As the battle to create original content for online video services continues, we get a glimpse into Apple's plans for the coming year. According to a report from The Wall Street Journal, Apple has a budget of $1 billion to spend in 2018 to "procure and produce" original content. The iPhone maker could acquire and produce up to 10 shows next year with this money, which will be largely left in the hands of new Apple hires Jamie Erlicht and Zack Van Amburg. Erlicht and Van Amburg are former presidents from Sony Pictures Television that moved to Apple in June to oversee video content strategy and production.
The $1 billion budget signals how serious Apple is about boosting its original programming, the newest of which lives on its Apple Music subscription service. This is Apple's first major push into original content, but it's $1 billion less than the money spend on content by rival companies. HBO spent about double last year on content (it reportedly costs $10 million to produce one episode of Game of Thrones), and Netflix may spend upwards of $6 billion this year. Apple's starting budget is similar to Amazon's when it first got into original programming in 2013 with Prime Video; Amazon could spend $4.5 billion on original content in 2017.
Original programming is the way to go, as it has proven to be a big driver in the growth of streaming services. Netflix's business benefited immensely from original hits like House of Cards, Orange is the New Black, and Stranger Things. Those kinds of shows—scripted comedies and dramas—are expensive to produce, and we've seen Netflix's annual budget for original programming increase over the past few years to accommodate that. Apple's first original series, Planet of the Apps and Carpool Karaoke, both just became available to Apple Music subscribers, and critics' reviews have been mixed.
Not all of Apple's $1 billion will be funneled into new show production; some of it will go toward acquiring rights for existing content and possibly hiring more entertainment industry veterans. Former Sony execs Jamie Erlicht and Zack Van Amburg were obvious choices to help Apple's Senior Vice President Eddy Cue mold the company's original content vision, but they will need others to produce hit shows that can stand up against the Game of Thrones of the world. Other companies have acquired talent recently, too: last week, Amazon announced it struck a deal with Walking Dead creator Robert Kirkman, hiring him away from AMC. Netflix recently hired Shonda Rhimes and Betsy Beers, the minds behind hits including Grey's Anatomy and Scandal, as well as Joel and Ethan Coen, who will produce a new series for the company.
Not only is Apple keeping up with the Joneses by investing more in original programming, but it's also hoping new shows will help boost its services business in the wake of declining movie rentals and sales. This used to be a big part of iTunes' revenue, but the rise of streaming services have steered customers away from buying and renting movies. While iTunes continues to glean billions in revenue, Apple's share of the movie rental-and-sales market dropped to 35 percent from 50 percent in 2012. According to The Wall Street Journal report, Apple isn't looking for original content to replace movie rentals or sales; instead, it's hoping new content encourages customers to consume both types of media through Apple services.
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