Party's over: Apple tries to shrink costs of Apple TV+ productions

AppleInsider · July 22, 2024 12:32PM

Billions have been spent on Apple TV+ original TV shows and movies, but now there is more pressure to control how the massive budgets are spent on productions.

Three people in futuristic clothing, looking determined, with an outer space backdrop featuring a planet and stars.

Foundation for Apple TV+ had a budget of $5M per episode

Like other major streaming services, Apple has spent a lot of money on original programming. Now, it wants to try to be more thoughtful with its expenditure on video content.

According to sources of Bloomberg, Apple SVP of Services Eddy Cue has been holding budgetary meetings with studio heads Zack Van Amburg and Jamie Erlicht. After allegedly spending more than $20 billion on productions so far, Cue supposedly wants to refine how the money is spent.

Apple supposedly has the reputation as the "biggest spender in town," but Van Amburg and Erlicht have allegedly told creative partners that will change.

High spend, little return

The company has a reputation for spending a lot of money on the content for Apple TV+. This included $500 million in total on movies from major directors Martin Scorsese, Ridley Scott, and Matthew Vaughn.

On the TV side, this has manifested in high-budget programming, such as an alleged $250 million on "Masters of the Air." In February, news of budgetary cuts surrounding "Foundation" surfaced, with the show apparently costing Apple $5 million per episode or $50 million per season.

"The Morning Show" had originally paid stars Reese Witherspoon and Jennifer Aniston more than $1 million per episode in the first season. For the fourth season, they are expected to earn double, with Apple spending more than $50 million on the cast alone.

Two women with blonde hair stand in front of cracked TV screens displaying colored test patterns and news studio scenes.

The Morning Show is costing Apple TV+ more than ever to produce

However, all this spending isn't met by revenue coming the other way. At the box office, the movies failed to gain much traction, and seemingly only "Killers of the Flower Moon" managed to gain an audience in streaming.

Similarly, despite the cost of "Masters of the Air," Nielsen's rankings revealed it failed to get as much of a U.S. viewership as the Japanese-language Netflix show "House of Ninjas."

Overall, it is claimed that Apple TV+ has a 0.2% share of overall U.S. TV viewing. Apple's monthly viewership is supposedly less than Netflix's daily viewership.

A plan in action

To try and reverse the situation, or at least to reduce how much this impacts Apple's bottom line, Apple TV+'s leadership is making some changes to how it funds projects.

For a start, there is the intention to pay less upfront for the shows it commissions. The idea is that shows and films that go over budget will be shouldered more by third-party production companies in the future.

According to some report sources, Apple has also decided against buying shows that it would've agreed to a few years ago. It's also ordering fewer straight-to-series projects.

Over the years, it has also been quicker to cancel shows that fail to bring an audience. In 2021, only 22% of shows were allowed to reach a third season, while 43% did in 2020.

There is also talk of Apple licensing content for its service. Apple has previously licensed classic movies and is in talks to do so again, but the discussions could indicate a wider strategy is in play.

An absorbable issue

The requests to cut costs are ones Apple would be expected to make, considering they will typically increase over time unless addressed. But at the same time, Apple is in a position where it doesn't necessarily hurt the company as much as others.

Other streaming services have cut costs in various ways, including letting go of staff and curtailing budgets. However, Apple's response to the problem is somewhat more lenient in that it can somewhat justify the outlay as a small drop in a $3 trillion bucket.

The consistently high number of awards and nominations it has received for its shows and films, as well as the critical acclaim, has allowed Apple to cultivate an appearance of quality for its shows. Despite that appearance, it hasn't had big returns at the box office or viewership numbers.

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nmemac · July 22, 2024 12:49PM

I realise I am probably an outlier on this, but I stopped watching much broadcast TV over a decade ago because I got tired of series being cancelled with no conclusion to a story at the end of a season, often ending with a cliffhanger for the next series that never came. I often waited for the end of a series to buy dvd complete series boxsets if they reached a satisfying conclusion.

