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Apple Is Waving a Fat Wad of Cash at Hollywood

By Danny Vena – Updated Apr 9, 2018 at 4:04PM

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Netflix and Amazon are the clear leaders in streaming. Apple wants in on the action.

Netflix (NFLX -1.78%) is the undisputed leader in the streaming video industry. The company reported 117 million subscribers worldwide to close out 2017, and it said it plans to spend $8 billion this year to continue its growth. Netflix boasts 61% penetration in the U.S. among people who subscribe to a streaming service, according to Hub Entertainment Research report Decoding the Default. That far exceeds the 36% attributed to's Prime Video, or a 22% share for Hulu. A full 38% of respondents subscribe to two or more streaming platforms, illustrating that this isn't a zero-sum game.

Notably absent from the survey was Apple (AAPL -3.00%), which has only recently telegraphed its ambitions in creating content. However, the belle of Cupertino isn't content to stay in the shadows, flashing a big wad of cash and saying it plans to spend over $1 billion this year on programming. Some of its early choices show just how serious the company is about making a mark in the streaming space.

Silhouette of a man with a remote standing in front of a wall of dozens of television screens.

Apple wants its piece of the streaming market. Image source: Getty Images.

A slow start

Apple's first two attempts at producing programs resulted in the critically derided Planet of the Apps and Carpool Karaoke: The Series, which were both available to subscribers of Apple Music. Despite a cool reception for those early efforts, Apple made it known it was willing to spend big for the right projects.

The company poached Zack Van Amburg and Jamie Erlicht, seasoned executives for Sony Pictures Entertainment, to head its nascent efforts. The pair headed the studio behind megahit Breaking Bad, and they have signed an impressive array of Hollywood's finest to lead Apple's opening volley.

Star power

In the past six months, Apple has signed more than a dozen projects, with nine of them going straight to series.

Apple penned an agreement with Reese Witherspoon and Jennifer Aniston to secure the rights to their highly anticipated drama centered on a morning TV program, agreeing to two 10-episode seasons out of the gate. Witherspoon is hot off the hugely successful Big Little Lies for HBO, and this will mark the first big project for Aniston, best known for her Emmy Award-winning stint on Friends.

In a nod to 80's nostalgia, Apple will be rebooting Steven Spielberg's Emmy-winning science fiction and horror anthology Amazing Stories. The company is said to have green-lit a 10-episode deal for the iconic series, which attracted big Hollywood talent during its mid-80's run, including such heavy hitters as Clint Eastwood, Martin Scorsese, and Kevin Costner. 

There are others. Noted director M. Night Shyamalan, fresh off the recent success of horror-thriller Split, will be producing a 10-episode psychological thriller. Apple also signed Oscar-winning writer and director of La La Land, Damien Chazelle, to a project. The company secured Ronald D. Moore, of Battlestar Galactica and Outlander fame, to head a space drama. 

Patently obvious

Late last year, Apple filed a patent application titled "Real-time or near real-time streaming" in which the tech giant described the potential for a platform that could stream live content without requiring specialized servers, which Apple says can lead to significant costs in any "large scale deployment." The company goes on to describe a process that could stream live content as it is being created. 

It's important to note that Apple is known for pursuing technology and filing patents for ideas that it may never come to fruition. However, it does seem to indicate that Apple isn't ruling out streaming live events that could include sports, an area that Netflix said doesn't fit in with its current strategy.

A decade in the making

Netflix's 10-year lead in streaming will make it difficult to supplant. Consumers have shown, however, that they are willing to subscribe to multiple services to get the programming they want, so there will ultimately be more than one winner.

Apple may see this high-profile move into content as a springboard to achieving its intentions of doubling its services revenue to $50 billion by 2020.

The company may have gotten off to a slow start, but Apple exec Eddy Cue was clear about the company's intentions in a discussion at the South by Southwest tech conference in Austin, Texas. "We're all in," Cue said. "We're completely all in." 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Amazon, Apple, and Netflix. The Motley Fool owns shares of and recommends Amazon, Apple, and Netflix. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.

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