Apple TV+ Beefing Up Catalog Content

As upstart subscription streaming video services go, Apple TV+ remains largely under the radar. Launching just 10 days ahead of Disney+ last November, the $4.99 SVOD service boasted 30 original programs, scant catalog content and reportedly has about 10 million subscribers. Apple gives a free year of service with any hardware purchase.

Now the Cupertino, Calif.-based CE giant is reportedly looking to beef up its content portfolio with catalog content, according to Bloomberg, which cited sources familiar with the situation. Despite about $200 billion in free cash at the end of 2019, Apple didn’t get into bidding for coveted TV series such as “Friends,” “The Office,” “Seinfeld” or “The Simpsons.”

With coronavirus quarantines continuing in many parts of the country, Apple is realizing the value of enhanced program offerings in the home. The company has reportedly begun contacting production companies about catalog TV shows and movies to backup original programming, which includes the launch of animated adult series “Central Park” on May 29, and documentaries “Dear”  and “Dads” in June.

Original series,”The Morning Show,” co-starring Jennifer Aniston, Reese Witherspoon and Steve Carell, earned Aniston her first SAG Award.

In an interview last month with Bloomberg, Apple CEO Tim Cook admitted the COVID-19 pandemic had expanded the market for new Apple TV + subscribers spending more time in the home.

“The pandemic cut both ways,” he said.

CEO: Apple TV+ Looking for Original Content, Not Re-Runs

Apple’s foray into subscription streaming video via Apple TV+ is all about original programming — not expensive re-runs. That’s according to CEO Tim Cook in response to a question during the Feb. 26 shareholder meeting about why the tech giant hasn’t gone after well-known catalog fare such as “Friends,” “The Big Bang Theory” or “The Office,” among others.

“We love ‘Friends.’ Who doesn’t love ‘Friends’? It’s not what Apple TV+ is about, it’s about original programming,” Cook said. “It doesn’t feel right for Apple to go out and take a rerun. It doesn’t feel like Apple.”

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AT&T’s WarnerMedia Entertainment reportedly paid $85 million per year for five years ($425 million) securing the exclusive streaming rights for “Friends” away from Netflix.

NBCUniversal paid more than $500 million for streaming rights to “The Office,” while Netflix paid about the same for “Seinfeld.”

Apple TV+ launched Nov. 1, 2019 with 24 original series, including Golden Globes winner “The Morning Show” for Jennifer Aniston. Other series include “Home Before Dark,” “Amazing Stories,” “Truth Be Told,” “Trying,” “See,” and “Dickenson,” starring Hailee Steinfeld (Bumblebee).

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“We’re going to be focused on original programming,” Cook said, adding that Apple TV+ is off to a “rousing start” without elaborating additional details, including subscriber numbers.

Apple giving away a free year of the service with any purchase of an Apple hardware product.

SVOD Helps Apple Post Record Q1 Services Revenue of $12.7 Billion

Despite myriad naysayers, the Apple TV+ subscription streaming video service is quietly exceeding expectations and producing on the bottom line, according to CEO Tim Cook.

Speaking Jan. 28 on the Q1 fiscal call, Cook said Apple TV+, which launched on Nov. 1, 2019, has had a “rousing start” with strong consumer response worldwide. Unlike Disney+, which launched on Nov. 12 in six markets, Apple TV+ is available in 100 markets that sell iPhone, iPad, Apple Watches and Mac computers.

The SVOD platform helped Apple’s “services” business segment generate record revenue of $12.7 billion for the first quarter, ended Dec. 28, 2019. That was up 17% compared to services revenue of $10.8 billion in the previous-year period.

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The services category, which also includes iTunes, the App Store, the Mac App Store, Apple Music, Apple Pay, AppleCare and Apple Arcade, has become a significant revenue driver for the Menlo Park, Calif.-based tech giant.

Apple also had a great quarter overall, posting record revenue of $91.8 billion, up 9% from the year-ago quarter. International sales accounted for 61% of the quarter’s revenue.

“We are thrilled to report Apple’s highest quarterly revenue ever, fueled by strong demand for our iPhone 11 and iPhone 11 Pro models, and all-time records for Services and Wearables,” Cook said.

He said Apple’s install base across all branded devices grew in each of the company’s geographic segments topping 1.5 billion.

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“We see this as a powerful testament to the satisfaction, engagement and loyalty of our customers — and a great driver of our growth across the board,” Cook said.

 

Apple Ups Q2 ‘Services’ Revenue to Record $11.5 Billion

Apple April 30 reported record “services” revenue of $11.5 billion, up more than 16% from revenue of $9.13 billion during the previous-year period.

