For a long time, the TV entertainment model was for content creators to work through a middleman, a network. That meant appealing to as many as possible viewers and serving up the accompanying commercials. The Internet is changing the rules, and now focused content, direct to the viewer, is taking off. Even Apple is on the bandwagon. But can Apple make it work?
Two items crossed my desk today at almost the same time. As it so often happens, the intersection of two ideas got me thinking. Here they are.
#1. Ben Silverman, Will.i.am Producing Unscripted Series for Apple. The short version:
[Apple] has teamed up with executive producers Ben Silverman, musician Will.i.am and Howard Owens’ Propagate for an unscripted series about the Apple app ecosystem. Apple is offering few details about the project, but Silverman says it will, at least in part, highlight the stories of how Apple apps are developed.
#2. Netflix Content Portfolio Down 32% Since 2014 The title misses the key point, which is:
Clearly, Netflix is spending money on content. It’s just not buying in bulk anymore. While observers may question the quantity decline, Netflix would rather attention be paid on quality — as in original and exclusive content. [Emphasis mine.]
This all fits in with what Apple had been trying to do for a long time and failed: become just another middleman, squeezing the price down for the customer and being forced to cough up the premium prices asked for modern content. I've explained why this just didn't work. "3 Reasons Apple’s TV Subscription Service Failed." I noted:
So when a company like Apple comes along and threatens to settle for very minor profits as it proposes to cause a net loss in total industry revenue, the natural reaction by the entrenched players was likely, 'Hey, you can have this service so long as our total revenue goes up, you don't threaten our business partners, the carriers, and we get to control the relationship with the viewer. Here are our terms for that.'
What Netflix figured out before Apple is that once you have the infrastructure to connect directly to a customer/viewer, it's generally very hard to pay big bucks for content, keep your prices reasonable, and still make money. And so you get more integrated, create your own content, and cut out the middleman. HBO figured that out. ShowTime figured that out. As have others.
And even though HBO Now has only captured a fraction of the total HBO subscribers on cable/satellite, the future trends are unmistakable.
Next page: Apple Gets On Board With Content
Page 2 - Apple is Now on Board With Content
It all started about the time Apple realized that its fantasy of a subscription TV service for $40/month just wasn't going to work. Soon thereafter, Bryan Chaffin observed: "Apple’s First Scripted Series will Star Dr. Dre." It's called Vital Signs And now we have another project cited at the top of this article.
According to The Hollywood Reporter, Apple's Eddie Cue declined to discuss distribution details but did say, "We certainly want everyone to be able to watch this on their TV, iPhones and iPads."
What's changed Apple's thinking? Part of it certainly has to be the incredible surge in today's number and quality of video projects that can appeal to a loyal, enthusiastic but niche market. For example, a show like Marvel's Jesica Jones never could have aired on network TV. Because of this, the economics of scale have been reversed.
It used to be that to make money, ad revenue was tied to ratings, millions viewers. Today, people with special tastes are more willing to pay directly for what they want, and they'll binge view it. The revenue is good.
This is not new in some respects. Each new generation has its own voice when it comes to what's embraced. I remember when a generation that grew up on Gunsmoke and The George Burns and Gracie Allen Show had a hard time adapting to the culture, language and visuals of Star Trek in the fall of 1966. The show never had great ratings and was cancelled after season two. It was brought back thanks to a massive letter writing campaign. But by the end of season three, it was gone. It just couldn't sell enough dish soap.
Today, the content creators have a direct channel into the minds and hearts of viewers. They've become adept at using the Internet to incite and inspire. Their presentation tool is called an iPhone. They're tapping into that, creating a sensation, and grabbing eyeballs. Social media propels the enthusiasm of each niche group exponentially.
Apple is finally on that wavelength. No more dreams of being the middle man. Apple has its direct channel, the iPhone, the iPad and the Apple TV right in its lap. The question is, how good will Apple—a consumer hardware electronics giant—be at creating compelling content and capturing its own niche audience with its own voice?
That's the next story to be told.