The least well-kept secret in Hollywood could be that tech-giant Apple (NASDAQ:AAPL) is preparing to launch a streaming service. The company is famed for its culture of secrecy, however, and has remained mum about its ambitions. There have been endless theories floated and rumors spread regarding how the company will proceed, but evidence is mounting that an Apple streaming service could debut as early as 2019.
The strongest evidence to confirm the rumors is Apple's growing interest in original content. What began as something of a punchline has evolved into a significant investment in television series and deals with content creators that telegraph the company's streaming intent. Now, Apple is going even further -- into the area of feature films.
A telling partnership
Apple has signed a multiyear partnership with Oscar-winning film studio A24 to produce independent feature-length movies, deepening the company's push into original programming. The studio reportedly will create a number of movies for Apple.
A24 is renowned for producing such Oscar-winning efforts as Amy, the documentary that chronicled the life and death of singer Amy Winehouse, and Moonlight, which took home three Oscars last year, including best picture. The filmmaker also is responsible for such movies as Ex Machina, Room, The Witch, and Lady Bird.
Taken by itself, this deal doesn't seem very significant, but it is the latest in a growing body of evidence that illustrates Apple's desire to acquire exclusive and original content in anticipation of a streaming launch.
A slow start, but gaining momentum
Apple was derided after its early programming efforts, namely Planet of the Apps and Carpool Karaoke: The Series, were widely panned. However, several developments in mid-2017 hinted that Apple was coveting a piece of the growing streaming market.
First, Apple poached Sony executives Jamie Erlicht and Zack Van Amburg to head its video-programming efforts. The pair previously were in charge of Sony Pictures Television and were responsible for such hits as Breaking Bad, Better Call Saul, The Crown, and Rescue Me. The execs have a history of identifying and developing award-winning programs, with 36 Emmys and dozens of Golden Globes to their credit.
At the time, Apple exec Eddy Cue said, "We have exciting plans in store for customers and can't wait for [Erlicht and Van Amburg] to bring their expertise to Apple -- there is much more to come."
Within months of hiring Erlicht and Van Amburg, reports emerged that Apple was budgeting $1 billion to acquire and generate original content over the coming year, according to The Wall Street Journal (paywall). The rumor mill went into overdrive as Apple began to sign a host of Hollywood heavy hitters to its projects, with such high-profile names as Reese Witherspoon, Jennifer Aniston, M. Night Shyamalan, J.J. Abrams, and Oprah Winfrey inking deals with the tech giant.
Building to a big announcement?
The most recent rumor was the most intriguing, suggesting that Apple planned to launch a global streaming-video service. The platform, which would debut in the U.S. in early 2019, would eventually expand worldwide to more than 100 countries.
A move of this magnitude would quickly rival the reach of Netflix (NASDAQ:NFLX) and Amazon (NASDAQ:AMZN) Prime Video, the current leaders in streaming. Apple would have plenty of catching up to do, however, as those companies boast more than 135 million and 100 million subscribers, respectively. Additionally, Netflix's decade-long head start in streaming gives the company a decided advantage in terms of the technology and user interface, which it has refined repeatedly over the years.
Apple has been faced with slowing growth of its flagship iPhone and is increasingly focused on growing its subscription business to fill the gap. A streaming service would give the company a big boost to those efforts.
Even in the face of its challenges, it appears Apple is barreling headlong into the crowded realm of streaming. The company has yet to confirm its intentions, but as the old saying goes, where there's smoke, there's fire.
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.