Next Big Move: Apple to Invest $1billion on original programming

The Wall street Journal reports that the tech company has budgeted $1billion to acquire original content next year, according to sources close to the matter.

DailyMail.com reached out to the Cupertino, California company but they declined to comment on the report.

Therefore it’s unclear what time of programming Apple is seeking – whether television, movies, or both.

But judging by their budget, which is on par with Amazon’s the year it launched original programming, it seems they are trying to take a similar route.

Sources tell the Wall Street Journal that Apple has budgeted $1billion to spend on original programming next year. Above, Apple CEO Tim Cook

Sources tell the Wall Street Journal that Apple has budgeted $1billion to spend on original programming next year. Above, Apple CEO Tim Cook

Amazon started offering original television shows on its streaming service, Amazon Prime Video, in 2013. It wasn’t until about two years after that they started producing films in earnest.

So it seems that Apple could take the same path, starting small with TV shows first and then moving into film.

Experts close to the matter told the Journal that right now Apple has the budget to acquire about 10 TV shows.

In June, Apple poached two Hollywood executives from Sony, Jamie Erlicht and Zach Van Amburg, who have been meeting with agents to discuss possible shows to acquire. The two industry veterans started working in Apple’s LA offices this month.

In June, Apple poached Hollywood executives Zack Van Amburg (left) and Jamie Erlicht (right) from Sony to lead their original programming efforts. The two are pictured above with actor Bryan Cranston

In June, Apple poached Hollywood executives Zack Van Amburg (left) and Jamie Erlicht (right) from Sony to lead their original programming efforts. The two are pictured above with actor Bryan Cranston

It’s also unclear where Apple’s original programming would stream.

Right now, Apple offers movies and television shows to rent and buy in its iTunes store. Their original programming could continue to be offered through iTunes, or Apple may create a new separate streaming service with a monthly subscription, akin to Netflix, Hulu and Amazon Prime Video.

Apple has already taken a step in that direction when it comes to its music offerings.

While Apple users can still buy music in the iTunes store, the company also operates Apple Music, a monthly subscription service that gives members access to its entire catalog for $9.99 a month for a single person to $14.99 a month for a family plan.

Some industry experts are skeptical that the company will be successful in a market flooded with options.

Dave Hill, a former senior executive at 21st Century Fox, told the Journal that Apple’s recent hires give the company a chance to catch up to Amazon and Netflix, but that the flood of scripted shows is going to make it difficult to attract viewers.

‘There’s just not enough time,’ he said.

In fact, the Journal points out that even the successes in streaming can be pegged to luck – like Netflix’s back-to-back hits House of Cards and Orange is the New Black. The year that those two shows were released, Netflix’s budget was $2billion. Now it’s up to $6billion.

People who spoke about the plan to the Journal said that Apple needs at least one big hit to gain relevance.

And while its budget is on par with Amazon’s when it got into streaming, it’s still only about half of what HBO spent on content last year.

Still, with Apple’s revenue ($215.64 last year), they could certainly increase spending if original programming proves fruitful.

Another complication to Apple’s plan is the cut it takes from streaming services – like HBO Go, Hulu, Amazon and Netflix – for the apps they sell in the Apple App Store. If it proves to be a real competitor to these services, it could jeopardize that cut.

 

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