Streaming has possibly made this even worse, with many shows cancelled across different platforms before they reached a natural ending in the storytelling. Streaming services are under pressure to see a return, but I think some patience is required and viewing figures cannot be judged on a single season - the advantage of streaming that should not be thrown away is that people can come to watch a series in its entirety years after it first started, with many people binge-watching an entire series from start to finish in one go. Evan now I rarely watch an Apple show unless it gets go ahead for at least a second series, or more... i'm not going to waste hours of my life each year on shows that get cancelled with no conclusion. Whilst growing rapidly, Apple's offering is still too thin to be judged properly, and with uncertainty still surrounding shows like Foundation.

Maybe try to address why they're not successfully reaching a wider audience before cutting their legs off below the knee...

avon b7 · July 22, 2024 1:16PM

There is too much content on too many platforms for too few users with little time.

Add to that, series and films that are here today and gone tomorrow and you also have subscriber stress.

I never watch regular TV unless it is a sporting event because of the unrelenting stream of ads which cut in, mid-dialog and overlay ads for upcoming shows.

Now that is appearing (to a less invasive degree) on subscription services but it is only a question of time until it gets worse.

'Free' YouTube is basically unusable now.

I had the Apple TV+ trial and hardly watched anything so I didn't renew.

It won't be long before we see convergence to reduce the number of options.

At least original content has a long term value for the platforms.

And yes, shows getting cancelled simply because they didn't get off to a great start is a huge turn off. Even if they were critically acclaimed.

Back in the day, some of the greatest series got off to a bad start but grew over time.

foregoneconclusion · July 22, 2024 1:48PM

Quality of writing and casting are the two most important factors for a TV show. I think Apple has also made some errors with the its choices of source content. Example: Isaac Asimov may be a classic sci-fi writer but his popularity was at its peak back in the 60s and 70s. Pouring money into adapting the Foundation series was always kind of an odd choice. More contemporary sci-fi book adaptations (like what they're going to do with 'Neuromancer') or even something like the Fallout video game adaptation makes more sense from the angle of attracting streaming viewers.

CarmB · July 22, 2024 2:37PM

nmemac said:

I realise I am probably an outlier on this, but I stopped watching much broadcast TV over a decade ago because I got tired of series being cancelled with no conclusion to a story at the end of a season, often ending with a cliffhanger for the next series that never came. I often waited for the end of a series to buy dvd complete series boxsets if they reached a satisfying conclusion.

Streaming has possibly made this even worse, with many shows cancelled across different platforms before they reached a natural ending in the storytelling. Streaming services are under pressure to see a return, but I think some patience is required and viewing figures cannot be judged on a single season - the advantage of streaming that should not be thrown away is that people can come to watch a series in its entirety years after it first started, with many people binge-watching an entire series from start to finish in one go. Evan now I rarely watch an Apple show unless it gets go ahead for at least a second series, or more... i'm not going to waste hours of my life each year on shows that get cancelled with no conclusion. Whilst growing rapidly, Apple's offering is still too thin to be judged properly, and with uncertainty still surrounding shows like Foundation.

Maybe try to address why they're not successfully reaching a wider audience before cutting their legs off below the knee...

At the least, if you end a season with a cliffhanger, put out one or two more episode to allow for the story to be completed properly. By not completing the story arc, it's as if Apple is comfortable with releasing an incomplete product. Very amateurish and lacking regard for the consumers. Even if the numbers are not what is desired, there are still thousands of consumers who choose to check out a show. Others might check in long after a show was first presented. They deserve better. It would be another matter if shows were more episodic along the lines of how shows were structured decades ago but if you have an ongoing story and you tease something more to come, it's unprofessional to simply not follow through.

beowulfschmidt · July 22, 2024 3:09PM

nmemac said:

I realise I am probably an outlier on this, but I stopped watching much broadcast TV over a decade ago because I got tired of series being cancelled with no conclusion to a story at the end of a season, often ending with a cliffhanger for the next series that never came. I often waited for the end of a series to buy dvd complete series boxsets if they reached a satisfying conclusion.

