UPDATED 19:19 EDT / AUGUST 16 2017

INFRA

Report: Apple will invest $1B to create its own TV shows and films

Apple Inc. will invest more than $1 billion to produce several of its own television shows and films over the next year, which could put the iPhone maker in more direct competition with the likes of Netflix, Hulu and Amazon Prime.

According to a report by the Wall Street Journal, sources familiar with the matter say that Apple’s investment could lead to the creation of up to 10 new television programs within the next year, and the company hopes to match the quality of big-budget TV productions such as those found on HBO. If the report is accurate, then Apple could end up spending roughly $3 million to $4 million per episode, which would put it in line with HBO’s per-episode budget for “Game of Thrones.”

Apple’s new investment is likely aimed at boosting revenue and user growth for iTunes Video. Apple’s offering continues to face more and more competition not only from other streaming platforms such as Netflix Inc. and Amazon.com Inc., but also from networks and major studios, many of which are now creating their own online subscription services while also pulling their shows off other platforms.

“Content is a vital missing link that could help Apple complete a powerful ecosystem of programming, devices and services,” eMarketer Principal Analyst Paul Verna said.

Apple would hardly be the first streaming provider to invest in original web programming. Netflix in particular has been relying on its original series to drive user growth and retention, and with more than 5.2 million subscribers added in the last quarter alone, the company’s tactic seems to be paying off. Netflix also announced a new budget for original programming today, and it is aiming a lot higher than Apple, with an investment of more than $7 billion in new shows and films.

In addition to fueling user growth, original web shows have also started to content for major awards against major networks, and shows such as Netflix’s “Stranger Things” and Hulu’s “The Handmaid’s Tale” have proved that streaming services can contend with established players in the TV industry when it comes to critical acclaim.

Netflix Chief Content Officer Ted Sarandos confirmed in an interview with Variety that competition with network-owned streaming platforms, including Disney’s recently announced service, continues to be a driving force behind Netflix’s focus on original content.

“I would say that the relationship between studios and networks has always been that of a frenemy,” Sarandos said. “Everyone is doing some version of it already. They just have to make a decision for their companies, their brands and their shareholders on how to best optimize the content. We started making original content five years ago, betting this would happen.”

With a $1 billion investment, Apple’s foray into television production seems to be more than a simple experiment. But the company will have to compete with more than other network’s content; it will also have to compete with their infrastructures. Both Netflix and Amazon have massive networking capabilities to back up their platforms, and while Apple is no stranger to hosting data, it has not dealt with streaming to quite the same degree.

Of course, if any company can throw money at problem to solve a technology bottleneck, it would certainly be Apple.

Image: Apple

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