Apple plans to follow premium channels HBO and Showtime, as well as streaming services such as Netflix, Amazon and Hulu, in creating its own original TV shows and movies, The Wall Street Journal reported Thursday.
The company is negotiating agreements with veteran content producers to buy the rights to scripted television programs, unnamed sources told the WSJ. It likely will offer its content through an over-the-top service similar to Netflix.
The move to original TV content could be a major leap forward for Apple to promote not only its devices but its content delivery system.
Apple recently launched Apple Music, a US$10-a-month music streaming service that includes some short documentary-based programming.
However, Apple Music has not yet achieved the success of Spotify, which has more than 40 million paying subscribers, compared to Apple’s 20 million.
Apple could have its work cut out for it as it attempts a similar play in an already-crowded TV market. TV viewers already have a wealth of original programming to choose from on basic and premium cable, as well as OTT — not to mention the old standard television networks.
Beyond the Music
Apple’s short-term strategy could be to expand on Apple Music and make it an even more appealing draw than Spotify or other competitors.
“This could be a way of adding value to Apple Music with original video content,” said Dan Cryan, senior director of digital media at IHS Markit.
“As much as anything else, this move by Apple needs to be seen in the context of its music business,” he told the E-Commerce Times.
“You need a large bouquet of content to make it work as video proposition, but to add value to a music subscription service you still just need to make good content that can attract users,” Cryan explained. “But fundamentally what you are doing is still very different from a standalone video model.”
Brand Position and Proxy
Apple’s interest in offering original content may be keyed to expansion of its brand and its ecosystem.
“To be a premium brand in the digital space you have to have original content,” said Joel Espelien, senior analyst at The Diffusion Group.
“When you think of what makes HBO or Showtime a premium brand, it is really their original content,” he told the E-Commerce Times.
“If you don’t have that original content, the consumer may think you are just a generic service, which is why even DirecTV has now put out original content to stand out,” Espelien pointed out.”Apple has been vulnerable by not having that content, but the second part of this is that original content is also a great proxy for the ecosystem.”
It’s much easier to promote original programming than to attempt to lure consumers to a service or ecosystem, he noted. “You can’t put that sort of stuff on the side of a bus, and … the consumer isn’t drawn to it, which is why Netflix promotes its original content.”
Apple already has achieved great success pivoting from a computer company — one that practically went out of business in the 1990s — to a consumer electronics maker and services company. Apple’s ecosystem remains a key part of its business, and any content it creates likely will exist within its ecosystem as well.
“Content becomes much more important to an ecosystem company — much more important than it is to a device company,” said Espelien.
Although Apple’s content could help promote Apple devices such as the iPad, it also would have to be available on competitor devices, such as Android tablets.
“In a fundamental sense, all Apple products exist as part of the ecosystem that includes devices and services, but it is doubtful people would buy an Apple TV device just to watch a few shows,” said IHS Markit’s Cryan.
“This is why Apple Music is already available for Android devices,” he observed. “The bigger question is whether Apple can use these shows to promote mindshare for Apple Music and its services.”
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