Streaming has possibly made this even worse, with many shows cancelled across different platforms before they reached a natural ending in the storytelling. Streaming services are under pressure to see a return, but I think some patience is required and viewing figures cannot be judged on a single season - the advantage of streaming that should not be thrown away is that people can come to watch a series in its entirety years after it first started, with many people binge-watching an entire series from start to finish in one go. Evan now I rarely watch an Apple show unless it gets go ahead for at least a second series, or more... i'm not going to waste hours of my life each year on shows that get cancelled with no conclusion. Whilst growing rapidly, Apple's offering is still too thin to be judged properly, and with uncertainty still surrounding shows like Foundation.

Maybe try to address why they're not successfully reaching a wider audience before cutting their legs off below the knee...

You might be an outlier, but you're certainly not alone. I am currently watching Smallville, which I only did for the first season when it was broadcast, because I knew it had a satisfying ending. Breaking Bad was another one. The Fallout series is another one that I probably won't watch any more of until it ends, and then only if it ends well. There's too many cancelled shows to waste my time watching an incomplete story.

maury markowitz · July 22, 2024 3:51PM

Similarly, despite the cost of "Masters of the Air," Nielsen's rankings revealed it failed to get as much of a U.S. viewership

Because it's terrible. It's every bad cliche of the last 70 years of WWII filmmaking stuffed into a single show.

How did they not realize this was going off the rails from the start? "I know what we need, yet another movie about WWII bombers that's just like all the other ones!"

hammeroftruth · July 22, 2024 4:00PM

avon b7 said:

There is too much content on too many platforms for too few users with little time.

Add to that, series and films that are here today and gone tomorrow and you also have subscriber stress.

I never watch regular TV unless it is a sporting event because of the unrelenting stream of ads which cut in, mid-dialog and overlay ads for upcoming shows.

Now that is appearing (to a less invasive degree) on subscription services but it is only a question of time until it gets worse.

'Free' YouTube is basically unusable now.

I had the Apple TV+ trial and hardly watched anything so I didn't renew.

It won't be long before we see convergence to reduce the number of options.

At least original content has a long term value for the platforms.

And yes, shows getting cancelled simply because they didn't get off to a great start is a huge turn off. Even if they were critically acclaimed.

Back in the day, some of the greatest series got off to a bad start but grew over time.

There’s a different generation that is running things now and they have extreme ADHD. If the show isn’t a hit out of the gate, they give it two more episodes before they pull the plug.

Plus US network tv template matches its shows
and kills the ones that may be great story telling, but not a lot of flash and glitz. They end up keeping shows that really take liberties on story plots, proving we as a society are getting dumber if the show keeps getting renewed.

lotones · July 22, 2024 5:20PM

I like Apple TV+'s content quite a lot. I find the quality very consistent from program to program. What drives me crazy is only 10 episodes a season, then you have to wait a year or more for a story to continue. By that time your emotional investment in the characters has evaporated, the young actors are a year or more older and taller, and major plot lines are a distant memory. I know this is the same model all streamers use, but if Apple wants to build an audience, longer seasons and quicker turnarounds would go a long way.

Specifically in Foundation's case, spend less $ per episode (less elaborate sets, locations, and extras would be fine...), but spread it out to more episodes, and move the plot along faster.

Keep the audience's attention you've fought so hard to get.

daven · July 22, 2024 5:46PM

After several free trials, I subscribed to Apple TV+ because the quality of the shows was good but these days with the flood of content I find myself mostly watching old series like Perry Mason and Gunsmoke on MeTV and YouTube videos about camping. I piggy back on my sister’s Prime but the only things I watch on that are old shows and again, I haven’t watched anything on it for probably over a month now.

I think a lot of it has to do with the old “Paradox of Choice” conundrum where if you have so many choices you end up not watching anything at all consistently. Plus, living in a northern state, I watch a lot more in the winter than I do in the summer. One thing I do find frustrating is that you never know when the next season is going to drop. Maybe others have figured it out but I haven’t.

bakerzdosen · July 22, 2024 6:40PM

CarmB said:
At the least, if you end a season with a cliffhanger, put out one or two more episode to allow for the story to be completed properly.

[cough]Shantaram[/cough]

Personally, I think Apple has done better than most in this regard, but at the same time, recent history shows otherwise.

If I can no longer trust that Apple won't finish out their series, I have no reason to watch and get "invested." Constellation certainly wasn't great, but again, we never would have started watching it knowing it was going to be discontinued. If there was some sort of conclusion on the docket, I'd be fine with it - even if it wasn't somehow one of the greatest conclusions to a series ever...