As the media/tech giant shifts its focus from hardware products such as iPhone, iPad, Mac and Apple Watch, among others, it has upped scrutiny on services, which include sales of digital movies and TV shows on iTunes and Apple TV, in addition to the pending rollout of Apple TV+ app and separate subscription streaming video service.

“Our March quarter [services] results show the continued strength of our installed base of over 1.4 billion active devices,” CEO Tim Cook said in a statement.

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Cook eyes Apple’s install base as the genesis for the future success of AppleTV+ and related Apple business ventures such as Apple News, Apple Pay (including branded credit card), Apple Arcade (gaming) and Apple Music.

Indeed, Apple said sales of its legacy iPhone declined nearly 18% to $31 billion from $37.5 billion during the previous-year period. The attributed the decline to 21.5% drop in unit sales in China – a slight improvement from 26.7% unit drop in the prior-year quarter.

Mac revenue dipped 4% to $5.5 billion, while iPad sales revenue increased 21.5% to $4.8 billion.

Net revenue fell about 5% to $58 billion from $61.1 billion. Net income fell almost 17% to $11.5 billion from $13.8 billion.

Stars Bite on Apple Streaming Service

Stars and filmmakers from Steven Spielberg and J.J. Abrams to Steve Carell, Jennifer Aniston, Reese Witherspoon and Oprah turned out March 25 to help Apple launch it’s new streaming service Apple TV+.

Report: Apple Video Service Bowing Without Netflix, HBO, Hulu

When it comes to streaming video, Apple has largely been a spectator. In fact, the late Steve Jobs infamously considered Apple TV a “hobby.”

But the company synonymous with consumer electronics innovation is spearheading a major push into OTT video this year, including spending more than $1 billion on original content.

With a brand as powerful as Disney’s, Apple apparently believes it is worth a lot in the OTT ecosystem.

CEO Tim Cook said as much on the recent fiscal call.

“We see huge changes in customer behavior taking place now and we think that it will accelerate as the year goes by with the breakdown of the cable bundle,” he said. “I think that it’ll likely take place at a much faster pace this year.”

Indeed, the Menlo Park, Calif.-based company is upping the ante for third-parties along for the streaming ride on its platform — reportedly set to launch by May without heavyweights Netflix, Hulu and HBO Now.

While both brands are available on the Apple TV streaming media device, CNBC reports the new platform will operate similarly to Amazon Channels as facilitator to original and third-party OTT services — the latter for a cut of the subscriber action.

Apple, which gets 15% commission per third-party subscriber generated through the App store, now wants 30% per sub on the new platform, according to CNBC. The Wall Street Journal previously reported Apple is looking at a 50% split for its pending news streaming service.

Apparently, Netflix, Hulu and HBO aren’t biting, while Lionsgate-owned Starz, Showtime OTT and Viacom are. HBO, Starz and Showtime are available on Amazon Channels.

 

Apple iPhone Q1 Revenue Drops 15%, Services Sales Top Record $10.9 Billion

Apple Jan. 29 reported first-quarter (ended Dec. 29, 2018) revenue from the iPhone fell 15% to $52 billion from $61.1 billion during the previous-year period.

Apple attributed the lower than anticipated revenue to sluggish sales in China and emerging markets.

“We believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, U.S. dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements,” CEO Tim Cook said in a statement.

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While the downturn forced Apple to revise its fiscal guidance, the company continued to fire on all cylinders in other business segments.

Apple services revenue, which includes sales of digital movies and TV shows on iTunes and Apple TV, generated a record $10.9 billion – up nearly 20% from last year.

The segment, which also includes AppleCare, Apple Pay, licensing and other services, is on track to double in size from 2016 to 2020.

Overall, Apple posted quarterly revenue of $84.3 billion, a decline of 5% from the year-ago quarter, and quarterly earnings per diluted share of $4.18, up 7.5%. International sales accounted for 62% of the quarter’s revenue.

 

Morgan Stanley Says Apple SVOD Service Can Rival Netflix — in Seven Years

Netflix shares took a slight hit after Morgan Stanley Sept. 5 issued a bullish note on Apple’s slowly evolving subscription streaming video service.

In the report — Apple, Inc.: The Emerging Power of Apple Services, Part 3: Video a New Growth Driver in 2019– Morgan Stanley analysts believe Apple’s longstanding success with iTunes and the music industry, Hollywood and its ability to capture consumer demand through the iPhone, iPad and Apple Watch portends great promise in over-the-top video distribution.

