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Apple Wants to Win an Oscar

By Adam Levy - Oct 1, 2019 at 9:00AM

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Critical acclaim could help attract both users and creators to Apple TV+.

Apple (AAPL 2.14%) is best known for making small screens -- the kind that fit in your pocket. But the tech giant wants a piece of the big screen, too.

The iPhone maker is in talks with movie theaters to screen some of the films it's producing for its new streaming video service, Apple TV+. Apple isn't looking for Disney-level box office hits to subsidize its $4.99 subscription price; it wants an Oscar. A theatrical run is a necessary piece of qualifying a film for the Academy Awards, something Netflix (NFLX 2.72%) has tried and failed to work around with its focus on in-home streaming.

Winning an Oscar can bring a lot of attention to Apple's streaming service, especially as the market becomes increasingly crowded. What's more, that attention will come both from consumers and creators, making Apple TV+ even more attractive for both.

A still from The Morning Show displayed on Apple TV, Macbook, iPad, and iPhone.

Image source: Apple.

Putting bets in the annual Oscar pool

Apple's plan isn't original.

At the start of last year, Netflix announced its plans to increase its marketing budget about 50% to $2 billion. A large chunk of that increased investment went toward campaigns Netflix's end users never saw. It paid for Emmy and Oscar campaigns.

Some of those campaigns produced excellent results. Netflix gained a lot of attention for Roma at last year's Oscars, even though it lost out on Best Picture. Others haven't gone as well; see this year's Emmys. Nonetheless, Netflix's management contends that the increased marketing spend "is wise." 

Apple, notably, has a lot of cash at its disposal. And if Netflix, which already has a strong brand for streaming television and movies, believes it's wise to invest in Oscar and Emmy campaigns, it might not be a bad idea for Apple, either.

That's not to say Apple shouldn't invest in more traditional marketing channels. Indeed, it's leveraging its massive customer base to build an audience for its shows and films by offering a free year of Apple TV+ with any device purchase. It's advertising its series on television during primetime events. And it'll probably use digital direct-response advertising on all the popular platforms when the service launches in November.

But an Oscar or an Emmy can do a lot to bring attention to Apple TV+ and get those customers to stay subscribed.

Attracting top talent

Apple showed off a lineup of top Hollywood talent at its event introducing Apple TV+ back in March. Steven Spielberg, Oprah Winfrey, Justin Lin, Reese Witherspoon, Jennifer Aniston, and Steve Carell all showed up along with a slew of other celebrities. Its early content slate is chock-full of star power.

But Apple can't just buy every piece of content it wants. That was evidenced when J.J. Abrams reportedly turned down Apple's higher offer in favor of AT&T's (T 1.27%) WarnerMedia for an overall deal. Abrams objected to Apple's lack of theatrical distribution, among other things. 

Importantly, these overall deals are becoming increasingly popular as media companies expand into direct-to-consumer streaming, and they're also becoming extremely expensive. Apple has the money, but it might not have the brand to attract top Hollywood talent when compared with WarnerMedia, Disney, and even Netflix. Showing that it can win the industry's most prestigious awards should help attract talent.

Attracting and retaining popular and prolific storytellers, show-runners, and directors has become the name of the game. Viewers are attracted to J.J. Abrams' content; they want to see the next Shonda Rhimes series. While big hits can still come from relative unknowns like the Duffer Brother's Stranger Things, they're much more predictive from creators with a track record, like David Fincher's House of Cards or Jenji Kohan's Orange Is the New Black.

Apple has the capability to get millions of people to at least try the service. Ultimately, its success or failure in keeping those subscribers paying $4.99 month after month will come down to the quality of the content it can acquire. A few awards will help push it to compete with the big names in media for top talent.

Adam Levy owns shares of Apple and Walt Disney. The Motley Fool owns shares of and recommends Apple, Netflix, and Walt Disney. The Motley Fool has the following options: long January 2021 $60 calls on Walt Disney, short October 2019 $125 calls on Walt Disney, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.

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