Apple said to be eyeing Culver Studios as homebase for Hollywood production push
Apple is reportedly in talks to move its original video content division to Culver Studios, a place with a long history in the Hollywood film industry.
Although the location has 13 soundstages suitaible for both TV and feature films, Apple is primarily looking for office space, sources informed the Financial Times. The studio counts people like Howard Hughes and Cecil B. DeMille as former owners, and is also the home of the famous mansion from "Gone With the Wind."
Apple is allegedly planning to spend beyond a previously-reported $1 billion budget on original video, and the two former Sony Pictures Television executives in charge -- Jamie Erlicht and Zack Van Amburg -- are said to be tasked with securing "around a dozen" original TV shows. The company was previously thought to be aiming at 10.
One show Apple is reportedly bidding on is a drama themed around a morning talk show, starring Jennifer Aniston and Reese Witherspoon. Other bidders include companies like Netflix however, which could mean the show won't appear on Apple's slate.
The iPhone maker is reportedly taking its original video efforts more seriously now than even a year ago, when it was laying the groundwork for Apple Music shows like "Planet of the Apps" and "Carpool Karaoke" -- both of which have failed to catch on with the wider public, despite numerous celebrities being used as magnets.
"They woke up and said, 'Let's really do this'," one Hollywood agent told the Times. "It's a lot different to a year or two ago."
Even exceeding $1 billion may make Apple a relatively minor player in TV, since that's about half what HBO spent in 2016, and well below the $6 billion Netflix is spending this year. Apple will presumably ramp up its budget if it can establish one or more hits.
It's unclear how the company will air future TV shows. While it could continue restricting them to Apple Music, that might hamper their audience, since many people will likely want to watch on an HDTV but not have access to an Apple TV. There's no way of watching Apple Music video on devices such as a Roku or Chromecast.
Although the location has 13 soundstages suitaible for both TV and feature films, Apple is primarily looking for office space, sources informed the Financial Times. The studio counts people like Howard Hughes and Cecil B. DeMille as former owners, and is also the home of the famous mansion from "Gone With the Wind."
Apple is allegedly planning to spend beyond a previously-reported $1 billion budget on original video, and the two former Sony Pictures Television executives in charge -- Jamie Erlicht and Zack Van Amburg -- are said to be tasked with securing "around a dozen" original TV shows. The company was previously thought to be aiming at 10.
One show Apple is reportedly bidding on is a drama themed around a morning talk show, starring Jennifer Aniston and Reese Witherspoon. Other bidders include companies like Netflix however, which could mean the show won't appear on Apple's slate.
The iPhone maker is reportedly taking its original video efforts more seriously now than even a year ago, when it was laying the groundwork for Apple Music shows like "Planet of the Apps" and "Carpool Karaoke" -- both of which have failed to catch on with the wider public, despite numerous celebrities being used as magnets.
"They woke up and said, 'Let's really do this'," one Hollywood agent told the Times. "It's a lot different to a year or two ago."
Even exceeding $1 billion may make Apple a relatively minor player in TV, since that's about half what HBO spent in 2016, and well below the $6 billion Netflix is spending this year. Apple will presumably ramp up its budget if it can establish one or more hits.
It's unclear how the company will air future TV shows. While it could continue restricting them to Apple Music, that might hamper their audience, since many people will likely want to watch on an HDTV but not have access to an Apple TV. There's no way of watching Apple Music video on devices such as a Roku or Chromecast.
Comments
"It's unclear how the company will air future TV shows. While it could continue restricting them to Apple Music, that might hamper their audience, since many people will likely want to watch on an HDTV but not have access to an Apple TV. There's no way of watching Apple Music video on devices such as a Roku or Chromecast."
That is the challenge, isn't it? Apple is the only entrant into this market that a hardware provider first and foremost. For Apple to be successful in this market I think they're going to have to commit to being available on every hardware platform (exactly like they did with iTunes for Windows). Let people buy Apple TVs because they are great part of the Apple ecosystem; don't expect people to buy them because they want to see a particular TV show.
A friend of mine took to Facebook a few weeks ago to whine about Carpool Karaoke being exclusive to Apple Music. I didn't get the big deal since GoT is exclusive to HBO and House of Cards is exclusive to Netflix and The Tick is exclusive to Amazon Prime. But the difference is that for each of those other ones, once you have a basic box on your TV you can add any of those services instantly for a few bucks. To do the same for CK, you'd either have to watch it on your iPad or order a new piece of hardware.
Did anyone expect them to be mass-market hits? I support Apple going into this space, but those two projects (along with the Dre bio-pic) seemed like lame entries.
http://www.24i.com/blog/futuresource-smart-tvs-top-way-tune-netflix/
http://www.digitaltveurope.net/706581/futuresource-smart-tvs-the-top-way-to-tune-into-netflix/
https://www.recode.net/2017/7/25/15998358/netflix-subscribers-growth-watching-smartphones-apps-app-annie-comscore
The widest used Smart TV systems there are Tizen by Samsung and WebOS (Palm/HP) on LG. While Apple would be able to make apps for those systems, their content isn't going to be all that profitable. Netflix made $8.8b last year and just $187m net income (2% profit margin):
https://www.stock-analysis-on.net/NASDAQ/Company/Netflix-Inc/Ratios/Profitability#Net-Profit-Margin
Apple would be better using the subscriptions to sell hardware because that's where most of their profit comes from. Apple TV has likely sold over 40m units by now, they have over 20m in the US alone:
http://appleinsider.com/articles/17/07/26/internet-connected-television-use-including-apple-tv-growing-to-over-168-million-in-2017
Not all Apple TV owners would subscribe to the service but I think they'd manage to get a reasonable number of users across their entire Mac, iOS and Apple TV ecosystem. Maybe not Netflix numbers (100m) but Apple Music is nearing 30m. Apple Music has had a lot of installs on Android (at least 10m) but the app isn't in the top grossing apps list so they might not be turning into subscribers. Apple would be best with their own hardware first and if they don't get enough traction then they can look at other platform support.
