Question: What does Tim Cook want Apple TV+ to be?
Answer: anything he wants. The CEO of the world’s most valuable company doesn’t need his streaming service to be the biggest. Center director Jeffrey Cole explains.
By Jeffrey Cole
What’s Tim Cook up to?
When Apple makes a move, the Earth usually shakes.
When Steve Jobs introduced the iPhone at one of Apple’s must-see, splashy product announcements in 2007 (wearing his iconic turtle-neck sweater and jeans—all in black) there were four large players in the handset world: Nokia, Blackberry, Motorola, and SonyEricsson. Within four years, all had become irrelevant. The introduction of the iPod (2003) and iPad in 2010 had similar impact on the competition and consumers’ imaginations.
Apple does big things. Even the Apple Watch (not the iWatch) introduced by Tim Cook in 2014, three years after Jobs’ death, immediately captured the smartwatch market.
When we think of Apple’s products, retail stores, impact on our culture, and much more, we see a company whose goal is always to dominate the marketplace and our imaginations.
Therefore, it was surprising when the most valuable company in the world entered the streaming world in a small way. It has stayed small. Is this the plan: to have a small toe in the streaming door? Or is Apple TV+ merely an early Trojan horse foray before reinforcements and massive budgets change the entertainment world?
Warner, NBC, Paramount, and Disney built streaming platforms to protect their core businesses of producing content and ensuring it had a place to be seen. Their fear was that streaming would be completely dominated by Netflix, which was growing at an alarming rate and devoting as much as $20 billion to production.
Apple had no such fears. It didn’t need to produce entertainment to sell hardware. Apple had no markets to protect.
Worlds to conquer
It was never clear why Apple got into entertainment. Was it vanity? Over the years, soft drink companies, Japanese electronics manufactures, telcos, newspaper publishers, alcohol manufacturers, and others were lured by the chance to attend the Oscars and hobnob with A-list celebrities.
Or was it a vision of a whole new world Apple could conquer (as it has with music, phones, computers, and watches)? Apple is now moving heavily into major sports as well as advertising and other media. Could Tim Cook see something the rest of us don’t? Is there a master plan?
In 2017 Cook brought two of the best executives in the television business, Sony’s Jamie Erlicht and Zach Van Amburg, to Apple to build a case for producing entertainment content.
Using a little literary license, I imagine Cook said, “Guys, we’re not sure we really want to be in this business, but let’s experiment and see what happens. Let’s dabble.” Then he reached into his pocket as if scrounging for spare change and offered, “Here’s $6 billion. See what you can do.”
That move alone validated Rupert Murdoch’s conclusion that he could not match his new competitors in the media world: trillion dollar tech companies. Instead, Murdoch cashed out by selling his entertainment properties to Disney for $71 billion.
In November of 2019, a few months before the pandemic, Apple TV+ premiered at a cost of $4.99 a month. Anyone who bought an Apple hardware product (phone, iPad, or computer) got a free one-year subscription. The next month, Disney introduced its streamer, Disney+, at $6.99 a month.
Each of the new streamers had a signature program. For Disney it was the extraordinarily successful The Mandalorian, from the Star Wars Universe.
Apple’s headline program was The Morning Show, starring Jennifer Anniston, Reece Witherspoon, and Steve Carell. Loosely based on the Matt Lauer scandal at The Today Show, The Morning Show was the most expensive television program ever made (a record that lasted only a few months) at $15 million an hour. What would have been a massive cost problem for Murdoch and the other studios, was no big deal for the richest company in the world.
Having spent as much as $20 billion a year on enormous amounts of content, Netflix had a deep library and was ready for the pandemic. Apple (and Disney) had only a few programs. They quickly bought films from studios that could not be released into closed movie theaters. Apple TV+ acquired Tom Hank’s World War II submarine drama, Greyhound.
When we think of Apple’s products, retail stores, impact on our culture, and much more, we see a company whose goal is always to dominate the marketplace and our imaginations. Therefore, it was surprising when the most valuable company in the world entered the streaming world in a small way. It has stayed small. Is this the plan: to have a small toe in the streaming door? Or is Apple TV+ merely an early Trojan horse foray before reinforcements and massive budgets change the entertainment world?
The Morning Show flourished as people discovered it when hungry for new entertainment during COVID. Later, Apple found immense success with Ted Lasso. The upbeat comedy with its message of inspiration, kindness, and decency became the emblematic program of the pandemic—perfect for an audience seeking something uplifting and positive. Ted Lasso went on to win the Emmy for best comedy, as well as a slew of acting awards, both times it has been eligible.
Apple also succeeded where Netflix couldn’t
Netflix desperately wanted to be the first streamer to win the Oscar for best picture. It spent hundreds of millions of dollars to produce (or acquire), films that might capture the top award. Its first attempt came with Roma, which was eligible for an Oscar since it also premiered for a few weeks in theaters. The closing of theaters during COVID suddenly made streaming content eligible. Netflix bet heavily on Mank, The Trial of the Chicago 7, The Irishman, and The Power of the Dog.
The streaming giant spend tens of millions of dollars building Oscar campaigns and hosting parties, primarily for bragging rights.
All Netflix’s hopes were dashed in 2022 when another streamer won the best-picture Oscar. Apple TV+ came in like a traditional underdog with a warm and endearing but small film, CODA, to capture the Oscar.
Apple TV+ has been a major success. It has the quality fans expect from the Silicon Valley Company. But the largest company in the world has the smallest major streamer. Apple TV+ is the Ted Lasso of the streaming world. It is a quality, inexpensive service. It is everyone’s second or third SVOD subscription. It is too small to be a first choice.
Is Tim Cook satisfied having created such a modest but high-quality, boutique service?
Unlike most of the streamers constrained by tightening budgets, Apple could quickly dominate the streaming world by putting $30 billion or more annually into production. Unlike every other streamer, Apple has not raised its price. It is still $4.99 a month (or $50 a year).
What does Cook want Apple TV+ to be? The answer is that it can be anything he wants it to be.
However, Cook isn’t sharing his thoughts. Apple’s new products and industries they might enter are closely held secrets.
Just because Apple is a giant in the phone, music, and computer business does not mean it wants to be a giant in entertainment. With Apple TV+, the company has been experimenting and dabbling. Successfully.
It makes its trillions of dollars in hardware and services. Entertainment is just a rounding error. What happens with Apple in streaming will not affect the stock price. That is why they have resisted buying companies they are frequently rumored to be interested in: Disney or Netflix.
Apple is not an acquirer on the hunt for other companies. While Facebook has spent $24 billion buying Instagram, Occulus, and WhatsApp (it also tried to snag Snapchat for $3 billion), the bigger, and much more successful, Apple’s biggest acquisition was $2.2 billion for Beats.
My guess is that Apple TV+ has become exactly what Tim Cook wanted when he began dabbling. It has extended his brand, associated the company with quality and success — plus he gets invited to the Oscars and Emmys.
If Cook is going to make major investments, it will not be to dominate entertainment. It will be to introduce a much rumored iCar and to use its Watch and data to become a major player in health care. Or maybe an industry no one other than Apple is thinking about.
Tim Cook wants Apple TV+ to be what it is: a smallish, inexpensive niche for quality that enhances the brand. That’s what it is, and that’s it will likely stay.
Jeffrey Cole is the founder and director of The Center for the Digital Future at USC Annenberg.
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October 12, 2022