Actor Jon Hamm and Apple CEO Tim Cook in Sept. 2018 (Photo by Justin Sullivan/Getty Images)
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Tech companies have long resisted the idea that they are media companies. They provide devices, software, and social media platforms to host content, but don't want to be seen as arbiters or curators of it.
Apple has no such qualms; there's simply too big a profit margin in software and services. The company has invested billions in original content over the past few years to stock its forthcoming video streaming service with original movies, series, and plenty of star power to sell consumers on paying for yet another monthly subscription.
Yesterday, Apple sent out invites for an "Apple special event" at the Steve Jobs Theater in Cupertino on March 25, where the company is widely expected to unveil its long-awaited streaming video service. The invite features a short black-and-white video with an old timey movie countdown to the Apple logo and the tagline "It's show time."
The service will offer original content developed by Apple as well as a channel-like interface allowing users to sign up for other streaming platforms, similar to the add-ons offered by Amazon Prime Video and Hulu. Everything will be viewable within the iOS TV app; iOS and Apple TV users will get access to Apple's original content for free, at least to start. The tech giant is also expected to launch a subscription news service building off its acquisition of Texture, described as a "Netflix for magazines."
On the streaming front, the company has more than two dozen shows and movies in development or production with several very big names, including a reported content deal with Oprah Winfrey and a major bidding war for the rights to new Peanuts content. Apple's shows will also reportedly be family-friendly; no sex, violence, or profanity.
Apple's original content lineup includes a morning-news drama starring Reese Witherspoon, Jennifer Aniston, and Steve Carell; children's programming from the producers of Sesame Street; a remake of Steven Spielberg's Amazing Stories; a sci-fi series from Battlestar Galactica showrunner Ron Moore; a drama series from La La Land and Whiplash director Damien Chazelle; a Sofia Coppola original film starring Bill Murray and Rashida Jones; and projects with Hollywood stars including Chris Evans, Jason Momoa, and Jennifer Garner attached.
Thor: Ragnarok director Taiki Waititi is also adapting Terry Gilliam's sci-fi/fantasy classic Time Bandits as a TV series for Apple, Deadline reports.
A Tight Grip on iOS Content
Apple joins an increasingly crowded market. It will compete with existing online video powerhouses as well as upcoming streaming apps from Disney, AT&T-owned WarnerMedia, and Comcast-owned NBCUniversal.
Some companies and channels—including CBS/Showtime, Starz, and Viacom—have signed on to offer subscription services through Apple's platform. HBO is still in negotiations, CNBC reports, but Netflix, Hulu, and Amazon Video are not expected to participate.
Apple aims to bring an App Store-like gatekeeper approach to controlling streaming content on iOS devices, taking a 30 percent cut on every streaming app subscription through its service. That's a steep commission compared with the 15 percent it currently takes from streaming-service subscriptions through the App Store. The tech giant is demanding up to 50 percent from news publishers for its subscription Apple News service, The Wall Street Journal reports.
This strategy is part of Apple's broader push into software and services, which has made up more and more of the company's profits over the past several years amid stagnant hardware sales. Like Amazon, Apple owns its own data centers, so every new service it releases holds tantalizing profit margins. In addition to its video streaming and news services, the company is exploring a similar service for video games, Cheddar reports.
When you offer subscriptions for original video content, premium news sources, music streaming, and more, you're not just a technology provider anymore. Apple is about to officially become an entertainment and media company.
"I think entertainment's going to become a key element of Apple's business," said Jeffrey Cole, a Research Professor at the USC Annenberg School for Communication and Journalism, and Director of USC's Center for the Digital Future. "For them, spending $2 billion on [original content] is just dabbling. If they like what they see, I think they'll have a $10 billion budget."
PCMag will delve into this more in our April Digital Edition cover story: the old and new players, the war for original content, and where all of this leaves consumers. Check back in a few weeks for that.