CEO Tim Cook: Apple TV+ Remaining Selective on Content Spending Decisions

Apple generated a record $129 billion in revenue over its most-recent 90-day fiscal period. But that doesn’t mean the Cupertino. Calif.-based consumer tech giant isn’t breaking the bank on Apple TV+ content, reportedly spending around $6.5 billion on movies and TV shows. That pales in comparison to Netflix’s $17 billion and Amazon’s $9 billion in annual content spend.

Speaking on the Jan. 27 fiscal call, Apple CEO Tim Cook reiterated that financial output on movies and TV shows was not important. The executive touted that the streaming platform’s shows and movies have earned 200 industry award wins and more than 890 nominations.

“We don’t make purely financial decisions about the content,” Cook said on the call. “We try to find great content that has a reason for being.”

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The executive said every program is a “tremendous credit” to the storytellers in front and behind of the cameras.

“We’re giving storytellers a place to tell original stories and feel really good about where we are competitively and strategic position of the product,” he said.

Current rollouts include Joel Coen’s The Tragedy of Macbeth, CODA and Swan Song, along with new series “Severance” and “The Afterparty.” Emmy-winning “Ted Lasso,” the comedy about an American football coach hired to run a British soccer team, remains the streamer’s most-popular original series.

“We love shows like ‘Ted Lasso,’ and several of the others that have a reason for existing, may have a good message and may make people feel better at the end of it,” Cook said. “But I don’t feel that we’ve narrowed our universe of things we’re selecting from. There’s plenty to pick from out there, and I think we’re doing a pretty good job of it as we speak.”

Ampere: Global Content Spend Topped $220 Billion in 2021, Driven by Streaming Video

What a difference a pandemic makes.

Global spending on visual content is projected to top $220 billion in 2021 — up $20 billion from 2020 when industry shutdowns due to the spread of the COVID-19 virus halted productions on movie and TV sets, according to new data from Ampere Analysis.

Leading the spending: streaming video, specifically Netflix, which reportedly spent $13.2 billion this year to lead all platforms. Rivals Apple TV+, Disney+, HBO Max, Peacock and Paramount+ spent a combined $8 billion on original content.

Overall, Comcast and Disney spent $22.7 billion and $18.6 billion, respectively, on original content this year when including all of their linear TV and theatrical operations.

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“Comcast and Disney invest heavily in sports rights, which — alongside their hefty investments in original content — contributed to their leading positions on the table,” Hannah Walsh, research manager at Ampere, said in a statement. “Sports rights made up of over a third of both Comcast and Disney’s spend in 2021.”

Indeed, Netflix co-CEO/chief content officer Ted Sarandos remains resolute that the streamer would not venture into live sports streaming, including entering bidding rights for sports leagues.

That said, Ampere said SVOD platforms upped their content spend in 2021 by 20% to about $50 billion, which is up more than 50% since 2019.

“In 2022, we expect content investment to exceed $230 billion, primarily driven by subscription streaming services, as the battle in the original content arena intensifies — both in the U.S., but also in the global markets which are increasingly key for growth,” Walsh said.

Analysts: Netflix Spending $17 Billion on Content in 2020

Go big or go home. That appears to be the motto at Netflix when it comes to original content spending.

New data from BMO Capital Markets contends the SVOD behemoth will spend about $17 billion on original content this year, up $2 billion from 2019. Netflix ended the third-quarter (Sept. 30, 2019) with more than $24 billion in long-term debt to bond holders and third-party content producers.

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By comparison, NBC Universal’s pending Peacock streaming service reportedly will spend upwards of $2 billion on original content in 2019. HBO Max and Disney+ are spending from $1 billion to $2 billion on content this year.

“We continue to believe the ‘streaming wars’ narrative is false and there will be multiple winners in global streaming,” analyst Dan Salmon wrote in a note. Indeed, BMO remains bullish on Netflix with a “buy” rating on the stock.

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In Q3, Netflix launched 802 hours of original programming, including Golden Globes winners and Oscar contenders The Irishman and Marriage Story.

“We continue to believe Netflix will hit or exceed its U.S. paid net add guide,” John Blackledge, analyst with Cowen & Co., wrote in a separate note.

