Finance

Apple to Spend $1B Annually on Original Programming

Journal says could fund 10 original series 8/17/2017 12:10 PM Eastern

Apple seems to finally be getting serious about television, as reports have the iPhone maker setting aside about $1 billion annually for original programming.

While that isn’t a lot compared to the $6 billion that Netflix and the $4.5 billion Amazon is expected to spend this year, it’s a start. And given that Apple is sitting on about $260 billion of cash on its balance sheet, the computer giant could step up that spending in a heartbeat.

Apple also could bring considerable marketing and technology clout to any TV offering, if the success of the IPod, the IPhone, the IPad and countless other iconic technical innovations is any evidence.    

The Wall Street Journal first reported that Apple was earmarking a specific sum for original shows. Apple has repeatedly threatened to enter the TV business but has held back in the past. But by committing actual funds to programming and moves earlier this year to hire away top content executives from Sony – Zack Van Amburg and Jamie Erlicht, who oversaw Sony Television hits like Breaking Bad, Better Call Saul and The Crown are now co-heads of video programming for Apple– the computer giant is showing that it means business.

In announcing the hirings in June, Apple senior VP of internet software and services Eddy Cue, who heads up the computer company’s overall video efforts, said “We have exciting plans in store for customers and can’t wait for them to bring their expertise to Apple — there is much more to come.”  

The addition of former WGN America president and general manager Matt Cherniss to oversee Apple’s worldwide video development helps solidify a commitment to quality shows. While at WGN America, Cherniss developed critically acclaimed but lightly viewed series like Manhattan (the network’s first Emmy winner), Underground and Outsiders.

Apple’s investment is small compared to Netflix ($6 billion) and Amazon Prime ($4.5 billion), but many analyst see the computer giant as slowly building its commitment to video. What had initially started as direct sales and rentals of video content via its ITunes service, grew into two original series launched earlier this year via its subscription Apple Music service – Planet of the Apps and a version of CBS The Late Late Show host James Corden’s Carpool Karaoke. Those series were basically critically panned, but with Apple’s financial heft – it has about $260 billion in cash on its balance sheet – the company has the firepower to significantly increase its content and quality commitment. And the Journal noted that $1 billion is about on par with Amazon’s initial foray into video in 2013.

But Apple is somewhat late to the game. Netflix, Hulu and Amazon have a considerable head start and other over-the-top and subscription video on demand services are popping up practically every week. Programmers like Disney, Discovery and Turner are also unveiling plans to launch their own direct-to-consumer offerings to help stem subscriber losses in traditional pay TV.

At the same time, there is a growing glut of content. Earlier this month FX Networks CEO John Landgraf said television was nearing an “unmanageable number of shows” at the Television Critics Association Summer Press Tour in California.

On an earnings conference call with analysts earlier in August, Apple CEO Tim Cook said the company’s video objectives were to learn the TV business and to hopefully grow its Apple Music subscriber base by offering exclusive content, but added it was still early days.  

“So, we'll see how this area goes, but it is still an area of great interest,” Cook said on the call.

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