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Apple Sets Aside '$1 Billion War Chest' for Hollywood Programming
Apple has earmarked $1 billion to acquire and produce original television content over the next year to compete with the likes of Netflix and Amazon, the Wall Street Journal reported on Wednesday.
The plans could see Apple procure and produce as many as 10 television shows, according to people familiar with the matter, thanks to a budget figure that is about half of what Time Warner's HBO spent on content last year and around the same amount as Amazon spent in 2013, after it announced its own move into original programming.
The budget will reportedly be controlled by Hollywood veterans Jamie Erlicht and Zack Van Amburg, who were hired by Apple in June from Sony to oversee content acquisition and video strategy. Apple also recently hired former WGN America President Matt Cherniss to oversee development of the company’s worldwide video unit. Cherniss previously worked with Erlicht and Van Amburg to bring the Sony shows "Underground" and "Outsiders" to WGN.
As for the cost of programming, this can vary widely, from more than $2 million an episode for a comedy to more than $5 million for a drama, while high-end shows such as "Game of Thrones" can cost over $10 million per episode to produce.
For its video service to gain traction, Apple needs at least one hit, according to the people familiar with the plan who spoke to the newspaper. The company's initial video efforts include "Planet of the Apps", which was launched in June on Apple Music, and "Carpool Karaoke," which was launched last week. Apple has not revealed ratings for the shows but both have been criticized by reviewers.
Apple is hoping its efforts in original programming will bolster the appeal of iTunes movie rentals and other offerings through the store. Last year, iTunes generated an estimated $4.1 billion in revenue, but its share of the movie rental-and-sales market has declined to less than 35 percent from 50 percent in 2012, according to the report.
The plans could see Apple procure and produce as many as 10 television shows, according to people familiar with the matter, thanks to a budget figure that is about half of what Time Warner's HBO spent on content last year and around the same amount as Amazon spent in 2013, after it announced its own move into original programming.
The budget will reportedly be controlled by Hollywood veterans Jamie Erlicht and Zack Van Amburg, who were hired by Apple in June from Sony to oversee content acquisition and video strategy. Apple also recently hired former WGN America President Matt Cherniss to oversee development of the company’s worldwide video unit. Cherniss previously worked with Erlicht and Van Amburg to bring the Sony shows "Underground" and "Outsiders" to WGN.
Mr. Van Amburg and Mr. Erlicht have begun meeting with Hollywood agents and holding discussions about shows Apple could acquire, the people familiar said. Mr. Matt Cherniss has movie experience, having worked as a production executive at Warner Bros.WSJ notes that not only will Apple have a fight on its hands going up against rivals already heavily invested in original content, but it will also have to avoid jeopardizing its 15 percent cut of subscriptions from its App Store for services like Netflix and HBO GO.
As for the cost of programming, this can vary widely, from more than $2 million an episode for a comedy to more than $5 million for a drama, while high-end shows such as "Game of Thrones" can cost over $10 million per episode to produce.
For its video service to gain traction, Apple needs at least one hit, according to the people familiar with the plan who spoke to the newspaper. The company's initial video efforts include "Planet of the Apps", which was launched in June on Apple Music, and "Carpool Karaoke," which was launched last week. Apple has not revealed ratings for the shows but both have been criticized by reviewers.
Apple is hoping its efforts in original programming will bolster the appeal of iTunes movie rentals and other offerings through the store. Last year, iTunes generated an estimated $4.1 billion in revenue, but its share of the movie rental-and-sales market has declined to less than 35 percent from 50 percent in 2012, according to the report.
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15 months ago
In related news, Apple has announced a renewal of CarPlay Karaoke for 93 more seasons.
15 months ago
Is anyone subscribing to Apple Music to watch Apple TV shows? I doubt it.
15 months ago
Well so far everything they have produced has been complete crap.
Would be a good idea to add an extra few zeroes, make it $10bn and actually hire decent people the shows, as the production AND plot of the stuff we have seen so far is boring and cheap.
Would be a good idea to add an extra few zeroes, make it $10bn and actually hire decent people the shows, as the production AND plot of the stuff we have seen so far is boring and cheap.
15 months ago
Until Apple hire people that know what they are doing they'll never compete with cable, satellite, online companies like Amazon and Netflix...
I'd suggest they start the spend with that.....
I'd suggest they start the spend with that.....
15 months ago
I keep hearing "that's not much compared to the competition".
Really? The most expensive Netflix original cost $130m per season but they tend to hover around $70m-80m and remember they've been in the game for a few years now and Apple haven't even started.
Apple wants 10 original shows with $1bn which averages at $100m per show per season, which is more than enough for a first year. If it's successful the budget will increase over time.
Really? The most expensive Netflix original cost $130m per season but they tend to hover around $70m-80m and remember they've been in the game for a few years now and Apple haven't even started.
Apple wants 10 original shows with $1bn which averages at $100m per show per season, which is more than enough for a first year. If it's successful the budget will increase over time.
15 months ago
Until Apple hire people that know what they are doing they'll never compete with cable, satellite, online companies like Amazon and Netflix...
I'd suggest they start the spend with that.....
They should've done that about 3 years ago. They're reacting to the Netflix growth. Apple's strategy of trying to be 'everything for everybody' is not working.
15 months ago
$1B is too low for first year!
Come on Tim Cook, spend the whole $3 billion of YouTube money you have!
Come on Tim Cook, spend the whole $3 billion of YouTube money you have!
15 months ago
They should've done that about 3 years ago. They're reacting to the Netflix growth. Apple's strategy of trying to be 'everything for everybody' is not working.
What's not working? Apple's high market cap? Apple's huge profits? Apple's high product reliability and customer satisfaction? If Apple wants to spend some money trying out new things, what's wrong with that? It's a good way to grow you business. It's a smart move to encourage more ecosystem buy-in. Also, stock markets dislike companies that appear stagnant, even if they are hugely successful.
Maybe it will flop but it's a great area to invest in.
15 months ago
What on earth is this once-great company doing? The last thing the world needs is another pointless bargain bucket TV streaming service.
Sooner or later another company is going to start producing a decent range of nicely-designed laptops and desktops with a Linux- or UNIX-based OS to rival Mac OS X (or whatever it's called nowadays), then Apple will finally work out what they've been doing wrong since Jobs died, at which point it will be too late.
Maybe you should start this new company since apparently you have it all figured out. Hopefully your company can beat them to the $1 trillion market cap since they are going downhill. If only Steve was still around to save this company...
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