With all the news about budgets, it's clear that Foundation certainly has the potential to REALLY upset me in that regard.

Also, since people have mentioned being "outliers," I'll just add that I'm also eagerly awaiting a conclusion to Invasion.

cloudy · July 22, 2024 7:47PM

Foundation, Severance, Slow Horses, Masters of Air, are really fantastic. And family members enjoy many of the other shows.
Apple should figure out how to contain costs but not cancel shows prematurely. It can take several seasons to really build a proper franchise.

Apple should consider focusing less on star power and instead cultivate the next generation of directors and actors the way HBO did in it's best days.
I could care less if Reese Witherspoon or Jennifer Aniston show up in a series. It's the plot and production that matter. Less (expensive) stars and more investment in stories that can be told over many seasons is where Apple can shine. Especially in SciFi/Fantasy.

entropys · July 22, 2024 8:49PM

Agree on the expensive, imported star issue. Make new stars.
on the series issue, it can be solved by a story from the start being built to only have one series. One.

And do not stretch it out. If the story can be properly told in six or eight episodes, that’s it. Think Netflix’s Queens Gambit.
K-dramas do this successfully. Stories are mostly eight, 12 or 16 episodes. The ones that go longer can get tedious. And multi series stories are not the norm.
A greater variety of stories, focussed on the story, rather than trying to milk existing shows to death. Apple TV+ does not have the depth of content to keep adding series to already existing shows. It needs more stories.

Oh, and if based on a book. Respect the source. No additional preaching inconsistent with the story. Look a the failure of The Willow series on Disney, or prime LOTR.

The name probably doesn’t help either. People think they need a set top box.

Marvin · July 22, 2024 10:37PM

AppleInsider said:
According to sources of Bloomberg, Apple SVP of Services Eddy Cue has been holding budgetary meetings with studio heads Zack Van Amburg and Jamie Erlicht. After allegedly spending more than $20 billion on productions so far, Cue supposedly wants to refine how the money is spent.
However, all this spending isn't met by revenue coming the other way. At the box office, the movies failed to gain much traction, and seemingly only "Killers of the Flower Moon" managed to gain an audience in streaming.
A plan in action
To try and reverse the situation, or at least to reduce how much this impacts Apple's bottom line, Apple TV+'s leadership is making some changes to how it funds projects.

For a start, there is the intention to pay less upfront for the shows it commissions. The idea is that shows and films that go over budget will be shouldered more by third-party production companies in the future.

The amount that streaming companies spend vs the quality of what they produce is quite shocking when compared to blockbuster movies. Netflix is spending upwards of $10b per year on original content but have barely produced a handful of blockbuster level movies.

The production cost for the original Lord of the Rings trilogy was under $300m total and made around $3b in theaters:

https://screenrant.com/all-lord-rings-hobbit-middle-earth-movies-ranked-budget-highest-lowest/

Harry Potter movies were around $100-200m each, total budget $1.7b and made $9.5b in theaters:

https://screenrant.com/harry-potter-movies-ranked-by-budget/

Here's a list of movie budgets, most are below $200m:

https://www.the-numbers.com/movie/budgets/all

$20b is enough for 100 blockbuster quality movies, over 60 Lord of the Rings trilogies.

The streaming services are clearly missing good talent scouts and are throwing money at people hoping for a diamond in the rough. There needs to be a better process for weeding out bad productions early.

AI can help with this, someone can pitch a script and an AI can generate a movie with a cast to see what the movie could look like in a rough form with voice simulation. Then they can make a better decision on whether to greenlight it.

