Updated September 27, 2019
Apple tripled its content spending commitment from $2 billion to $6 billion this year to fund original shows and films for its new subscription video service, Apple TV+.
Apple TV+ will soon be available in more than 100 countries where it will need tons of local content to compete against Netflix after its recent global expansion.
Apple is incentivizing content creators by paying earlier in the production process than Netflix, which often pays creators over several years.
In many cases, Netflix offers between 30% and 50% higher rates for content than several competitors, including HBO, Showtime, and Starz. However, while most networks typically payout on delivery, Netflix often extends payments over a specific time period, which is usually accepted by the other party, because the premium is worth it.
Apple’s recent spending spree has raised the prices of television shows, which are already riding high after Netflix doubled its content spending in the last two years.
Apple TV+ boosted its slate budget in an attempt to compete against Netflix and Amazon, as well as several forthcoming services including Disney+, HBO Max, and Peacock from NBC Universal. The launch of Apple+ is Apple’s latest of several attempts over the last decade to crack into television production.
Netflix remains the streaming spending leader by a long shot. The company expects to spend $15 billion this year, up from $9 billion last year. However, unlike Netflix, which is fueled by expensive junk bonds, Apple is flush with cold hard cash to the tune of $250 billion.
Streamers Pay Top Dollar
Prior to just a few weeks ago, Apple was only planning to spend $2 billion on original content, up from $1 billion that it already spent to produce its current slate. Currently, Apple+ is under the direction of two well-known executives from Sony Pictures Television, who likely lobbied for more funds.
Like all newcomers making a foray into Hollywood, Apple is not immune to overpaying for content. The company spent more per episode for its drama The Morning Show than the $15 million per episode HBO spent on the last season of Game of Thrones.
Like all newcomers making a foray into Hollywood, Apple is not immune to overpaying for content. The company spent more per episode for its drama The Morning Show than the $15 million per episode HBO spent on the last season of Game of Thrones. Apple shelled out $300 million for two seasons of the news-drama starring Aniston and Witherspoon after a contentious bidding war with Netflix.
The outsized commitment was also more than Apple’s science-fiction show See, which is set 600 years in the future after a virus has decimated humankind starring Jason Momoa and written by the creator of Peaky Blinders.
To illustrate how prices for prestige projects have skyrocketed, Netflix made waves when it spent $100 million for two ten-episode seasons of House of Cards six years ago.
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The Morning Show, like most other Apple TV+ shows, will premiere with only three episodes available immediately, followed by one new episode weekly. However, some full seasons of shows will be available all at once.
Read More: Apple’s addition to the market will not frustrate the launch of Disney+ or challenge Netflix in a meaningful way.
After its initial slate, there are five other shows Apple will slowly add in the upcoming months, including a series featuring Oprah Winfrey; Helpsters and The Elephant King, a documentary movie the company acquired at TIFF in 2018. Also, on the slate are three kids shows, including a Sesame Street spinoff, Ghostwriter, and an animated series Snoopy in Space.
Apple has ordered around two-dozen shows, including projects from Oprah Winfrey, Damien Chazelle, Chris Evans, J.J. Abrams, Steven Spielberg, M. Knight Shyamalan, and others.
Apple TV+ will be available in more than 100 countries when it launches a week before Disney+ on November 1st at the price of $4.99 per month.
Apple is contending with the fact that many of the best producers, directors, and actors have other commitments, which leads them to overpay for very famous but less promising talent.
Apple probably picked the worst time to launch a video subscription streaming service. The November release marks its third attempt in the last year alone to launch its first slate of shows after twice postponing mainly due to quality concerns.TwitCount Button