Apple as content creators

I have often wondered why a company that is competing for our living rooms, and with as much cash to splash around as Apple simply doesn’t produce their own content. A new report on Variety.com suggests that Apple has just begun to do this. This immediately raises the question, they’re only just starting this now?

The next thing to note is that this is putatively so that Apple can compete with Netflix. This is interesting because it marks a shift in Apple’s focus in who their competitors are. Up until now, Apple has primarily been focused on competing on hardware sales. Sure, iTunes has been incredibly successful as a music retailer (much less so for movies and television shows), but the Apple ecosystem is generally intended to leverage into hardware sales.

OS X has gotten cheaper and cheaper to the point that the last few versions have been given away for free. Ditto with iWork and the various cloud services ending with iCloud. iOS iterations have always been free to iPhone users, but early on, iPod Touch users needed to pay to update. The point has been to enhance the user experience holistically to keep them purchasing new models. (And it’s also a great tactic when you are competing against a company that makes most of its money from OS and office suite sales.)

However, the fashion of the times is for subscription streaming services, both for music and video. I am sure that Apple would have preferred to keep selling songs through iTunes, but competition from streaming music services to this model has led to Apple Music. In this case, content creation is more of a by-product rather than a new way of doing business. If Apple were to get into producing movies and/or television then that would be a new way of doing business. It wouldn’t be about protecting their lucrative market (if it were then the would be no Netflix channel on the Apple TV). It could conceivably be about leveraging hardware sales if the new service was tied to a new Apple TV, but given that Apple are only just starting to talk about producing content then we should get a new Apple TV long before Apple-produced content.

So what it looks like, is that Apple are struggling to get content deals in place for the new Apple TV and subscription service and decided it would be much easier if they could offer their own content. Exclusive content is a good differentiator from their competitors. Heck, it might even just be a bargaining ploy—just the mere threat of Apple producing their own content might encourage current content providers into line. At any rate, exclusive content would provide Apple with more control over the user experience without having to be dependent on traditional media sources.

Jason Snell’s feeling is that Apple shouldn’t be producing their own content but if Apple are launching a subscription service then I am not sure that they can afford to sit this one out.

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