10m users paying $10-20/month gives them $1.2-2.4b revenue to work with every year. That's a decent budget for producing TV shows and the better exclusive shows and premium content they have, the more people will be willing to subscribe and buy into Apple's hardware platforms. I think Apple would eventually be able to sell 10m TVs per year if they made a standalone TV in addition to the box so that's another option to expand their hardware base.
I don't see why Apple would get into the video content service for the video content alone. With music, they have to get the artists to choose to publish on the platform and the artists get paid by streams so the volume is more important. With TV, they license the content upfront or make their own so they are only weighing up the cost of the content against the subscriber revenue.
This kind of service could be why they are investing in more data centers, so that they have a robust CDN. Netflix uses Amazon AWS:
https://media.netflix.com/en/company-blog/completing-the-netflix-cloud-migration
Concerning the content, the following mentioned in the article hits a certain demographic but doesn't sound like it would be enough for a premium subscription:
https://www.vanityfair.com/hollywood/2017/07/jennifer-aniston-reese-witherspoon-tv-show
The standard to meet for content is pretty much HBO. Ideally Apple would have bought them but they'd have to buy up all of Time Warner, which is lot of money and it would be harder to recoup that with an exclusive service:
https://www.cnbc.com/2014/02/05/time-warner-discloses-hbo-financials-for-first-time.html
HBO shows include The Wire, Sopranos, Six Feet Under, Game of Thrones, Curb Your Enthusiasm, Sex and the City, Veep, Silicon Valley, Boardwalk Empire, Westworld, Last Week Tonight, Real Time.
The political TV talk shows draw in a regular audience and they always have fresh material. Jon Stewart from The Daily Show was in talks with HBO for a new animated show but they couldn't turn those around quickly enough so he will be doing a stand-up show instead. One advantage Apple has here is the variable run time. They can record content as short as 10 minutes like a Carpool Karaoke episode along with 45 minute dramas. They will never have to fill a time slot in a TV schedule.
I don't think they need exclusive content before launching though. If they can build a similar back-catalog of content as Netflix, including Disney content for kids, along with instant streaming of recent movies in the iTunes Movie Store, that should be enough to get people to sign up. Launch it in as many countries as possible and allow watching on Macs, PCs, iOS, Apple TV. Once they build up a few million subscribers, exclusive shows are going to be able to get more traction. What will draw people in is being able to stream the latest movies on a subscription rather than paying per purchase, they just need to figure out the best subscription model to do that. Now is as good a time as any with movies like Wonder Woman:
https://itunes.apple.com/us/movie/wonder-woman-2017/id1235765633
Instead of $20 outright to own it, it would just be in the user's library like Netflix and they'd pay their subscription. They'd only be allowed to stream/rent the premium movies if they had enough credits so they'd either save them up during the month or top them up when needed. The back-catalog wouldn't use up the credits. Allowing people to stream premium content for a certain time without being charged e.g 20% of the length of the content, would help discoverability.
They would be hard-pressed to find a better studio to acquire - great facilities and an amazing history – De Mille, Selznick, Hitchcock, GWTW, and scores of major hit movies. It is large enough that they could rent out half the place to other production companies.
If they make some money on sales of the content great but the intent is to sell more iPads and aTVs. This is no different than Microsoft and Sony having exclusive content for their respective consoles except for Apple the money is made on the hardware side rather than software side.
Why on earth would Apple spend money to make Roku better? The only reason Apple has iTunes on Windows isn't to sell music to Windows users but to support iPhone sales to Windows users.
If Apple manages to create the next GoTs then you damn well better buy an aTV to watch on your 4K TV just like if you want to use FCPX or Xcode you buy a Mac.
I made this decision around 10 years ago. If it is not on free to air then I don't watch it. Thankfully here in the UK we have a thing called FreeSat. more than 100 channels at no monthly cost. Do I really care that I don't get to see GoT or CPK? No I don't but there again, I'm an awkward old SOB.
Apple is gradually turning the ship around, where hardware is simply the facilitator into the ecosystem. At some point, the Apple ecosystem will start generating money that even Apple hardware sales cannot match. My bet is that in 3 years time, Apple services will be a bigger draw for the company than Apple hardware.
Lets face it - we will soon reach a point where customers no longer need to buy the latest iPhone every 2 years. Their older one will be perfectly fine. If iPhone upgrade cycles stretch to 3 years or 4 years, then the value of the hardware sales diminish significantly. This is already the case with Macs, its already the case with iPads - no reason not to expect this to happen in iPhones. In fact, if you consider hand-me-down devices, iPhone life is already 4 years. There's plenty of 5s devices out there - very noticeable because of the smaller size. In fact, Apple was even selling the 5S in India till recently. That obviously means a 4 year life for iPhone is not a major stretch.
I foresee that Apple will change the game, such that Apple hardware offers the most integrated experience and the most delightful experience into the Apple ecosystem. You can choose to access the Apple ecosystem from Android at some point if you want to - but why would you want Google to be able to see what you are purchasing? That seamless and safe experience will be the driver.
In 3 years time, Apple should be able to comfortably generate $20 per month per user from the ecosystem. At which point, the ecosystem is effectively far more important than the initial hardware sale. If you have an Apple Music subscription, you are almost there. If you rent or buy one movie a weekend, you are already there.
The game is changing. Those who look at iPhone sales as the only justification for the stock price are not even capable of seeing the game of the future.