Apple Sets Its Sights on Hollywood With Plans for Original Content
January 12 2017 - 5:59AM
Dow Jones News
By Ben Fritz, Tripp Mickle and Hannah Karp
Apple Inc. is planning to build a significant new business in
original television shows and movies, according to people familiar
with the matter, a move that could make it a bigger player in
Hollywood and offset slowing sales of iPhones and iPads.
These people said the programming would be available to
subscribers of Apple's $10-a-month streaming-music service, which
has struggled to catch up to the larger Spotify AB. Apple Music
already includes a limited number of documentary-style segments on
musicians, but nothing like the premium programming it is now
seeking.
The technology giant has been in talks with veteran producers in
recent months about buying rights to scripted television programs.
It also has approached experienced marketing executives at studios
and networks to discuss hiring them to promote its content, said
people with knowledge of the discussions.
In addition to TV, Apple indicated to these people that it is
considering offering original movies, though those plans are more
preliminary.
Executives at Apple have told people in Hollywood they hope to
start offering original scripted content by the end of 2017.
The shows Apple is considering would likely be comparable to
critically acclaimed programs like "Westworld" on Time Warner
Inc.'s HBO or "Stranger Things" on Netflix.
Because it is looking at just a handful of carefully selected
shows, and potentially films, it doesn't appear Apple is preparing
to spend the hundreds of millions or even billions of dollars it
would need to spend annually to become a direct competitor to
Netflix Inc., Amazon.com Inc.'s Prime Video or premium cable
networks.
Rather, it would escalate the arms race between Apple Music and
Spotify, which both offer essentially the same catalog of tens of
millions of songs, by adding other content that could distinguish
Apple's service.
Nonetheless, the entry of the world's most valuable company into
original television and films could be a transformative moment for
Hollywood and mark a significant turn in strategy for Apple as it
starts to become more of a media company, rather than just a
distributor of other companies' media.
In addition to its music-related nonfiction shows and
documentaries, Apple Music already has bought the rights to a
half-hour version of "Carpool Karaoke," which is currently a
segment on CBS's "The Late Late Show with James Corden." It is also
making a quasi-biographical series about Dr. Dre, the rap star and
Apple Music executive, which is slated to premiere later this
year.
But it hasn't yet bought scripted content from outside
producers, a more expensive and riskier endeavor that takes it
further onto the turf of entertainment companies. The series and
movies Apple is now considering buying don't have any particular
relationship to music, according to the people familiar with the
matter.
One reason Apple hasn't yet completed a deal to buy a scripted
series is because it is still working out details of its business
strategy built around original content. But it has told producers
that a key advantage it hopes to offer is that it would share data
on how many people watch its original content and some demographic
data on them. Netflix doesn't share any such information with its
content creators, which has been a source of contention among some
in Hollywood.
Apple has been flirting for years with whether and how it should
enter the entertainment business. It held talk with television
companies about offering a "skinny bundle" of networks over the
internet, but was never able to reach terms. It also approached
Time Warner Inc. last year about a possible merger before that
company agreed to be acquired by AT&T Inc.
The move into original content comes as Apple is grappling with
a slowdown in its traditional business. Last year it missed its own
internal revenue targets for the first time in at least seven years
as sales of the iPhone 6s fell short of expectations. Sales of the
iPhone, which turned Apple into the world's most profitable
company, have slowed amid rising competition, particularly in
China.
Apple Music has become a key piece of the company's services
business, which has been growing as iPhone sales slow. Revenue from
Apple Music rose 22% in the quarter ended Sept. 24, but the
service's subscriber base is still dwarfed by Spotify's.
Apple Music said in December that it had more than 20 million
subscribers, most of whom pay $9.99 a month; Spotify counted more
than 40 million paying subscribers in September.
Write to Ben Fritz at ben.fritz@wsj.com, Tripp Mickle at
Tripp.Mickle@wsj.com and Hannah Karp at hannah.karp@wsj.com
(END) Dow Jones Newswires
January 12, 2017 05:44 ET (10:44 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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