“We forecast that an Apple Video streaming service with high-quality but limited breadth could be priced at the low end vs. competitors, or $7.99/month, and reach over 50 million paid subscribers by 2025, compared to 124 million at Netflix subs and Apple’s 650 million-unit iPhone installed base,” wrote the analysts.

Indeed, the note suggests Apple’s SVOD service could grow from a $500 million business in 2019 to $4.4 billion operation by 2025.

Lofty projections considering the late Steve Jobs often considered Apple TV and streaming a video a hobby and not a platform Apple could invest heavily in.

That’s changed as CEO Tim Cook and Eddy Cue, SVP of Internet software and services, have upped Apple’s video profile by hiring a string of entertainment executives, producers and directors to jumpstart original programming.

The biggest announcement occurred last November about an untitled morning show drama starring and executive produced by Reese Witherspoon and Jennifer Aniston.

Other projects include a sketch comedy with Kristen Wiig; renewed seasons of “Carpool Karaoke,” a basketball drama with Golden State Warriors Kevin Durant serving as both the subject and producer; and unnamed series from directors M. Night Shyamalan, J.J. Abrams and Oprah Winfrey, among others.

Morgan Stanley believes the Apple SVOD service could get a boost when bundled with the Apple Music and Texture news and magazine subscription services. A strategy Hulu has employed partnering with Spotify.

The note said such a bundling would diversify content options for consumers, diminish the need for immediate original content hits, increase perceived consumer value and simplify billing, among other features.

“If we incorporate the assumptions from our Apple Media bundle scenario while keeping all other Apple Services forecasts unchanged, then we’d expect Apple Services revenue to grow at a 21% through 2025, ultimately reaching $143 billion by 2025, up from current forecasts of a 19% revenue growth and $124 billion in revenue by 2025.”

Apple Services generated $95 billion in revenue in the most recent fiscal period.

“We believe that Apple Video will become a reality sooner than investors think, and use this report as a way to frame the two most likely methods for video content distribution and potential impact video could have on Apple’s Services business,” wrote the analysts.

Apple: ‘We Don’t Know Anything’ About Making TV Shows

Apple knows the appeal of must-have consumer electronics better than anyone. Its brand singularly created markets for mobile phones, tablets, computers, audio speakers and now watches.

Yet, as tech rivals Google and Facebook jump into the video content business hoping to bridge the considerable gap to Netflix, Amazon Prime Video and even Hulu, Apple has taken baby steps.

While the late Steve Jobs infamously considered Apple TV a “little hobby,” current CEO Tim Cook has been equally slow to jump on the bandwagon – until now. Indeed, Apple considers itself anything but expert on the machinations of Hollywood.

“We don’t know anything about making television,” Eddy Cue, SVP of Internet software and services, told The New York Times at the recent South by Southwest media confab in Austin, Tex.

Despite sitting on reported fiscal largess exceeding $250 billion, Apple’s forays into original programing are all but non-existent – perhaps due to cautionary missteps taken by Microsoft and Yahoo, among others.

Apple is expert at creating apps, but recent original 10-episode reality show, “Planet of the Apps,” where contestants attempted turn their app ideas into careers, was largely unremarkable.

“They know music and they know apps, and I’m sure they’ll begin to explore other genres,” Jake Wayne, a participant on the show, told Mashable.com. “For now, they’re doing what they know best.”

Maybe, but Apple is leaving its tech comfort zone and creating a sizeable beachhead in Hollywood. It is building a 128,000-square foot media complex on the former Metro-Goldwyn-Mayer grounds in Culver City, Calif.

Last summer, Cue hired Sony Pictures Television executives Jamie Erlicht and Zack Van Amburg – 15-year veterans behind programs such as “Breaking Bad,” (AMC Networks) spinoff “Better Call Saul,” (Netflix) “The Crown,” (Netflix) “Damages,” “The Blacklist,” “Sneaky Pete” (Amazon) and “Rescue Me,” among others.

“We have exciting plans in store for customers and can’t wait for [Erlicht and Van Amburg] to bring their expertise to Apple,” Cue said at the time.

Indeed, the executives reportedly oversee a staff of more than 40, charged with operating original content divisions around drama, children, South America and European programing.

Production deals with Reese Witherspoon, Jennifer Aniston, Steven Spielberg, Damien Chazelle, M. Night Shyamalan, Kristen Wiig and Octavia Spencer highlight more than 12 original programs greenlighted for completion.

“We’re all in,” Cue said. “We’re completely all in.”