Once again, it is rumored that Apple is planning to enter the movie and show production business. It certainly has the capital for such a venture; the company has $200 billion in reserves. Apple has previous connections to the movie industry in its ownership of Pixar under Steve Jobs; it could now simply buy an existing production studio with an excellent track record in generating original content. However, Apple's competition-primarily Netflix, Amazon, and Hulu-already have a firm hold on the market.
The TV industry has come to recognize the long-term potential in catering to "cord-cutters", or customers who forsake traditional television for videos streamed online. To such consumers, original content that can be watched at the viewer's convenience is ideal. Netflix has had incredible success with its original programming, most notably with its series House of Cards and Orange is the New Black-both of which are now at three seasons and counting. In addition to providing content for a mature audience, Netflix also signed a 2012 deal with Disney granting it access to animated children's movies. The deal appreciably broadened the age range of Netflix's viewer population. After the deal kicked in in 2013, revenue increased 22% to $1.1 billion; the company grew to 31.09 million subscribers domestically and 9.19 million abroad. Now valued at $32.9 billion in 2015, Netflix is worth more than both CBS and Viacom.
Amazon and Hulu both have a strong presence in the industry as well. The latter notably signed a deal in April 2015 with Sony Pictures TV, which granted it streaming rights to Seinfeld; the company also has rights to uncensored episodes of South Park. Hulu has been moderately successful with its original programming; its series Deadbeat was recently renewed for a third season. Amazon has produced its own original content as well, and recently outbid Apple for the rights to the wildly popular show Top Gear. Internationally, the Chinese companies Alibaba, Tencent and Baidu are beginning to edge into the streaming business as well. In 2014, Alibaba acquired a 16.5% stake in Youku Tudou, which is the second-largest video sharing website in the world (behind Youtube). China has approximately double the online users of the United States, and as such has staggering market potential.
What Apple lacks, and what Netflix, Hulu, and Amazon have, is a streaming model based on subscriptions. Rather than a pay-per-month charge granting access to an archive, Apple instead sells its content (including exclusive purchased independent movies) at a premium cost through iTunes. However, Apple has an advantage aside from its large cash reserves: an established consumer population with Apple products-iPhones, iPads, and Apple TV's, which all come with iTunes-already in hand. Having this population's payment information registered will likewise make current buyers easier converts to a potential Apple streaming service.
One of Apple's original selling points was that customers could build their own technological bubbles. All of its products synced effortlessly with one another, spurring customers to buy exclusively Apple. Now Apple is one of the world's largest providers of TV, movies, and music through both its iTunes store and its music streaming service-all while simultaneously owning a large chunk of the hardware that consumers use to view entertainment. As a result, it is not a question of if but rather of when Apple will begin producing its own original content. It has the capital, the hardware, and the large consumer base. Apple's true challenge will be differentiating itself from the existing competition.