Some decisions seem more obvious. Productions like The Morning Show have such a weak overall structure. The audience score for season 3 is 12%:

https://www.rottentomatoes.com/tv/the_morning_show/s03

The shows with the good ratings are the high quality cinema productions:

https://collider.com/best-apple-tv-original-movies-ranked-rotten-tomatoes/

https://www.rottentomatoes.com/m/wolfwalkers
https://www.rottentomatoes.com/m/tetris
https://www.rottentomatoes.com/m/killers_of_the_flower_moon
https://www.rottentomatoes.com/m/the_banker_2020
https://www.rottentomatoes.com/m/greyhound

More cinema, less low quality TV would give a better return for their investment. This comes from better writers and good source material:

https://www.shortlist.com/lists/40-best-film-adaptations
https://en.wikipedia.org/wiki/List_of_best-selling_books

Apple is adapting some best-selling books and these get good reviews:

https://ebookfriendly.com/top-100-kindle-books-all-time/
https://www.rottentomatoes.com/tv/defending_jacob

kjespoko · July 23, 2024 1:18AM

I may be in the minority here, but I can’t stand the language in these shows. The use of the f-word has gotten out of control. Sometimes I feel that the writers just force it in. Put less TV-M and I’d watch a lot more!

entropys · July 23, 2024 2:56AM

Marvin

the trouble with the morning show is that it was at best a one series show. Now it is just boring soap with expensive actors.

That list of kindle books is interesting , but nearly all have already been made into movies or shows.

perhaps Follet’s The Pillars of the Earth would make a great short series and hasn’t been done. That said, I don’t expect it would be quite the right thing for the people picking ATV+ content. Too religious and the pitch might be tricky.

Personally, I would like to have a limited run Hornblower series. Say three or four episodes per book, like the Ion Griffud version a few years ago, but with a budget.

and with regard to SF, how about Henlien’s time for the stars? Classic Amazing Stories type Sci Fi. Or Starship Troopers a lot more faithful to the book.
On nasty aliens, how about Legacy of Heorot, by Larry Niven, Jerry Pournelle and Steven Barnes? About an unintended consequence of interfering in a strange environment. This could be made without much outlay.

mattinoz · July 23, 2024 2:57AM

I like that Apple hasn’t avoided sci-fi like so many others in the industry but maybe big budgets aren’t needed to make it all happen.

They could develop a low budget fresh cast and crew show to basically act as a showcase for surfacing interesting things. A twilight zone style show or something

take some risks but with low budgets and say 3 to 4 episodes miniseries they can drop in one per month but really favouring the craft not the names.

lukei · July 23, 2024 5:02AM

What is the relevance of Apple’s market cap to this?

Seems like a scrappy end note to an otherwise good article

iqatedo · July 23, 2024 6:10AM

entropys said:

Marvin

the trouble with the morning show is that it was at best a one series show. Now it is just boring soap with expensive actors.

That list of kindle books is interesting , but nearly all have already been made into movies or shows.

perhaps Follet’s The Pillars of the Earth would make a great short series and hasn’t been done. That said, I don’t expect it would be quite the right thing for the people picking ATV+ content. Too religious and the pitch might be tricky.

Personally, I would like to have a limited run Hornblower series. Say three or four episodes per book, like the Ion Griffud version a few years ago, but with a budget.

and with regard to SF, how about Henlien’s time for the stars? Classic Amazing Stories type Sci Fi. Or Starship Troopers a lot more faithful to the book.
On nasty aliens, how about Legacy of Heorot, by Larry Niven, Jerry Pournelle and Steven Barnes? About an unintended consequence of interfering in a strange environment. This could be made without much outlay.

Read every Hornblower book as a teenager. Bedtime was 'what am I going to read now?' Usually for a couple of hours. Doc. E. E. Smith, Asimov, Clarke too and others. Those days.

warren21 · July 23, 2024 12:29PM

I’ve gone back to purchasing physical media. Problem solved for me and only occasionally look at Netflix or ATV.

applecored · July 23, 2024 12:35PM

kjespoko said:

I may be in the minority here, but I can’t stand the language in these shows. The use of the f-word has gotten out of control. Sometimes I feel that the writers just force it in. Put less TV-M and I’d watch a lot more!

Gotta say I would tend to agree. Sometimes its just thrown in there randomly and until that point the show/movie was a great family event. Ted Lasso didn't need all that swearing, it was such a great show with great story, comedy and actors. Some of the messages would have been great for kids to learn and understand.

Party's over: Apple tries to shrink costs of Apple TV+ productions

High spend, little return

A plan in action

An absorbable issue

Comments

A plan in action