Apple to inject $1bn funds after late start in original content

Apple has seemed to us, allergic to spending money on worthwhile aims, despite it sitting on a money mountain. This week the Wall Street Journal has quoted insiders saying the budget for original content for Apple next year is $1 billion, which shows that it is starting to overcome that allergy.

The Faultline Online Reporter take on Apple and video content is that it has always wanted to do something radical in video content, and that has always scared the Hollywood studios, and they have never cut extensive deals with Apple. Netflix scared them less, and look where they are now, perhaps ready to take Apple’s dollars with less reservations.

But it Apple wants to do whatever the hell it likes with content, then it should really make its own or at least pay for it to be made. The move was presaged by the appointment in June of two seasoned Sony Pictures Television (SPT) ex-Presidents at Apple. It is clear from past moves that Apple will want Apple content to play only on Apple devices, and that, we believe, will limit it in the end – but start with $1 billion, spend it wisely, and then perhaps add another $2 billion the following year, and pretty soon Apple drags Google into the war and everyone goes all in on content.

But our feel is that it will take 4 or 5 long years, by which time Netflix is out of reach, and a move into original content was something Apple should have considered before we all started bandying around the term “original content” 5 or 6 years ago. Apple has managed to make software in its App Store exclusive to its devices and music in iTunes mostly for iOS devices (and of course PCs) so when the entire entertainment industry becomes the fodder to tempt people onto networks or devices – those two – Apple and Google need to be in on it and they will be.

Netflix already has achieved disproportionate revenue growth for the $6 billion it is already spending on original content each year, and given that it has $16 billion promised to content providers in the future, even Apple is going to take a while to build an organization which can spend that kind of content wisely. HBO is a great example of an organization which spends wisely – it spent just a couple of $1 billion on original content last year, and boasts the Game of Thrones, one of the most followed (and pirated) series of all time.

Apple’s first attempts at original content were very much into specialist content which many people feel plays best on phones with titles like ‘Carpool Karaoke’ which you can switch on and off and pick it up whenever you like, and ‘Planet of the Apps,’ which debuted on Apple Music. We might suggest there are more likely to be part of a mobile first video service like Go90 – which itself has only had limited success.

Apple should be able to add another 10 such shows to its roster inside a year with that kind of money – but it’s still not enough to build a services around – and perhaps it can continue to use Apple Music as a Trojan Horse, using that to lever fans slowly towards video.

But the idea of Apple competing with ‘Game of Thrones’ at the first attempt is far less likely and the other global player Amazon Prime Video, plans to spend $4.5 billion in 2017, and accelerate thereafter.