How Shall The Success of Apple’s Original TV Content be Measured?

Jennifer Anniston and Reese Witherspoon are coming to Apple TV

It’s not official yet, but we expect Apple to announce its original TV content with a glitzy presentation on March 25. Of course, when it finally launches, it’ll be a sensation. But how will success be measured?

Jennifer Anniston and Reese Witherspoon are coming to Apple TV
Jennifer Anniston and Reese Witherspoon are coming to… Apple Prime?

Recently, Barry Diller, a former studio, executive was interviewed by Kara Swisher on her podcast Recode Decode.

Mr. Diller said some interesting things about Amazon, Netflix and Apple. Opinions to be sure, but worth pondering.

Diller praised Disney CEO Bob Iger as a “superb executive,” but predicted Disney would only do “okay in streaming” when it launches its streaming service Disney Plus later this year. In general, he advised, “those who chase Netflix are fools.”

“Netflix has won this game,” he said. “I mean, short of some existential event, it is Netflix’s. No one can get, I believe, to their level of subscribers, which gives them real dominance.”

Regarding Apple, Mr. Diller told Swisher:

Everybody is going to play in this, but I think that those who chase Netflix are fools. Or try to compete with Amazon Prime, because I don’t think there’s any ability for anybody in the, let’s call it the … The media business, the entertainment business, who do so. And I’m not saying that other people can’t build services.

Given those assertions, I’d like to assess Apple’s genuine prospects. How will Apple assess its success other than by ROI? Awards? Growth rate? Revenue? Customer base? Apple’s own declaration of success may differ from the industry’s.

Projected Growth

There’s a lot to think abut here. First, Netflix has been around for a long time. In January, CNN Business reported that Netflix is approaching 150 milion subscribers. Founded in 1997, Netflix has had a 21 year head start on Apple. And so, one must ask, how many years will Apple give itself to diagnose its own success?

Apple Music launched in 2015 and has grown to about 60 million paying customers, so Apple certainly knows how to grow a service. But it hasn’t caught up with Spotify’s 96 million paying customers and may never do so.

Remember, every service has a huge growth rate for starters. The real measure will be sustained growth and how/where the numbers peak.

Content

Growth of Apple’s TV service, let’s call it Apple Prime, will probably not depend on Apple’s cachet as a hardware maker. Or on the company’s reputation as a whole. Or major awards. TV viewers look at price, convenience and appealing content.

Apple may pride itself on developing quality PG-rated content, from what we’ve learned, but the competition also has quality content. Apple will have to uniquely stand out in the market to make big gains in viewership. Doing that with quality content alone probably isn’t sufficient. How the company generates special appeal will be interesting to see.

Monetization

One angle for special appeal that’s been discussed is for Apple to stand out from the competition by making Apple Prime free, but only on Apple devices. That flies in the face of Apple’s expected focus on growing services revenue, but perhaps that’ll only be an opening gambit for a few months or a year. At some point, when Apple Prime is popular enough, Apple will have to charge a subscription fee. How long it’ll be free is a judgment call.

Apple’s Track Record

Apple is a strong competitor is most any market it jumps into. The company is respected, pays attention to our privacy, and builds great products. It’s also very nimble and shouldn’t be underestimated.

Even so, Apple will have a lot of catching up to do. Apple Prime will have to garner special appeal and become both respected and highly desired. With that, there is no reason Apple can’t become one of the Big Four. (Amazon, Apple, Disney+, Netflix.) But execution will have to be error-free, agenda-free, and arrogance-free to counter an already experienced and entrenched competition.

In the end, I don’t view Mr. Diller’s analysis as definitive. It might even be compared to Steve Ballmer’s initial assessment of the iPhone.

One thought on “How Shall The Success of Apple’s Original TV Content be Measured?

  • Let’s not forget that Apple’s major services success, Apple Music, with all its human curation etc. is actually Beats Music, formed in an entirely different culture and organisation than Apple’s. It’s to Apple’s credit that in buying Beats Music, Apple didn’t destroy what made Beats great. And Apple Music goes from strength to strength. Yay!

    Can this be done with video streaming? Apple hasn’t purchased a successful, preferably great video streaming service to morph into Apple Video. We have production studio execs, but not much proven streaming service muscle recruited to Apple to these ends. Do seasoned Apple observers really believe Apple can create a successful streaming business on its own? History is not in favour of that miracle.

    The future of video streaming arriving rapidly. Content distributors are taking back their content from the likes of Netflix and launching their own streaming services. Seems like a doomed proposition, but there’s no doubt (as I’ve noted elsewhere on this site), a lot of blood and treasure will be expended developing hundreds of streaming services that disaggregate Netflix’s current aggregated advantage. The unassailable Netflix is one contract negotiation away from fielding only its original content and none of the library that made them what they are today. Netflix and Amazon didn’t need original content, unless they were fortifying themselves against just this future, when their back-catalogue disappears. Streaming popularity and profits will be a fraction of what they are currently for Netflix and Amazon.

    And this is the world Apple Video is coming into. In the short term, Apple Video might negotiate a back-catalogue to bolster value and popularity, but it seems certain the back-catalogue will go away. Perhaps sooner than we think.

    As also noted elsewhere – in this future, profits will be low and Apple, with a backup hardware business may not need to make profits on streaming (may run it break-even like App Store for many years to build viability). Netflix and Amazon original content become bit players, channels rather than whole services. Netflix/Amazon/Apple may all strive to be the HBO of the future, but that is not only a very different game, its time may even be past.

    The Apple Television app may unify these disparate channels, but I can’t see how Apple will make a profit out of this, unless it negotiates aggregated channel deals in a new streaming model, that includes Netflix, Amazon, the Disney debacle, other movie studios’ multiple channels and all distributor based channels… and THAT is an entirely different world than the one we have now. You can get these separately purchased channels on Apple Television app, but obviously the $10/month goes to each channel at the moment. If the back-catalogue disappears and the streaming successes shrink to original content channels only, THAT will be a different world, and Eddie Cue may once again put his feet up on the table and offer to rescue the disparate distributor and former-streamer original content channels from their self inflicted death-spiral induced by assuming consumers will pay $10/month for hundreds of individual channels. They won’t of course. Piracy will reach a new high and Eddie will offer the video industry a lifeline, as Apple offered the music business so long ago.

    All the current discussion assumes Netflix stays the same, holds on to it’s back-catalogue, and Apple negotiates a similar service. I not only posit that this model is already dead, but a lot of reality checks and soul searching will have to accompany the gutting of the current streaming industry before Apple can pick up the pieces. That’s a very long game indeed, but only Apple and maybe Amazon will have other businesses that can prop up their original channels until the whole industry gives up and agrees to aggregate again.

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