According to a Wall Street Journal report earlier today, Apple has earmarked $50 million towards original programming that will most likely have iconic storyteller Steven Spielberg at the helm. The deal was signed between Apple and Spielberg’s Amblin Television and Universal Television, which is a unit of NBCUniversal under the Comcast umbrella.
The intent is to revive the 1980s series Amazing Stories, which itself was an attempt at recreating something along the lines of Twilight Zone. Though Amazing Stories was considered a major hit with over five Emmy wins over the 1985 to 1987 period when it was aired, it was cancelled after Season 2 by NBC.
Apple is clearly on the warpath with its plans for original streamable video content for its Apple Music platform. The service is one of its key growth drivers for the future as iPhone sales get more unpredictable with each passing year. The company has already committed to spending over $1 billion in original programming over the next one year, and the deal with Spielberg could be the start of something big.
The Verge brought up a very relevant point about distributing the content, however. Verge author Bryan Bishop questioned the wisdom of only distributing the content through Apple’s services, and exclusively to Apple device owners. In essence, he contends that doing so would be little more than a “value-add to Apple’s music ambitions.”
While I agree that distributing it solely within the Apple Music platform might sound counterproductive to Apple’s plans, certain numbers suggest that Apple could, in fact, find enough leverage within its own user base (about 1 billion active devices as of January 2016) for it to be viable.
In one sense, Apple isn’t trying to compete with Netflix or Amazon or Hulu or any of the others. It has enough of a user base to capture tens of millions of eyeballs for any premium content it produces. Apple Music recently crossed 30 million paying subscribers, and if a potential hit series like Amazing Stories managed to get even more Apple users on the company’s music platform, it could translate into billions of dollars annually, over a period of time. That’s money well spent.
From another perspective, all platforms have their own exclusive content. For example, you won’t find Netflix original content anywhere else, at least not legally. The only difference is that Netflix serves its content through a web or mobile application that is not exclusive to a particular user segment, while Apple does the same but only on devices running its own operating systems. When you look at it that way, what Apple is doing is not much different from what everyone else is. The only difference is that there’s a virtual wall around access to the content, and it’s called “being an Apple device owner.”
That said, the company is still a long way from creating enough of a body of video content to make subscribing to the service an attractive proposition for Apple device users. But if early efforts bear some fruit, you can be sure that Apple will double down on its investments in the space, possibly even outdoing Netflix’s ever-increasing content spend if it feels the ROI would be justified.
Netflix is committing over $15 billion towards original content creation this year, and they only have about three and a half times more subscribers than Apple Music at this point. And even that commitment seriously tests Netflix’s financial limits. But for Apple, such an investment would hardly unbalance its balance sheet. If it sees any signs of strong positive growth in Apple Music subscriptions from its early efforts, you can bet on the fact that Apple will sharply increase its spending and give some of the other SVOD players a run for their money, even if it doesn’t start to spend like Netflix right away.