Apple to spend $1.2 billion on original content for its own streaming service

August 17, 2017
| Report Focus News

HOW much money would it take to beat Netflix at its own game?

Probably somewhere around $A1.2 billion, at least that’s what Apple has committed to procure and produce its own original content in 2018.

The budget falls well short of the $A7.5 billion Netflix spent this year, but according to the people familiar with the plan, Apple plans to acquire and produce as many as 10 television shows, reported The Wall Street Journal.

Comparatively, the amount is about half of what HBO spent on content last year and on par with estimates of what Amazon spent when it announced its move to original programming in 2013.

As part of its plan to enter into the crowded online streaming service market, the iPhone manufacturer has poached two long-time Sony Pictures Television executives responsible for some of the most widely acclaimed programming of the past decade.

Having served as presidents for Sony Pictures Television since 2005, Jamie Erlicht and Zack Van Amburg played an instrumental role in developing the likes of Breaking Bad, The Crown and Better Call Saul.

Apple’s senior vice president of internet software and services Eddy Cue said the company hoped to benefit from the addition of the two men, who more than tripled Sony’s slate of original prime time series under their leadership.

“Jamie and Zack are two of the most talented TV executives in the world and have been instrumental in making this the golden age of television,” he said at the time.
It’s unknown if the company will use the existing Apple Music app or create a new service

It’s unknown if the company will use the existing Apple Music app or create a new serviceSource:Supplied
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The move into streaming is timely for Apple, with the company’s movie rental-and-sales market share falling to as low as 20 per cent in recent times.

Apple hopes that by 2020, the inclusion of original programming will more than double its $A30 billion services revenue, which includes App Store sales, Apple Pay and Apple Music.

While the company did not elaborate on its strategy, it hinted that it will be looking to increase its original content from the karaoke shows and app development-based TV already on its $10-a-month streaming service, Apple Music.

A late push into the competitive world of online streaming might have its challenges, but Apple has an advantage to help its cause — a wide distribution and advertising platform from the one billion iPhones, iPads and other devices that run the tech giant’s mobile operating system.

Moody’s analyst Gerald Granovsky said a ploy to create its own original content and secure licensing deals for an expansive library would be cheaper than to buy a pre-existing content company.

“From a credit perspective, we’d much rather see Apple overpay to deliver original content than pay $50 billion to buy Netflix and basically compete for the same content,” he told News Corp. “They’ll definitely get a better bang for their buck by focusing on their Apple TV product.”

Would you join an Apple streaming service? Continue the conversation in the comments below or with Matthew Dunn on Facebook and Twitter.