Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Apple Just Bought Its First Original Movies

By Evan Niu, CFA - Sep 11, 2018 at 5:04PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Mac maker scoops up the rights to two original films amid its ongoing push into original content.

Slowly but surely, Apple ( AAPL 2.19% ) has been amassing a catalog of original video content that it will inevitably include in a video streaming service. On the last earnings call, CEO Tim Cook made the most direct reference to date regarding the forthcoming service, saying that the company is "not really ready to share all the details" about what it "will eventually offer." What's less clear is when the service will be ready to launch, but it goes without saying that Apple will want a strong slate of original content for the debut.

The list of shows that Apple has already bought only continues to grow, but thus far, the content has all been TV shows.

Apple TV on a stand

Image source: Apple.

Adding movies to the mix

Bloomberg reports that Apple has secured the rights to two movies, both of which are family-oriented films. The first is Wolfwalkers, an animated movie made by Cartoon Saloon, an Oscar-nominated animation studio based in Ireland. Apple had reportedly been in talks with the studio over the summer, and director Tomm Moore has confirmed the deal on social media.

Here's a concept trailer for Wolfwalkers shared by animation news site Cartoon Brew in 2017:

The other film that Apple acquired distribution rights for is The Elephant Queen, a nature documentary narrated by Chiwetel Ejiofor, according to the report. Apple's TV execs Zack Van Amburg and Jamie Erlicht, which Apple poached from Sony in June 2017, have been on a spending spree, after reportedly getting allocated a $1 billion budget for original content about a year ago.

Video streaming will contribute to services growth

The video streaming service is part of Apple's broader services strategy, hoping to double services revenue by 2020 to approximately $50 billion. The Mac maker continues to make steady progress as it marches toward that goal, with trailing-12-month (TTM) services revenue now at over $35 billion. There are two major reasons why Apple is so interested in growing its services business: Recurring services revenue is highly profitable and is not subject to the seasonal fluctuations that its consumer hardware business contends with.

Apple also knows that it can count on broad swaths of its loyal user base to sign up for such a service. The market rate for over-the-top (OTT) streaming services is $10 to $15 per month. If Apple can grow video streaming subscribers to a level comparable with Apple Music, which now has 40 million paid subscribers, that could potentially represent annual revenue of $400 million to $600 million.

"Cord-cutting, in our view, is only going to accelerate and probably accelerate at a much faster rate than is widely thought," Cook said in July. Apple wants a piece of that unstoppable trend.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$160.24 (2.19%) $3.43

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.