Lights, iPhone, action! Apple (AAPL) may be getting into production of original scripted content. A report in the Wall Street Journal quotes anonymous sources as saying that Apple may debut original shows on Apple Music, its streaming service, by the end of 2017. The company is not looking for run-of-the-mill content; instead, it is aiming to run edgy, prestige content similar to Netflix Inc.’s (NFLX) “Stranger Things”, and HBO's (TWX) Westworld, tackling unconventional themes and fantastic storylines. The company is also fine-tuning its business strategy for such content. According to the WSJ report, it intends to share data relating to the programs, including demographics and ratings, unlike Netflix which does not share such data.
Apple’s entry into original television programing is driven by two imperatives. First, the company wants to bolster its services division. In the last couple of quarters, Apple CEO Tim Cook has highlighted this division’s performance and predicted that revenues from it could be the size of a Fortune 100 company by the end of this year.
Apple music is a start. It trails industry leader Spotify by a wide margin of approximately 20 million subscribers (based on numbers released by both companies last year). Original television programming is one way for the service to distinguish itself in a sea of streaming services offering an almost-identical slate of music track listing. In that respect, Apple’s strategy is somewhat similar to that of Amazon.com Inc. (AMZN), which has a smaller library of music content as compared to Spotify but a growing trove of critically-acclaimed television content. In the Seattle company’s case, that library is expected to benefit its Prime service. (See also: Streaming Music With Most Paid Subscribers).
Second, original scripted shows could also boost viewership numbers for Apple TV, the company’s device that enables users to watch content from multiple providers. It had earlier tried to license content for the service from Hollywood, but content owners refused to play ball over concerns the move could lead to an iTunes scenario in which the industry’s revenues collapse. Apple’s willingness to share viewership data is a sign the company is willing to play by Hollywood’s rules. Although the company does not intend to produce the same volume of content offered by Netflix, the entry is still expected to make a massive difference in the market for original programming. (See also: Apple Releases Latest Version Of TV App).