Netflix reports fourth-quarter fiscal results on Jan. 21.

 

Report: EU Local Content Quotas No Threat to Netflix

With the European Union reportedly set to vote in December on mandating over-the-top video subscription services offer at least 30% local content in each country of operation, Netflix would appear to have few concerns meeting the quotas, according to a note by investment bank Exane BNP Paribas.

Since expanding its SVOD service globally in 2016, Netflix has aggressively sought out localized original and catalog content in each country.

With the streaming service expected to spend more than $13 billion on original content this year, much of the budget is targeted towards developing local programming for subscribers in Europe, South America and Asia.

Indeed, Netflix’s Spanish production, “La Casa de Papel,” is the most-watched foreign-language content in the SVOD pioneer’s history.

“Netflix is already reportedly close to having 30% European content,” investment bank Exane BNP Paribas wrote in a note. “To comply with the rules, any service operating within the EU could merely maintain a similar ‘European’ fraction of its overall catalogue. However, specifics of the commission’s plan could add serious complications that effectively fragment both a service’s catalogue and pricing depending on the country where it’s being viewed.”

According to the bank, each country member in the EU would have 20 months to apply the law on OTT video services operating within their borders – including possibly upping the quota to 40%.

“Individual countries could also choose to require surcharges to support their national production funds,” wrote the bank. “Consequently, Amazon Video in France might require 10% French content, or Germany’s Netflix would need to raise prices to subsidize other companies’ production efforts.”

Regardless, Netflix is spending nearly $1.2 billion (€1 billion) this year on local content to comply with possible EU guidelines, Reed Hastings, co-founder and CEO of Netflix, told a film confab in Lille, France earlier this year.

“We’re building rapidly towards that [30%],” Hastings said. “There is great regulation that is very useful. It’s up to us in every country to participate and follow those regulations.”

 

Amazon, Netflix Moving in Opposite Directions on Original Content

Amazon Prime Video and Netflix may be ensnarled in a content spending arms race, but Amazon (which is spending $6 billion on content in 2018) is taking a different approach than the SVOD pioneer (and chief rival) when it comes to greenlighting original programming.

While Netflix will spend upwards of $8 billion on original content this year – with an emphasis on diversity as well as pushing the envelope creatively – Amazon Studios is taking a more measured route, according to Wedbush Securities analyst Michael Pachter.

Amazon Studios in April quietly ended the practice of soliciting scripts and concept submissions from the public – an innovative strategy it pioneered in 2010 offering up to $2.7 million to filmmakers and screenwriters (without industry representation) whose material was approved for pilot consideration.

The studio – under new boss Jennifer Salke – is reportedly eyeing content for the young adult genre, in addition to programming with mainstream global appeal, such as “The Grand Tour,” the 2016 reboot of the BBC’s “Top Gear” reality motor car series featuring the original cast.

It greenlighted “Utopia,” a series from Gone Girl novelist/screenwriter Gillian Flynn about a group of young social media-savvy adults being chased by a “deep-state” organization.

“We are huge fans of Gillian’s electrifying work,” Nick Hall, head of alternative series for Amazon Studios, said in a statement earlier this year. “She crafts stories that hold her audience in a constant state of suspense and subverts the expectations behind her characters. She will deliver Prime Video members a series they won’t forget, and ‘Utopia’s’ relevance is sure to connect with viewers around the globe.”

Amazon also inked rights to a new series based on the Lord of the Rings from “This is Us” director Dan Fogelman. It also has a first-look deal with Kenneth Lonergan, director of Amazon’s Oscar-winning Manchester by the Sea.

“[We want] big shows that can make the biggest difference around the world,” Amazon founder/CEO Jeff Bezos told Variety.

Indeed, Amazon opted not to greenlight three pilots approved by Prime members, in addition to canceling “One Mississippi” (after two seasons), “I Love Dick” (after one season), and “Jean-Claude Van Johnson” (after one season).

“Going forward we expect fewer new series from Amazon, with more resources deployed towards proven projects and larger scale productions,” Pachter wrote in a July 2 note.