.