The entertainment industry is changing and the nuances are dramatic to say the least. The last few years have shown us that any streaming site with substantial capital can run their own production company and create content to give tv networks a genuine run for their money. The 2018 Emmy Awards exemplified perfectly the shift towards the acceptance and public favoritism shown toward content related by streaming studios like Netflix (NFLX) and Amazon (AMZN). Amazon (AMZN) cleaned house, especially in the comedy category with their show The Marvelous Mrs. Maisel securing five statuettes, including awards for Outstanding Comedy Series, Outstanding Writing for a Comedy Series, and several awards for the actors and directorial team responsible for the show.
Meanwhile, somewhere in the New Mexican desert, Netflix (NFLX) is reportedly spending $1 billion on a new production studio. The new site is built, specifically in Albuquerque, will allow the streaming site to expand production to create content for their consistently growing base of 130 million subscribers around the globe. According to the latest Global Internet Phenomena Report, Netflix (NFLX) accounts for 15% of the total downstream volume of internet traffic globally, which, in laymen’s terms, means the majority of internet users are watching the Office.
Naturally, when companies find success to the level of Netflix (NFLX) and Amazon (AMZN), other entities will start to take notice and see if they can’t find a way to take advantage of the tidal shift in the said industry. Given that Apple (AAPL) has had a year wrought with sub-par demand for iPhones and other snafus of the like, taking a stab at content creation might not be a bad idea. Banking on this potential fiscal opportunity, Apple (AAPL) recently announced that they had entered into a multiyear deal with Oprah Winfrey as part of their push into original content.
“I would confirm that television has an intense interest with me and many other people here. Int terms of owning content and creating content, we have started focusing on some original content…We’ve got a few things going there that we’ve talked about. And I think it’s a great opportunity for us both from a creation point of view and an ownership point of view, and so, it is an area that we’re focused on.”
–Tim Cook, Chief Executive Officer, Apple
In the official press release, Apple (AAPL) said that they hope Winfrey “will create original programs that embrace her incomparable ability to connect with audiences around the world” for the tech giant. In addition to this deal, Apple (AAPL) wrote up another contract to collaborate with indie film studio A24 to produce original film content for the eventual release of its streaming platform. Over the summer, CEO Tim Cook told reporters that he firmly believes “cord-cutting…is only going to accelerate and probably accelerate at a much faster rate than is widely thought.” By cord-cutting, Cook is referring to the recent trend of consumers electing to stream television via streaming sites like Netflix (NFLX) and Amazon Prime (AMZN), rather than pay for a monthly cable subscription.
While one would assume shareholders of Apple (AAPL) would be ecstatic to hear that the tech industry pioneer is trying to leverage its predominance in the space to become a contender in content creation and streaming services, the company’s investors remain largely unconvinced. For example, A24, the production company that Apple (AAPL) recently agreed to a multiyear deal with, was responsible for “Moonlight,” a film that received the Oscar for best picture, while being one of the lowest grossing films ever to win this award. From a purely creative perspective, Apple’s (AAPL)entrance into content creation is interesting, but in terms of potential for fiscal growth, I’m not so sure.
Additionally, Tim Cook made it clear early on that, in terms of subject matter for Apple’s (AAPL) foray into content, he doesn’t want any films or television series to contain gratuitous violence or risqué storylines that “might risk the company’s brand aesthetic. I wish Apple (AAPL) the best of luck as it ventures into the direct-to-consumer streaming market, and hope that Tim Cook is well aware that Netflix (NFLX) spends $8 billion a year on content, and his company merely earmarked roughly $1 billion for this project.