Wall Street Journal:
Apple Inc. (AAPL) has set a budget of roughly $1 billion to procure and produce original content over the next year, according to people familiar with the matter–a sign of how serious the iPhone maker is about making a splash in Hollywood.
Combined with the company’s marketing clout and global reach, that immediately makes Apple a considerable competitor in a crowded market where new media players and traditional media companies are vying to acquire original shows. The figure is about half what Time Warner Inc.’s HBO spent on content last year and on par with estimates of what Amazon.com spent in 2013, the year after it announced its move into original programming.
And:
Programming costs can range from more than $2 million an episode for a comedy to more than $5 million for a drama. An episode of some high-end shows such as “Game of Thrones” can cost more than $10 million to produce.
The back-to-back success of the original shows “House of Cards” and “Orange Is the New Black” is credited with building Netflix’s business. At the time they were released the company’s annual budget for original and acquired programming was about $2 billion; this year it is expected to spend more than $6 billion.
Personally, I would not judge Apple’s chances here based on shows like Planet of the Apps and Carpool Karaoke. That would be like judging a developer on the apps they write as they learn how to program.
Key to Apple’s success will be setting aside enough cash (which they appear more than willing to do) and ability to bring on board the right mix of people, people with experience and craft. With the hire of Zack Van Amburg and Jamie Erlicht, and the addition of Matt Cherniss to oversee development, Apple has the start of a significant original programming effort.
Good point about Planet of the Apps and CP Karaoke. Though my concern with Planet is more how self-serving it is than the actual production itself. It’s so transparently marketing-driven. And in my experience, when branding and marketing people get in the mix, things always go horribly wrong. For example, the email we all got at work a few months ago where the head of marketing insisted we all had to change our computer desktops to some marketing photos to highlight the “branding” they were pushing at the moment.
Nope, National Geographic and NASA photos say on my desktop. (Not even my own!)
I’d love to be a fly on the wall as the execs discuss the reasoning behind why Apple needs to do program at all. Netflix was obvious – they are in the business of streaming and when they started, DVDs were still a significant factor. House of Cards and Orange Is the New Black helped get people to signup. Hulu, the same. Amazon, likewise has streaming video as a core offering of Prime.
Apple doesn’t have a streaming service. I wonder how they see this stuff fitting in their future.
I see Apple’s move into content production as their way of earning a seat at the table when it comes to making deals with other content creators. If Apple can truly become a player in the industry, then the large media conglomerates will be obliged to include them when shaping future standards like augmented & virtual reality. I don’t see this as an immediate revenue stream, but more means to an end. For years, media titans have stonewalled Apple in their efforts to modernize the system. With ~600 mm to ~1 bn active device users, Apple will be a formidable force to be reckoned with.
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